Enacted in 1974, the federal Employee Retirement Income Security Act (ERISA) was intended to govern the benefits of employer-paid pension and health funds to ensure that disputes were resolved in a uniform manner. Even now the courts have consistently held that the health benefits provided by HMOs were covered under ERISA. As a result of this interpretation negligence and malpractice suits against HMOs brought in state courts were routinely transferred to federal jurisdictions where they died. Under ERISA rules the greatest recourse and recovery allowed to a plaintiff was to recoup only the cost of the medical treatment being denied! ERISA has provided managed care with the opportunity of maintaining sometimes outrageous and harmful behavior with immunity from significant consequence. In our society there are few more dramatic validations of the observation that “behavior only changes when there are consequences” than this one.
Twenty-one years after the passage of ERISA, and after 21 years of continued patient disenfranchisement from reasonable legal recourse the Supreme Court held, in 1995, that ERISA was meant only to assure the uniform administration of employee-benefit plans and was not intended to replace the role of the state in regulating the quality of the health care. On June 20, 2002 the United States Supreme Court held that states can challenge HMO coverage decisions and hold them responsible for their actions (over the objections of the HMO industry). (Lueck S, Greenberger RS, Rundle R: “Court Backs Patient Appeals In Battle Over HMO Coverage”, Wall Street Journal, June 21, 2002)
On June 21, 2004 the United States Supreme Court settled the issue by unanimously rejecting a Texas case and bared all states from letting patients sue managed health companies (HMOs) whose refusal to pay for treatment resulted in death or injury. The ruling made clear that the only recourse to ERISA was through the Congress of the United States (which initiated the problem in the first place).