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The AMA filed an amicus curiae brief last month with the Supreme Court of Pennsylvania to challenge the claims by some health insurance plans that they are shielded from malpractice liability under the federal Employee Retirement Income Security Act.
A favorable ruling would allow Pennsylvania courts to decide malpractice suits against insurers and managed care organizations.
"This case should level the liability playing field by holding HMO's and health plans accountable for their treatment decisions regardless of ERISA," commented Carol O'Brien, the AMA's division counsel for patient advocacy in Chicago. She added that the AMA plans to file amicus briefs in future cases involving ERISA preemptions.
ERISA was enacted in 1974 by Congress to govern employee benefit plans offered by private employers. The federal law preempts state laws related to employer health plans, hindering patients from recovering damages.
Oral arguments in Pappas v. Asbel et al. v. United States Health Care Systems of Pennsylvania Inc. were expected to be heard at press time. The AMA filed its brief earlier this year.
"In filing our amicus brief, we hope to convince the Pennsylvania Supreme Court that the ERISA statute has been misinterpreted to preempt state tort claims," said AMA attorney Michael Werner.
A trial court found that ERISA preempted Basile Pappas's claim of medical malpractice against U.S. Health Care Systems of Pennsylvania. Pappas was rendered a quadriplegic after suffering a spinal cord injury.
He sued his physician and Haverford Community Hospital for damages. However, the hospital then joined U.S. Health Care Systems for refusing to transfer Pappas to a nonparticipating hospital recommended by the hospital's physicians, causing a three-hour delay.
An appellate court reversed the lower court's decision, stating that "decisions made by U.S. Health Care concerning where Mr. Pappas might receive treatment are propelled by dollar savings, not the protection of workers' rights--in this case the right to the most effective medical care--which was the original focus of ERISA," according to a press statement.
In an effort to close further the ERISA medical liability loophole, the AMA has shared information and briefs with the federal Department of Labor, according to O'Brien.
"The Labor Department has been a leader on the ERISA issue and filed several amicus briefs in federal and state courts. The department has taken the position that ERISA was never intended to preempt health plans from liability," said O'Brien.
Two important cases in which the department submitted briefs were Dukes v. U.S. Healthcare Inc. and Rice v. Panchal. Federal appeals courts ruled in 1995 that ERISA was not preempted and remanded the cases back to the states to decide.
The courts determined that ERISA does not apply to vicarious liability actions against HMO's unless plaintiffs claim that the plans erroneously withheld benefits due, according to Steven K. Hoge, M.D., chair of APA's Council on Psychiatry and Law.
Vicarious liability doctrine holds that corporate entities have a responsibility to select competent providers and monitor their performance, Hoge told Psychiatric News.
In Dukes, the court clarified that Congress did not create ERISA as a remedy for medical malpractice suits.
A federal appellate court ruling in Pacificare vs. Burrage in 1995 further distinguished between malpractice claims based on vicarious liability from the administration of plan benefits covered under ERISA.
Moreover, the scope of the ERISA preemption clause was narrowed in a landmark 1995 U.S. Supreme Court case, New York State Conference of Blue Cross/Blue Shield Plans v. Travelers Insurance Co. The court held that state laws were not preempted by ERISA unless they interfered with benefit structure and administration of employee plans, noted Hoge.
He commented, "A handful of cases has opened a crack in the ERISA preemption clause. It remains to be seen how the federal courts will sort out the issue."
(Psychiatric News, May 16, 1997)