[Congressional Record Volume 145, Number 128 (Tuesday, September 28, 1999)]
[House]
[Pages H8951-H8959]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MANAGED CARE REFORM
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 6, 1999, the gentleman from Iowa (Mr. Ganske) is recognized for
60 minutes as the designee of the majority leader.
Mr. GANSKE. Mr. Speaker, we are about 1 week from having at least 1
day of debate here on the floor of the House of Representatives on
managed care reform and, hopefully, we will pass the bipartisan
consensus patient protection bill of 1999.
There has been a lot of talk about what is in this bill, so I want to
go over some of the specifics. And then I want to focus a little bit
about some of the miscommunication that has been put out about the bill
in regards to its liability section, since I was largely responsible
for writing the liability section in a previous bill.
First of all, the bipartisan consensus patient protection bill of
1999 deals with access to care. I think the opponents to this
legislation want to focus on one issue, and that is the liability
provisions. But there is a lot in this bill. This is a comprehensive
bill that is important to the people of this country, and it is part of
the reason why over 300 organizations, patient advocacy groups,
consumer groups, provider groups, have endorsed this bill.
What are some of the provisions in the bill that make this an
excellent bill? First of all, access to emergency services. Individuals
should be assured that if they have an emergency, those services will
be covered by their plan. The bipartisan consensus bill says that
individuals must have access to emergency care without prior
authorization in any situation that a prudent layperson would regard as
an emergency.
What does this mean? Well, this means that if, for instance, an
individual wakes up in the middle of the night and has crushing chest
pain, is hot and sweaty, and that individual happens to remember an ad
put on TV by the American Heart Association that these could be signs
an individual could be suffering from a heart attack, that that
individual can go to the nearest emergency room, pronto, to be treated.
That is what a prudent layperson would define as a potentially
impending fatal heart attack.
Now, the problem that we have had is that a lot of HMOs will say that
if the tests show that the patient is actually not having a heart
attack, even though the symptoms indicated that they were, if the tests
after the fact show that the electrocardiogram was normal, that maybe
the individual was suffering severe inflammation of the esophagus or
the stomach, they say, well, see, the patient was not really having a
heart attack so they did not really need to go.
The problem with that is that when that kind of attitude gets around,
people then start worrying that they are going to be stuck with a big
bill and they may then delay getting the needed care that they need in
an expeditious fashion. The next time it happens it may really be a
heart attack, the individual may delay taking action, and then they may
not make it to the emergency room.
That is the type of thing that we are looking at fixing in this bill.
We did this for Medicare, by the way. This should be a noncontentious
issue. We have already passed that provision for Medicare. Why can we
not apply it to everyone in this country who buys insurance? Especially
those who take up HMO insurance.
How about the provisions for specialty care? Patients with special
conditions should have access to providers who have the expertise to
take care of them. The bipartisan consensus bill allows for referrals
for people to go outside of the plan's network for specialty care at no
extra cost for the enrollee, if there is no appropriate provider in
that health plan. This is really important to a lot of consumer groups,
a lot of patients with certain types of chronic care that need a
specialist. A person with rheumatoid arthritis, for instance.
Chronic care referrals for individuals who are seriously ill or
require continued care by a specialist. A plan should have a process
for selecting a specialist who can be the regular doctor for that
patient, so that every time a patient has to go and see their cancer
doctor they do not have to get a referral from the health plan.
How about women's protections? The bipartisan consensus bill provides
for direct access to obstetricians and gynecologists for services.
Children's protections. The bipartisan bill ensures that the special
needs of children are met, including access to pediatric specialists.
Children are not just little adults. Before I came to Congress, I was a
reconstructive surgeon. I took care of a lot of children with birth
defects. They have special needs. If a child has cancer, that child
ought to have access to a pediatric oncologist.
Continuity of care. Patients should be protected against disruptions
in care because of a change in the plan or a change in the provider's
network status. Let us say a woman is a couple months from delivering.
She has been followed by her obstetrician for two-thirds of her
pregnancy. All of a sudden the plan says, well, we are changing the
plan. This guy or this woman is no longer in the plan. That is a
significant disruption in care.
How about somebody who is dying and they have been followed or taken
care of by a certain physician? There are certain benefits to
continuity of care in terms of quality of care, and we ought to make
sure that people who are right in the midst of complicated treatments
do not have their care disrupted by a plan arbitrarily changing their
physicians.
Clinical trials. This is part of the reason why, for instance, the
American Cancer Society has endorsed the bipartisan consensus managed
care patient protection bill. Access to clinical trials can be crucial
for treatment of an illness, especially if it is the only known
treatment available. Plans under this bill must have a process for
allowing certain enrollees to participate in approved clinical trials,
and the plan must pay for the routine patient costs associated with
those trials. That is in our bill.
{time} 1930
Drug formularies. Prescription medications are not one size fits all.
For plans that use a formulary, beneficiaries should be able to access
medications that are not on that formulary when the prescribing
physician dictates.
Choice of plan. Choice is one of the key elements in consumer
satisfaction with the health system. The bipartisan consensus bill
would allow individuals to elect a point of service option when their
health insurance plan did not offer access to non-network providers.
Any additional costs would be borne by the patient. This is a fair
compromise.
People should be informed about decisions about their health plan
options, and they can only know what their plan is doing if their plan
provides them with sufficient information. This bill requires managed-
care plans to provide important information so that consumers can
understand their plan's policies, their plan's procedures, their plan's
benefits and requirements.
I mean, a lot of opponents to this legislation say, oh, just let the
free market work. Well, the free market is not really working, because
most people do not have a choice for their health plans. Most employers
will select one plan, most frequently on the basis of cost; and then
they will say to the employee, take it or leave it. So it is not like
the employee is getting that choice.
People who are denied care ought to have a reasonable utilization
review process. When a plan is reviewing the medical decisions of its
practitioners, it should do so in a fair and rational manner. This bill
lays out basic criteria for a good utilization review program with
physician participation in the development of the review criteria, the
administration by appropriately
[[Page H8952]]
qualified professionals, timely decisions within 14 days for ordinary
care, up to 28 days if the plan requests additional information within
the first 5 days or 72 hours if they need an urgent decision.
They should have the ability to appeal those decisions, and they
should be able to appeal in a fair process within the plan. And they
ought to have an external appeal so that if at the end of their
utilization review or their internal appeal within their plan and the
plan is still saying, no, we are not going to give you this care and
everything you have read about it and your own physician is telling you
this is prevailing standards of care and you can be harmed without it,
then an individual ought to have access to an external, independent
body with the capability and authority to resolve disputes for cases
involving medical judgment by the plan.
The plan should pay the costs of that process and any decision should
be binding on the plan. And that is what is in our bill. If a plan
refuses to comply with the external reviewer's determination, the
patient should be able to go to Federal court to enforce that decision.
And there could be a penalty. And that is in our bill.
I am going to talk about liability, though, if there is an injury.
There are certain things in this bill that to me, as a physician, are
absolutely essential for good health care. Consumers should have the
right to know all of their treatment options. A few years ago I
gathered together about 50 examples of contractual language from HMOs.
Some plans try to limit the amount of information that you can receive
from your doctor.
Let me give my colleagues an example of how this can work. Let us say
a woman would come to me with a lump in her breast. She would give me
her history. I would examine her breast. Under those types of gag rules
and those contract clauses that some HMOs have put out, before I could
tell this woman what her three treatment options were, one of which
might be more expensive than the other, I would be obligated to first
phone the health plan and say, Mrs. So-and-so has this problem. Can I
tell her about all three treatment options?
I mean, can you think of anything that would be worse in terms of a
patient wondering whether they are being leveled with by their doctor?
I mean, I am not saying that a plan cannot write a specific exclusion
of coverage into their plan.
Let us say that a plan says we are not going to cover liver
transplants. Well, that is a decision that that employer and that
health plan is making. I would hope that an employee would have a
choice to choose another plan.
Let us say that a patient comes in to see me as a physician and their
treatment option is a liver transplant; that is the only thing that
might save their life. Whether their plan pays for it or not, that
patient has a right to know that that treatment is available that could
save their life.
Now, the plan may not like the patient to know that because a patient
might be unhappy about that. But the patient has the right to know
that. That is in our bill.
There should be prompt payment of claims. Health plans should operate
efficiently. There should be paperwork simplification. And finally, let
us get back to the issue of responsibility.
As a Republican, I have voted many times for legislation that would
make people and entities responsible for their actions. I know most of
my Republican colleagues on this side of the aisle feel the same way.
If a criminal commits a murder, that person should be responsible for
his actions. We have passed several pieces of legislation that involve
the death penalty for that type of behavior. That is responsibility.
We passed the welfare reform bill a few years ago. We said, look, if
you are able-bodied and you can work, we will give you some help, some
education. But ultimately it is your responsibility to go out and
support your family. That is responsibility.
We have a situation here where, because of a law that was passed by
Congress 25 years ago, employer health plans are not responsible for
their medical decisions that can result in injury. That sort of seems
unbelievable, does it not? I mean, the only health plans in the country
that have that kind of exemption from liability, from responsibility
for injury that they can incur on a patient because of their decisions
are employer group health plans.
The Members of Congress receive their insurance through what is
called the Federal Employee Health Benefit Plan. Do you know what? If
our plans are not providing care, then a Member of Congress could sue
that health plan if that health plan resulted in injury to a
Congressman's family. Because it is not an ERISA plan, it is not one of
those employer plans. Other Government employees have the same right.
Church groups, for instance, that provide health benefits for their
employees, those health plans are not free of any responsibility. When
an insurance company sells a health policy to an individual and is
under State insurance regulation, they are not free of responsibility
for injuries that can result from their medical decisions. It is only
these plans that, by a 25-year-old Federal law, gave an exemption for
liability that they can cause injury to a patient, they can arbitrarily
define what ``medical necessity'' is, and you have no recourse other
than to recover the cost of the treatment that was not provided, which,
by the time you could get through that procedure might mean that you
are dead.
Let me give my colleagues an example of what I am talking about. This
is a little baby that I have treated before. I treated him for cleft
lip palate, a birth defect. The standard treatment for this is surgical
correction, both of the lip and of the palate. There is a functional
reason for that. Without that surgical correction, if you eat, food
comes out of your nose and you cannot speak correctly. And speech is an
absolutely essential part of our culture.
So all insurance companies that I know of in the past, traditional
insurance companies, do not consider correction of this birth defect,
do not consider correction of this birth defect, a cosmetic procedure.
This is a reconstructive procedure.
But under this Federal law that I am talking about, the ERISA law,
the Employee Retirement Income Security Act, from about 5 years ago, an
employer plan can define ``medical necessity'' as ``the cheapest, least
expensive care,'' and they could say, no, we are not going to authorize
a surgical repair for this birth defect. We are just going to give this
little kid a piece of plastic to shove up into the roof of his mouth,
something like an upper denture, and maybe that will help keep the food
from coming out of his nose.
And do my colleagues know what? They would have no legal recourse to
challenge that HMO. That is Federal law that allows them to do that.
You could say that medical decision you are making, that medical
judgment of ``medical necessity'' is wrong; it does not fit any of the
proscribed norms for treatment. And it results in injury to this child.
Because if he does not get his palate corrected, really, by about the
age of one, he may have a speech impediment the rest of his life. And
do my colleagues know what? They would have no legal recourse under
that Federal law. That is wrong. That is not justice.
Let me give my colleagues another case. We have here a little boy who
is tugging on his sister's sleeve. This picture was taken shortly
before he was 6 months old. When he was 6 months old, one night about 3
in the morning he had a temperature of about 105 and he was pretty
sick. And this beautiful little boy, looking so sick, caused his mother
to phone the HMO and say, my little boy Jimmy is sick. He has a
temperature of 104, 105. I need to take him to an emergency room.
She was on a 1-800 number, somebody thousands of miles away, who
said, well, you know, when we look at your State, this was in Georgia,
I can authorize you to go to this emergency room. And the mother said,
well, that is fine. But where is it? Well, I do not know. Look at a
map.
It turns out that the authorized emergency room was 70-some miles
away, clear on the other side of Atlanta, Georgia. The mother knew that
if she went and took him to another emergency room that is not
authorized, they would be stuck with a great big hospital bill. So she
wraps up little Jimmy. Ma and Dad get in the car and they start their
trip, 3 in the morning. And about halfway there, they pass
[[Page H8953]]
three hospitals that have emergency rooms and great pediatric care
facilities. But they do not stop because they have not received
authorization from that HMO reviewer who made a medical judgment over
the phone. The medical judgment was Jimmy is okay to travel 70 miles on
a prolonged ride.
Before they get to the authorized hospital, little Jimmy has a
cardiac arrest. His heart stops. He is not breathing. Picture Mom
trying to resuscitate him. Dad is driving like crazy. They finally pull
into the emergency room entrance. Mom leaps out of the car with little
Jimmy, screaming, Save my baby. Save my baby.
A nurse runs out, gives him mouth-to-mouth resuscitation. They start
the IVs. They pound his chest. They resuscitate him, and they get him
back and they manage to safe his life.
{time} 1945
Except they cannot quite save all of little Jimmy. Because he had
that cardiac arrest, he ends up with gangrene of both hands and both
feet, and both hands and both feet have to be amputated. This is a
consequence of the medical judgment, the medical decision that that HMO
reviewer at the end of a thousand-mile, 1-800 number made.
A judge reviewed this case. Of course under ERISA, the plan is liable
for nothing other than the cost of the amputations. But a judge
reviewed the case, and he came to the conclusion that the margin of
safety for this HMO was, as he put it, ``razor thin.'' I would add to
that, as razor thin as the scalpel that had to amputate little Jimmy's
hands and feet.
The opponents to this legislation who want to maintain this type of
legal immunity, they refer to cases like James Adams as ``anecdotes.''
They say, ``Oh, don't legislate on the basis of anecdotes.'' I look at
this little boy, and I think, is this an anecdote? I mean, this little
boy is never going to play basketball. I tell the Speaker of the House,
this little boy will never be able to get on the wrestling mat. This
little boy when he grows up and he marries the woman that he loves will
never be able to caress her face with his hand. This anecdote that the
HMOs say we should not legislate on, if he had a finger and you pricked
it, he would bleed.
This is not just that a health plan can make that type of medical
judgment and not be responsible for the injury that results. Plans
should be more careful than that. The liability part is the enforcement
mechanism to ensure that plans are more careful.
Now, look. The point of showing little Jimmy Adams is not necessarily
to say that we need a lawsuit. My point is this: We need a mechanism to
prevent this type of tragedy from happening. And we need the
encouragement to the HMOs to follow that process. And the process would
work like this: If somebody has an illness and they have a denial of
care by their HMO and they go through that internal appeals process and
they are still not satisfied, they can take that to an independent
panel which would make a determination on medical necessity. We know
from where this type of process has been set up that more than half of
the time, the independent appeals boards agree with the health plan on
the denial of care. But 50 percent of the time they agree with the
patient. And if they agree with the patient and they tell them, the
health plan, you should provide this treatment and the health plan does
that, then under our bipartisan, common sense, compromise bill, that
health plan is free of any punitive damages liability because they are
simply following the independent external appeals recommendation. That
is something that would be available for all health plans, whether they
are ERISA plans or plans that are selling to individuals. That is a
fair compromise on this issue. But if they do not follow those
recommendations and you end up with an injury like this, then the plan
is going to be liable under that State's laws, just as if they had sold
that policy to the Adams family on their own, as individuals, rather
than through their employer.
I hear an awful lot from the opponents to this legislation that you
are just going to make the employers liable. Well, I would refer
colleagues from both sides of the aisle to the actual bill, to page 97.
We say that health plans are not exempted from liability. Health plans
are not. But as long as the employer has not entered into that
decision-making by that HMO, then the employer is not liable.
Madam Speaker, I have here a legal brief from the law firm of
Gardner, Carton & Douglas which discusses this liability provision in
some detail for the Norwood-Dingell bill.
Let me just summarize what this says on the liability provisions.
This says, ``Managed care industry miscommunications on this
liability provision do not present an accurate analysis of the plan
sponsor protections in the bill. The HMO industry claims the bill would
subject plan sponsors, i.e., the employers, to a flood of lawsuits in
State courts over all benefits decisions under their group health
plans, and suggest that plan sponsors would be forced to abandon their
plans. All of this is incorrect, for the following reasons.''
This is just a summary.
First, almost all lawsuits would not be against plan sponsors. Under
current ERISA preemption law, suits seeking State law remedies for
injury or wrongful death of group health plan participants are already
allowed in numerous jurisdictions. Those cases show that these suits
are normally brought against the HMO, not against the employer. The
employers are generally not involved in ``treatment'' decisions that
lead to a plan participant's, to the employee's, injury or death.
``Ordinary'' benefit decisions, such as whether to reimburse particular
medical expenses, are not affected by our bill.
Second, the plan sponsor exposure would be limited. If a plan
sponsor, i.e., the employer, exercises discretion in making a benefit
claim decision and that decision results in injury or wrongful death,
section 302(a) in our bill makes an exception to ERISA to allow a State
claim. However, to recover, a plaintiff, the patient, or his family
must first prove that the sponsor exercised discretion which resulted
in the injury or death and then must prove all elements of a State law
cause of action based on the sponsor's conduct in making the decision
on that particular claim. The plaintiff must have a viable State law
cause of action because our bill only creates an exception to ERISA
preemption. It does not create a new cause of action.
Third. The statute's ``plain meaning'' limits plan sponsor liability.
The provisions in our bill that protect plan sponsors would be
interpreted under the Supreme Court's well-established ``plain
meaning'' analysis. Such an analysis supports the bill's clear
intention to continue to preempt any State law liability suits against
employers that do not involve an exercise of discretion by them in
making a decision that results in injury or death. Other types of
``discretionary'' plan sponsor action would not be affected and would
not be subject to State law liability claims.
Finally, the private sector health care would not be destroyed. The
limited legal exposure of employers under this bill will not cause them
to abandon group health plans. The experience of retirement plans and
``non-ERISA'' plans, group health plans, support that conclusion. Plan
sponsors would not need to abandon all control over group health plans
to remain protected.
Madam Speaker, I include the foregoing document in its entirety for
the Record:
[Memorandum]
From: Gardner, Carton & Douglas.
Date: September 27, 1999.
Subject: Liability of Plan Sponsors Under the Norwood-Dingell
Bill (H.R. 2723).
You have asked us to analyze whether Section 302(a) of H.R.
2723, the ``Bipartisan Consensus Managed Care Improvement Act
of 1999'' (the ``Bill'') could subject employers or others
(such as labor organizations) who sponsor group health plans
(``plan sponsors'') to potential liability under State law,
for injuries or deaths resulting from coverage decisions
under group health plans that they sponsor. As part of our
analysis, you asked us to consider letters that have been
prepared by some law firms for lobbying groups that are
opposed to the Bill (the ``managed Care Letters'').
The Managed Care Letters do not focus on the central
purpose of Section 302(a) of the Bill. That purpose is to
fill an unintended gap under the Employee Retirement Income
Security Act of 1974 (``ERISA''), by creating accountability
for managed care organizations (``MCOs'') and others who make
treatment decisions or provide services for participants in
group health plans subject to ERISA. The gap results from
judicial interpretations of ERISA which prevent the
application of State law remedies that otherwise would
redress an injury or death caused by
[[Page H8954]]
improper administration of a group health plan. Case law
rules which attempt to define the limits of ERISA preemption
in these circumstances are complex and differ from
jurisdiction to jurisdiction. The Managed Care Letters shift
attention from addressing this problem by characterizing
Section 302(a) as an ``employer liability'' provision. Based
on our analysis of Section 302(a), such a characterization is
incorrect.
Exeuctive Summary
Protection for plan sponsors. The protection for plan
sponsors included as part of Section 302(a) provides a
meaningful and workable limitation on the potential State law
liabilities otherwise allowed by the Bill.
Effect on ERISA preemption. Section 302(a) creates a
limited exception to ERISA's general ``preemption'' of State
laws that relate to employee benefit plans. The exception
only applies to State law causes of action against any person
based on personal injury or wrongful death resulting from
providing or arranging for insurance, administrative services
or medical services by such person to or for a group health
plan. It does not disturb ERISA preemption of State law
actions against a plan sponsor, except for actions based
on the sponsor's exercise of discretion on a participant's
claim for plan benefits resulted in personal injury or
wrongful death of a participant. Other discretion by plan
sponsors under a group health plan is not affected by
Section 302(a).
The Bill's limited exception to ERISA preemption is not an
``employer liability'' provision. The Managed Care Letters do
not present an accurate analysis of the plan sponsor
protections in the Bill. They claim the Bill would subject
plan sponsors to a flood of lawsuits in State courts over all
benefits decisions under their group health plans, and
suggest that plan sponsors would be forced to abandon their
plans. All of this is incorrect, for the following reasons:
1. Most lawsuits would not be against plan sponsors. Under
current ERISA preemption law, suits seeking State law
remedies for injury or wrongful death of group health plan
participants are already allowed in numerous jurisdictions.
Those cases show that these suits are normally brought
against MCOs--not against plan sponsors. Plan sponsors are
generally not involved in ``treatment'' decisions that lead
to a plan participant's injury or death. ``Ordinary'' benefit
decisions (such as whether to reimburse particular medical
expenses) are not affected by the Bill.
2. Plan sponsor exposure would be limited. If a plan
sponsor exercises discretion in making a benefit claim
decision under its group health plan, and that decision
results in injury or wrongful death, Section 302(a) makes an
exception to ERISA preemption to allow a State law claim
against the sponsor. To recover, though, a plaintiff must
first prove that the sponsor exercised discretion which
resulted in the injury or death, then must prove all elements
of a State law cause of action, based on the sponsor's
conduct in making the decision on that particular claim for
benefits. The plaintiff must have a viable State law cause of
actions because Section 302(a) only creates an exception to
ERISA preemption, and does not create a separate cause of
action.
3. The statute's ``plain meaning'' limits plan sponsor
liability. The provisions in Section 302(a) that protect plan
sponsors would be interpreted under the Supreme Court's well-
established ``plain meaning'' analysis. Such an analysis
supports the Bill's clear intention to continue to preempt
any State law liability suits against plan sponsors that do
not involve an exercise of discretion by them in making a
benefit claim decision resulting in injury or death. Other
types of ``discretionary'' plan sponsor action would not be
affected and would not be subject to State law liability
claims. Interpretations of Section 302(a) which characterize
it as a broad ``employer liability'' provision require one to
ignore critical elements of Section 302(a), in violation of
``plain meaning'' analysis.
4. Private-sector health care would not be destroyed. The
limited legal exposure of plan sponsors under Section 302(a)
will not cause them to abandon group health plans. The
experience of retirement plans and ``non-ERISA'' group health
plans supports this conclusion. Plan sponsors would not need
to abandon all control over a group health plan to remain
protected. Having MCOs or other third parties make all claims
decisions (as is often done), and then monitoring the
third party preserves the sponsors' control. Or, sponsors
could make the claims decisions and insure their exposure.
Discussion
1. BACKGROUND
Relevant ERISA provisions. Section 502(a)(1)(B) of ERISA
gives participants in an employee benefit plan subject to
ERISA (including a group health plan) the right to sue: (i)
to recover benefits due to them, (ii) to enforce their rights
under the terms of the plan, or (iii) to clarify their rights
to future benefits. Section 503 of ERISA and the regulations
under that Section require every employee benefit plan to
have procedures for notifying plan participants of denials of
benefits and for appeals from such denials. Section 514(a) of
ERISA states that the provisions of ERISA will supersede
(``preempt'') any and all State laws which ``relate to''
employee benefit plans which are covered by ERISA.
Under these ERISA provisions, the Supreme Court and other
federal courts have developed the following rules:
With limited exceptions, a participant must ``exhaust'' the
ERISA claims appeal procedures under Section 503 before
bringing a suit under Section 502(a)(1)(B). McGraw v.
Prudential Insurance Co., 137 F.3d 1253, 1263-64 (10th Cir.
1998); Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d
588, 594-95 (2d Cir. 1993).
The ERISA causes of action are a participant's exclusive
remedy to seek benefits or contest the administration of an
employee benefit plan which is covered by ERISA. Pilot Life
Insurance Co. v. Dedeaux, 481 U.S. 41, 47-57 (1987).
State causes of action which seek to mandate benefits
structures or administration of plans covered by ERISA are
preempted, as are those which seek alternatives to ERISA's
enforcement mechanisms. N.Y. State Conference of Blue Cross &
Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645,
657-58 (1995).
Under the ERISA causes of action, a participant or
beneficiary can recover benefits to which he or she is
entitled and certain other equitable relief. Other
compensatory, non-economic or punitive damages are not
available. Mertens v. Hewitt Associates, 508 U.S. 248, 255-62
(1993).
Managed care and ERISA. In the traditional ``fee-for-
service'' group health plan that was prevalent when ERISA was
enacted in 1974, a lawsuit based on personal injury or
wrongful death arising from treatment under the plan did not
implicate ERISA. The participant received the care prescribed
by his or her doctor, with payment made or reimbursed by an
insurer. If there was a bad medical result, the participant
could sue the medical care provider.
Managed care arrangements, which became prevalent only
after ERISA's enactment, place an intermediary between the
group health plan participant and the medical care that is
provided. MCOs, through their protocols and ``utilization
review'' procedures, make decisions affecting every aspect of
the patient's treatment, including decisions on medical
procedures, facilities utilized, access to specialists,
length of stay, and drug prescriptions. The consequence of an
improper or negligent decision on any of these matters can be
injury or death to the patient.
Today, an employer that establishes a group health plan
often arranges for an MCO to provide the benefits to plan
participants or beneficiaries. The employer may pay the MCO
on a capitated basis or it can ``self-insure'' by paying the
cost of treatment provided by the MCO.
ERISA preemption and MCO accountability. The combination of
ERISA preemption and the use of MCOs by group health plans to
provide benefits has produced a startling and unintended
result. The MCO used by a group health plan may make a highly
negligent treatment decision, and a participant may be
injured or die as a result. If the MCO's actions are treated
as acts of administration of an ERISA-covered plan, and
therefore qualify for protection under ERISA preemption, the
MCO is not accountable at law for the injury or death which
results from its actions.
This is because the State law remedies are preempted by
ERISA, and the only remedies under ERISA are the plan
benefits to which the participant is entitled. The ERISA
remedy is usually meaningless after the injury or death has
occurred. Thus, an ERISA group health plan participant can
suffer a ``wrong without a remedy.'' See Corcoran v. United
HealthCare, 965 F.2d 1321 (5th Cir. 1992); Kuhl v. Lincoln
National Life, 999 F.2d 298 (8th Cir. 1993); Spain v. Aetna
Life Insurance Co., 11 F.3d 129 (9th Cir. 1993).
This result can only occur if the patient is covered by a
plan that is subject to ERISA. Group health plans maintained
by federal, state and local governments, or by church
organizations, are not subject to ERISA--and aggrieved
participants in those plans can sue MCOs in state courts. So
can individuals covered by Medicare, Medicaid or by insurance
coverage that they purchase themselves. Thus, the interplay
of ERISA preemption provisions and managed care practices has
created a situation where participants in ERISA plans are the
only Americans with health care coverage who cannot go to
court to hold MCOs accountable for their negligent or
wrongful actions.
Some federal courts have recognized this unintended and
illogical situation, and have tried to distinguish MCO
activities that involve administration of ERISA-covered plans
for MCO activities that inolve medical decision-making and
the practice of medicine. See, e.g., Dukes v. U.S. HealthCare
Inc., 57 F.3d 350 (3rd Cir. 1995). these decisions have
allowed injured patients or survivors of decreased patients
to bring state court actions agaisnt MCOs in some
jurisdictions, in some circumstances. However, courts taking
this approach are forced to engage in a difficult hair-
splitting analysis of whether the claim at issue involves the
``quantity'' of benefits a patient received or the
``quality'' of those benefits--with preemption in the
``quantity'' case, and no preemption in the ``quality''
cases. Recent cases show how problematic this analysis is,
with different results occurring with similar facts. Compare,
for example, the decision in Moscovitch V. Danbury Hospital,
25 F. Supp. 2d 74 (D. Conn. 1988), with the decision in Huss
v. Green Spring Health Services, Inc., 18 F. Supp. 2d 400 (D.
Del. 1998). In both cases, an MCO decision was alleged to
have led to the suicide of a family's son. In Moscovitch,
the State law
[[Page H8955]]
claims were permitted, but in Huss they were held to be
preempted by ERISA.
MCO accountability to participants in ERISA-covered group
health plans should not depend on such hair-splitting.
Nothing in ERISA or its legislative history suggests that
ERISA-which was passed to protect plan participants--was
intended to put plan participants in a worse position than
other Americans with health care coverage.
Section 302(a) of the Bill. Section 302(a) of the Bill
addresses this problem by carefully supplementing the ERISA
preemption rules, with a new ERISA Section 514(e). The new
provision first provides, in Section 514(e)(1)(A), that ERISA
will not preempt an action under State law to: recover
damages resulting from personal injury or for wrongful death
against any person--(i) in connection with the provision of
insurance, administrative services, or medical services by
such person to or for a group health plan * * * or (ii) that
arises out of the arrangement by such person for the
provision of such insurance, administrative services, or
medical services by other persons.
Next is Section 514(e)(2)(A), a special rules expressly
intended to protect plan sponsors. It fully restores ERISA
preemption with respect to: any cause of action against an
employer or plan sponsor maintaining the group health plan
(or against an employee of such an employer or sponsor acting
with the scope of employment).
Finally, Section 514(e)(2)(B) states that the Section
514(e)(2)(A) protection for plan sponsors will not bar State
law causes of action otherwise allowed by Section 502(e)(1),
if: (i) such action is based on the employer's or other plan
sponsor's (or employee's) exercise of discretionary authority
to make a decision on a claim for benefits covered under the
plan * * * and (ii) the exercise by such employer or other
plan sponsor (or employee) of such authority resulted in
personal injury or wrongful death. [Emphasis added.]
II. ANALYSIS
A. How likely are lawsuits against plan sponsors?
the structure of the proposed new ERISA Section 514(e), and
the actual case law experience in jurisdictions which have
allowed some suits against MCO's by participants in ERISA
group health plans, both indicate that the ``flood'' of
litigation against plan sponsors predicted in the Managed
Care Letters is unlikely to occur.
Most group health plan benefit claims would be unaffected.
New ERISA Section 514(e)(1) would permit state court suits
against a person only where there is a personal injury
or wrongful death. The vast majority of the ``benefit
claims'' under group health plans do not involve personal
injury or wrongful death, but instead involve matters such
as: whether a person is eligible as a participant under
the plan, attempts to secure pre-approval for a particular
medical procedure or course of treatment; and claims for
reimbursement of medical expenses already incurred by the
participant or beneficiary.
These disputes are untouched by the Bill. They are still
subject to the ERISA Section 503 claims and appeals
procedures (including the alternative procedures provided by
the Bill), and then (following exhaustion of the Section 503
procedures) could be pursued only in a suit under ERISA
Section 502(a)(1)(B), where the plaintiff could only seek the
limited remedies available under ERISA.
No cause of action available against plan sponsors in many
cases. Putting aside the bulk of group health plan disputes,
which stay within current ERISA procedures (including the
alternative procedures provided by the Bill), we can turn to
those which do involve allegations of personal injury or
wrongful death. How likely is it that a plan sponsor will be
sued in state court if such suits are permitted under new
ERISA Section 514(e)(2)(B)?
Since 1994, a number of jurisdictions have allowed some
state lawsuits based on personal injury or wrongful death of
ERISA plan participants. Numerous suits like this have been
brought, with some allowed to go forward in state court and
others found to be preempted by ERISA. We have reviewed every
reported opinion involving such a case.
As we analyzed the facts of these cases, as set out in the
reported opinions, we found that the plan sponsor was almost
never shown or described as a defendant. Specifically, in
only two of the 75 cases we reviewed was there anything to
indicate that the plan sponsor was sued, even though the plan
sponsor might have selected the MCO and/or retained final
discretion on claims appeals. Every other conceivable party
seems to have been sued in these cases, including doctors,
nurses, hospitals, MCOs and equipment manufactures, but not
plan sponsors.
Why aren't plan sponsors (employees) typically sued? The
reason why plan sponsors are not sued in these cases is
probably because the personal injury or wrongful death occurs
as a result of MCO actions in which the plan sponsor is not
involved. The plan sponsor is not a part of the faulty
diagnosis, the premature discharge, the use of the
inappropriate drug or procedure, the refusal to admit, or the
delay in surgery. It is these events which cause the alleged
injuries and deaths. These are the well-publicized cases
which have led congress to consider managed care reform.
However, these are not plan sponsor decisions and are not
likely to support a cause of action against the plan sponsor
under the Bill's limited exception to ERISA preemption.
More specifically, the state law causes of action likely to
be pleaded in situations like this have specific elements,
all of which have to be established against a defendant. Many
of the cases brought against MCOs are medical malpractice
cases which would be inapplicable to plan sponsors (except,
perhaps, where the group health plan actually operated a
hospital or clinic). Negligence actions require a duty of
care, as established by law, and a breach of that duty
which is a proximate cause of the injury. Wrongful death
statutes typically require a wrongful act which would have
been actionable by the decedent, and which caused his or
her death. The MCO actions attacked in the cases we
reviewed could support such claims against an MCO, but not
a plan sponsor. That is why plan sponsors were not
defendants in the cases we reviewed, and why it seems they
are not likely to be sued in similar situations if the
Bill is enacted.
``Emotional distress'' claims. A related point which should
be addressed is whether the Bill would permit a suit against
a plan sponsor based on ``emotional distress.'' One of the
Managed Care Letters suggests that a participant could seek
mental health benefits, be denied, then sue in state court
for ``denied benefits, emotional distress and lost job
opportunities.''
Such a suit would not survive a motion to dismiss. While
state courts may permit recovery for ``emotional distress''
or ``mental anguish'' without an accompanying physical
injury, the proposed Section 514(e)(1)(A) requires a suit
``for personal injury or for wrongful death'' before there is
any preemption of ERISA. ``Personal injury'' means ``physical
injury'' (including physical injury arising out of treatment
or non-treatment of mental disease). Therefore, absent
physical injury, ``emotional distress'' is not enough to
trigger the exception to preemption, and the state law claims
are absolutely barred by Pilot Life.
The preceding analysis actually shows how effectively
proposed Section 514(e) would work. First, the requirements
for the exception to ERISA preemption (including the plan
sponsor exercising discretion which results in personal
injury or wrongful death) must be met; then all the elements
of an applicable State law cause of action must be satisfied.
Where State law suit against plan sponsor would not be
preempted. Without question, a plan sponsor could engage in
conduct where it could be sued under the proposed new Section
502(e). For example, a participant could seek a cutting-edge
cancer treatment, be denied and appeal to the plan sponsor's
``Benefits Committee.'' If that Committee denied the appeal
and the participant died, a wrongful death action could be
brought. But the plaintiff would have to prove the state law
claim--showing, for example, that the Committee decision was
in violation of a legal ``duty of care'' owed to the
participant, and that it was the ``proximate cause'' of the
participant's death. Cases like this occur, but they are not
everyday matters, even in a large group health plan. The plan
sponsor can insure against such liability, and can establish
claims appeal procedures to build a record which can
withstand scrutiny. In the alternative, it can transfer the
appeals function to a third party with medical expertise, and
monitor that entity's performance.
Once the scope and operation of the Bill's exception to
ERISA preemption is examined, and once the characteristics of
current suits against MCOs are reviewed, concerns about a
``flood'' of lawsuits against plan sponsors under the Bill
should greatly diminish.
B. How likely is an interpretation of the Bill allowing
broad plan sponsor liability?
Arugments in the Managed Care Letters. Ignoring both the
limited scope of the proposed changes to ERISA and the
detailed plan sponsor protection, the Managed Care Letters
predict dire consequences from the Bill. They argue that the
plan sponsor protections will be illusory, and that the Bill
would subject plan sponsors to potential State court
litigation over every coverage decision under a group health
plan. The Managed Care Letters go on to state that this broad
liability for plan sponsors would put them in an untenable
position and make group health plans unworkable. Several
arguments are made in support of these assertions.
``Discretion''. The Managed Care Letters suggest that,
because ``discretionary action'' can occur in many contexts
under ERISA, virtually any plan sponsor action regarding a
group health plan will involve an ``exercise of discretionary
authority'' that would make the plan sponsor subject to State
law actions.
Imputed actions. The next argument is that under general
agency concepts, the actions of a decision-maker, such as an
MCO third party would be ``imputed'' to the employer, and the
employer would thereby be deemed to have made an ``exercise
of discretionary authority to make a decision on a claim for
benefits covered under the plan.''
Retained control. Similarly, it is argued that, in reality,
a plan sponsor will always retain some control over the
actions of the MCO, and therefore will always be deemed to
have exercised discretionary authority to make a decision on
a claim for benefits covered under the plan.
Each of these objections can be addressed by applying the
``plain meaning'' rule of statutory construction to the
proposed new ERISA Section 514(e).
Plain meaning--overview. The new ERISA Section 514(e)
contained in the Bill, if enacted, would be subject to a
well-established
[[Page H8956]]
rule of statutory interpretation which focuses on the ``plain
meaning.'' This rule would strongly support the Bill's clear
intention to prevent State law liability for plan sponsors
that do not directly exercise discretion in making a benefit
claim decision under their group health plan. Other types of
``discretionary'' plan sponsor actions would be well outside
of the scope of the plain meaning of proposed Section
514(e)(2)(B).
The Supreme Court has repeatedly confirmed that the
starting point to determine the meaning of a federal statute
is the plain language of the statute itself. See, e.g.,
Central Bank of Denver v. First Interstate Bank of Denver,
511 U.S. 164, 171 (1994). If a court finds that this
statutory language is unambiguous, the inquiry should be
complete. See, e.g., Ardestani v. Immigration and
Naturalization Service, 502 U.S. 129, 135 (1991).
Most importantly, with regard to the overbroad,
hypothetical interpretations of proposed Section 514(e) found
in the Managed Care Letters, the Supreme Court has confirmed
that ``assertions of ambiguity do not transform a clear
statute into an ambiguous provision,'' and that courts must
be skeptical of clever readings of a statute that are based
on ``ingenuity.'' United States v. James, 478 U.S. 597, 604
(1986). The Supreme Court has similarly stated that a statute
can be viewed as unambiguous ``without addressing every
interpretative theory offered by a party.'' Salinas v.
United States, 118 S. Ct. 469 (1997).
This ``plain meaning'' approach has been used by the
Supreme Court in a number of recent cases reviewing disputes
involving federal employment laws. See, e.g., Hughes Aircraft
Company v. Jacobson, 199 S. Ct. 755 (1999) (dispute under
ERISA); Sutton v. United Air Lines, 119 S. Ct. 2139 (1999)
(dispute under the Americans with Disabilities Act); Murphy
v. United Parcel Service, 119 S. Ct. 2133 (1999) (same).
Plain meaning--applied to ``discretion.'' The Bill contains
clear, straightforward language that allows State law actions
otherwise allowed by the Bill to apply to a plan sponsor only
when it engages in a direct exercise of discretionary
authority to make a decision ``on a claim for benefits
covered under the plan.''
To begin, the structure of proposed Section 514(e) is
straightforward. New Section 514(e)'s structure of (1) rule,
(2) exception, and (3) exception-to-the-exception, is orderly
and understandable.
The Managed Care Letters argue that, under ERISA Section
3(21)(A), many types of ``discretion'' can create a fiduciary
status for a person administering an employee benefit plan.
This is true, but it is irrelevant to the plan sponsor
protection provided by the Bill. Under the bill's literal
language, plan sponsor protection is not lost whenever there
is some exercise of discretion by a plan sponsor. It is only
lost when there is plan sponsor discretion on ``a decision on
a claim for benefits covered under the plan.''
The Managed Care Letters argue that, even with respect to
discretion on claims for benefits, the Bill will be construed
to broadly allow suits against plan sponsors under State law,
because the plan sponsor may be viewed as ``indirectly''
exercising this discretion, for instance, by appointing the
MCO which actually exercises discretion. Such an
interpretation would read the words of Section 514(e)(2)(B)
right out of the statute. This is precisely what is
prohibited by the ``plain meaning'' rule.
In addition, the Bill carves out, in new Section
514(e)(2)(C), several specific plan sponsor activities which
will not, in any event, constitute an exercise of
discretionary authority on a benefit claim. They are: (i)
decisions to include or exclude any specific benefit from the
plan; (ii) decisions to provide extra-contractual benefits
outside of the plan; and (iii) decisions not to consider the
provision of a benefit while an internal or external review
of the claim is being conducted. These carve-outs further
insulate plan sponsors from State law actions in ``close
call'' situations.
Plain meaning--applied to ``imputed actions'' and
``retained control.'' It is unrealistic to argue, as the
Managed Care Letters do, that under general ``agency law''
concepts, actions of a third party decision-maker, such as an
MCO, would be ``imputed'' to the plan sponsor, who would then
be deemed to have made an ``exercise of discretionary
authority'' on a claim for benefits covered under the plan,
through the appointment or under some notion of ``ultimate
control'' of the group health plan.
There are two flaws in this argument. First, proposed ERISA
in Section 514(e)(2)(A) clearly shields plan sponsors from
the exception to ERISA preemption in Section 514(e)(1). If
proposed Section 514(e)(2)(B)--which is set up as an
exception to that shield--made plan sponsors subject to State
law suits for the acts of others, plan sponsors would be in
the same place as MCOs and others against whom State law
suits would be allowed under Section 514(e)(1). This
interpretation found in the Managed Care Letters would
impermissibly read the exception right out of the statute and
make the clear language of Section 514(e)(1)(A) meaningless.
This is exactly what is prohibited by the ``plain meaning''
rule of statutory construction--as well as by common sense.
In addition, the Managed Care Letters cite no relevant
legal authority to support this interpretation. We reviewed
the list of cases which one Managed Care Letter cites as a
``solid common law basis'' for its argument. What these cases
deal with is an MCO's liability for the acts of health care
providers which it employs or supervises. They have nothing
to do with the relationship between plan sponsor and a
service provider to its group health plan.
Therefore, we think that use of an ``agency'' or similar
argument to expand the scope of plan sponsor exposure would
be fundamentally at odds with the structure and plain meaning
of Section 302(a).
C. How likely is it that plan sponsors would terminate
group health plans under the Bill?
A perennial argument. The perennial argument against
changes to employee benefits laws is that the changes will
cause plan sponsors to abandon their plans. (Opponents to
ERISA predicted that it would destroy the entire private-
sector retirement plan system. It did not.) With regard to
the Bill, the experience of ``non-ERISA'' group health plans
and of retirement plans subject to ERISA indicates that new
ERISA Section 514(e) would not cause wholesale terminations
of group health plans.
What experience shows. ``Church plans'' provide a good
reference. Under ERISA Sections 4(b)(2) and 3(33), an
employee benefit plan sponsored by a church organization is
not subject to ERISA. Church organizations routinely sponsor
group health plans, and many utilize MCOs. With ERISA
preemption unavailable to them, these church-sponsors are
always potential targets for the kind of suits the Managed
Care Letters direly predict. Yet churches continue to sponsor
group health plans.
Sponsors of retirement plans subject to ERISA can be
subject to suits over the use or investment of plan assets,
with huge potential liabilities for breaches of ERISA
fiduciary duty. For example, a major bank was recently sued
for over $100 million in alleged losses to participants in
its ``401(k)'' retirement plan, based on the fee structure
and other issues related to the plan's investment options.
Franklin v. First Union Corp., Civil Action No. 3-99CV610,
E.D. Virginia (September 7, 1999). To our knowledge, no one
is suggesting that employers will now abandon their
``401(k)'' or other retirement plans in the face of such
potential liabilities.
Maintaining plan sponsor control. Nor do plan sponsors need
to ``abandon all control'' of the retirement plans to avoid
fiduciary liability. The investment management of retirement
plan assets is a good example. More and more, sponsors of
retirement plans have put the management of plan assets in
the hands of banks, insurance companies and other
professional investment managers. Plan sponsors engage in
careful manager searches, establish investment policies
and review the performance of the investment managers and,
where they deem it appropriate, change managers. The plan
sponsor then does not make day-to-day investment
decisions, but it certainly does not abandon control over
this plan function.
In the same say, a group health plan sponsor can choose an
MCO, and provide for it to have final authority over benefit
claims. The plan sponsor monitors the MCO's performance,
including its medical outcomes, and can change MCOs if it is
dissatisfied with the care provided by the MCO. In such a
situation, the plan sponsor would not have potential
liability under proposed ERISA Section 514(e), but would
certainly retain control over the operation of its group
health plan.
Therefore, based on the experience of ``non-ERISA'' group
health plans and ERISA retirement plans, it seems highly
unlikely that the Bill's State law liability provisions would
mean the end of employer-sponsored group health plans, or
that employers would be forced to abandon control of those
plans.
Conclusion
Our analysis shows that Section 302(a) of the Bill, if
enacted, would not expose plan sponsors to State law
liability in most situations. Only to the extent that a plan
sponsor directly exercised discretion in making a benefit
claim decision under its group health plan, and to the extent
that an improper decision then resulted in injury or wrongful
death, would there be an exception to ERISA preemption which
allowed a State law claim to be brought. This potential
liability is consistent with general principles of tort law,
where parties are liable for the consequences of their
negligent actions.
Most benefits decisions in which plan sponsors participle
are outside the scope of proposed new ERISA Section 514(e). A
personal injury or wrongful death is required before a state
law claim is allowed. Thus, claims seeking prior approval of
specific benefits, or seeking reimbursement of medical costs
already incurred, or seeking to clarify a person's status as
a plan participant would continue to be handled through the
existing ERISA claim and appeal procedures.
Where there is personal injury or wrongful death, and a
State law suit against an employer is permitted, there must
be an applicable state law cause of action--nothing in
Section 302(a) creates an independent cause of action. If
there is a potential state law claim, it will still be
preempted by ERISA unless the plaintiff can show (1) that the
plan sponsor exercised discretionary authority over a claim
for benefits in the case at issue, and (2) the exercise of
discretion resulted in personal injury of wrongful death.
Our review of the cases where ERISA plan participants have
filed suit for personal injury or wrongful death indicates
that, most commonly, patients are injured or die in
circumstances where the plan sponsor is not involved. It is
not the plan sponsor's Benefits
[[Page H8957]]
Committee which sends the mother home from the hospital with
her sick newborn child, or refuses to scheduled urgent
surgery. Speculation that plan sponsors will ``somehow'' face
broad State law liability is inconsistent with an analysis of
relevant case law and the ``plain meaning'' of the proposed
statue.
In sum, Section 302(a) of the Bill is a carefully-drafted
provision which addresses what many perceive as an
unfortunate and unintended gap in ERISA, without disturbing
the ERISA preemption rules applicable to most State law
claims against plan sponsors of group health plans.
What is the real life experience to bear that out? I refer my
colleagues to the front page story in the Washington Post today.
``Patients' Rights Case Study: So Far, Benign. In Texas, Ability to Sue
HMOs Has Prompted Little Litigation.''
Why is that? Because whereas they say that plans that make decisions,
medical decisions that result in injury are going to legally be liable,
they also set up that dispute resolution process that is in our bill, a
dispute resolution so that you can fix a problem before you end up with
the injury.
It says here in this article:
``The insurance industry and its business allies have spent millions
of dollars warning legislators in Washington that it would be dangerous
to give patients the right to sue health maintenance organizations,
arguing that the courts would be deluged with baseless litigation.
``But since the Texas legislature made managed care plans liable for
malpractice, there have only been five known lawsuits from among the 4
million Texans who belong to HMOs.
``And despite insurers' arguments that such a law would force them to
practice an expensive brand of defensive medicine, there is no sign
that medical costs are rising faster in Texas than anywhere else in the
country.''
It talks a little bit in this article about how this bill became law
in Texas. But then it goes on to say:
``The bill passed with overwhelming support from both Republicans and
Democrats in Texas. Governor Bush, now a Republican presidential
candidate, had opposed the idea of allowing HMOs to be sued. But this
time, in a position that puts him at odds with GOP leaders in Congress,
he let the law take effect.
``Two years later, a Bush spokesman said the governor believes the
law has `worked well,' primarily because of a grievance system included
in the legislation that has ruled on about 600 cases and sided with
patients about half the time. `We have not seen an explosion of
lawsuits,' said Governor Bush's spokesman Ray Sullivan. `That's what
the governor wanted.' ''
Madam Speaker, because this is a comprehensive bill that includes so
many good provisions to help patients get the kind of care that they
need, it is not just a liability bill, it is a bill that because of
these other provisions that will allow patients who are not getting a
fair shake from their HMOs to have a process to get that fixed, we have
300 organizations who have endorsed the bipartisan consensus bill, H.R.
2723.
Madam Speaker, I include this list for the Congressional Record.
300 Organizations Endorsing H.R. 2723
Adapted Physical Activity Council.
AIDS Action.
Allergy and Asthma Network--Mothers of Asthmatics, Inc.
Alliance for Children and Families.
Alliance for Rehabilitation Counseling.
American Academy of Allergy and Immunology.
American Academy of Child and Adolescent Psychiatry.
American Academy of Emergency Medicine.
American Academy of Facial Plastic and Reconstructive
Surgery.
American Academy of Family Physicians.
American Academy of Neurology.
American Academy of Opthamology.
American Academy of Otolaryngology--Head and Neck Surgery.
American Academy of Pain Medicine.
American Academy of Pediatrics.
American Academy of Physical Medicine & Rehabilitation.
American Association for Hand Surgery.
American Association for Holistic Health.
American Association for Marriage and Family Therapy.
American Association for Mental Retardation.
American Association for Psychosocial Rehabilitation.
American Association for Respiratory Care.
American Association for the Study of Headache.
American Association for Clinical Endocrinologists.
American Association of Clinical Urologists.
American Association of Hip and Knee Surgeons.
American Association of Neurological Surgeons.
American Association of Nurse Anesthetists.
American Association of Oral and Maxillofacial Surgeons.
American Association of Orthopaedic Foot and Ankle
Surgeons.
American Association of Orthopaedic Surgeons.
American Association of Pastoral Counselors.
American Association of People with Disabilities.
American Association of Private Practice Psychiatrists.
American Association of University Affiliated Programs for
Persons with DD.
American Association of University Women.
American Association on Health and Disability.
American Bar Association, Commission on Mental & Physical
Disability Law.
American Board of Examiners in Clinical Social Work.
American Cancer Society.
American Chiropractic Association.
American College of Allergy and Immunology.
American College of Cardiology.
American College of Emergency Physicians.
American College of Foot and Ankle Surgeons.
American College of Gastroenterology.
American College of Nuclear Physicians.
American College of Nurse-Midwives.
American College of Obstetricians and Gynecologists.
American College of Osteopathic Family Physicians.
American College of Osteopathic Surgeons.
American College of Physicians.
American College of Radiation Oncology.
American College of Radiology.
American College of Rheumatology.
American College of Surgeons.
American Council for the Blind.
American Counseling Association.
American Dental Association.
American Diabetes Association.
American EEG Society.
American Family Foundation.
American Federation of HomeCare Providers, Inc.
American Federation of State, County, and Municipal
Employees.
American Federation of Teachers.
American Foundation for the Blind.
American Gastroenterological Association.
American Group Psychotherapy Association.
American Heart Association.
American Liver Foundation.
American Lung Association/American Thoracic Society.
American Medical Association.
American Medical Rehabilitation Providers Association.
American Medical Student Association.
American Medical Women's Association, Inc.
American Mental Health Counselors Association.
American Music Therapy Association.
American Network of Community Options And Resources.
American Nurses Association.
American Occupational Therapy Association.
American Optometric Association.
American Orthopaedic Society for Sports Medicine.
American Orthopsychiatric Association.
American Orthotic and Prosthetic Association.
American Osteopathic Academy of Orthopedics.
American Osteopathic Association.
American Osteopathic Surgeons.
American Pain Society.
American Physical Therapy Association.
American Podiatric Medical Association.
American Psychiatric Association.
American Psychiatric Nurses Association.
American Psychoanalytic Association.
American Psychological Association.
American Public Health Association.
American Society for Dermatologic Surgery.
American Society for Gastrointestinal Endoscopy.
American Society for Surgery of the Hand.
American Society for Therapeutic Radiology and Oncology.
American Society of Anesthesiology.
American Society of Bariatric Surgery.
American Society of Cataract and Refractive Surgery.
American Society of Clinical Oncology.
American Society of Dermatology.
American Society of Echocardiography.
American Society of Foot and Ankle Surgery.
American Society of General Surgeons.
American Society of Hand Therapists.
American Society of Hematology.
American Society of Internal Medicine.
American Society of Nephrology.
American Society of Nuclear Cardiology.
American Society of Pediatric Nephrology.
American Society of Plastic and Reconstructive Surgeons,
Inc.
American Society of Transplant Surgeons.
American Society of Transplantation.
[[Page H8958]]
American Speech-Language-Hearing Association.
American Therapeutic Recreation Association.
American Urological Association.
Americans for Better Care of the Dying.
Amputee Coalition of America.
Anxiety Disorders Association of America.
Arthritis Foundation.
Arthroscopy Association of North America.
Association for Ambulatory Behavioral Healthcare.
Association for Education and Rehabilitation Of the Blind
and Visually Impaired.
Association for Persons in Supported Employment.
Association for the Advancement of Psychology.
Association for the Education of Community Rehabilitation
Personnel.
Association of American Cancer Institutes.
Association of Education for Community Rehabilitation
Programs.
Association of Freestanding Radiation Oncology Centers.
Association of Maternal and Child Health Programs.
Association of Subspecialty Professors.
Association of Tech Act Projects.
Association of Women's Health Obstetric and Neonatal
Nurses.
Asthma & Allergy Foundation of America.
Austism Society of America.
Bazelon Center for Mental Health Law.
California Access to Specialty Care Coalition.
California Congress of Dermatological Societies.
Cancer Leadership Council.
Center for Patient Advocacy.
Center on Disability and Health.
Child Welfare League of America.
Children & Adults with Attention Deficit/Hyperactivity
Disorder.
Children's Defense Fund.
Citizens United for Rehabilitation of Errants.
Clinical Social Work Federation.
Communication Workers of America.
Conference of Educational Administrators of Schools and
Programs for the Deaf.
Congress of Neurological Surgeons.
Consortium of Developmental Disabilities Councils.
Consumer Action Network.
Consumer Federation of America.
Consumers Union.
Cooley's Anemia Foundation.
Corporation for the Advancement of Psychiatry.
Council for Exceptional Children.
Council for Learning Disabilities.
Crohn's and Colitis Foundation of America.
Diagenetics.
Digestive Disease National Coalition.
Disability Rights Education and Defense Fund.
Division for Early Childhood of the CEC.
Easter Seals.
Epilepsy Foundation of America.
Evangelical Lutheran Church in America.
Eye Bank Association of America.
Families USA.
Family Service America.
Family Voices.
Federated Ambulatory Surgery Association.
Federation of Behavioral, Psychological & Cognitive
Sciences.
Federation of Families for Children's Mental Health.
Florida Breast Cancer Coalition.
Friends Committee on National Legislation.
Goodwill Industries International, Inc.
Gullain-Barre Syndrome Foundation.
Helen Keller National Center.
Higher Education Consortium for Special Education.
Human Rights Campaign.
Huntington's Disease Society of America.
Infectious Disease Society of America.
Inter/National Association of Business, Industry and
Rehabilitation.
International Association of Jewish Vocational Services.
International Association of Psychosocial Rehabilitation
Services.
International Dyslexia Association.
Joseph P. Kennedy, Jr. Foundation.
League of Women Voters.
Learning Disabilities Association.
Leukemia Society of America.
Linda Creed Breast Cancer Foundation.
Lupus Foundation of America, Inc.
Massachusetts Breast Cancer Coalition.
Medical College of Wisconsin.
Michigan State Medical Society.
Minnesota Breast Cancer Coalition.
National Alliance for the Mentally Ill
National Association for Medical Equipment Services.
National Association for Rural Mental Health.
National Association for State Directors of Developmental
Disabilities Services.
National Association for the Advancement of Orthotics and
Prosthetics.
National Association of Children's Hospitals.
National Association of Developmental Disabilities
Councils.
National Association of Medical Directors of Respiratory
Care.
National Association of Nurse Practitioners in Women's
Health.
National Association of People with AIDS.
National Association of Physicians Who Care.
National Association of Private Schools for Exceptional
Children.
National Association of Protection and Advocacy Systems.
National Association of Psychiatric Treatment Centers for
Children.
National Association of Public Hospitals and Health Systems
(Qualified Support).
National Association of Rehabilitation Research and
Training Centers.
National Association of School Psychologists.
National Association of Social Workers.
National Association of State Directors of Special
Education.
National Association of State Mental Health Program
Directors.
National Association of the Deaf.
National Black Women's Health Project.
National Breast Cancer Coalition.
National Center for Learning Disabilities.
National Coalition on Deaf-Blindness.
National Committee to Preserve Social Security and
Medicare.
National Community Pharmacists Association.
National Consortium of Phys. Ed. And Recreation For
Individuals with Disabilities.
National Consumers League.
National Council for Community Behavioral Healthcare.
National Depressive and Manic-Depressive Association.
National Down Syndrome Society.
National Foundation for Ectodermal Dysplasias.
National Hemophilia Foundation.
National Medical Association.
National Mental Health Association.
National Multiple Sclerosis Society.
National Organization of Physicians Who Care.
National Organization of Social Security Claimants'
Representatives.
National Organization on Disability.
National Parent Network on Disabilities.
National Partnership for Women & Families.
National Patient Advocate Foundation.
National Psoriasis Foundation.
National Rehabilitation Association.
National Rehabilitation Hospital.
National Therapeutic Recreation Society.
NETWORK: National Catholic Social Justice Lobby.
New York State Nurses Association.
NISH.
North American Brain Tumor Coalition.
North American Society of Pacing and Electrophysiology.
North American Spine Society.
Opticians Association of America.
Oregon Dermatology Society.
Orthopaedic Trauma Association.
Outpatient Ophthalmic Surgery Society.
Pain Care Coalition.
Paralysis Society of America.
Paralyzed Veterans of America.
Patient Advocates for Skin Disease Research.
Patients Who Care.
Pediatric Orthopaedic Society of North America.
Pediatrix Medical Group: Neonatology and Pediatric
Intensive Care Specialist.
Physicians for Reproductive Choice and Health.
Physicians Who Care.
Pituitary Tumor Network.
Public Citizen (Liability Provisions Only).
Rehabilitation Engineering and Assistive Technology Society
of N. America.
Renal Physicians Association.
Resolve: The National Infertility Clinic.
Scoliosis Research Society.
Self Help for Hard of Hearing People, Inc.
Service Employees International Union.
Sjogren's Syndrome Foundation Inc.
Society for Excellence in Eyecare.
Society for Vascular Surgery.
Society of Cardiovascular & Interventional Radiology.
Society of Critical Care Medicine.
Society of Gynecologic Oncologists.
Society of Nuclear Medicine.
Society of Thoracic Surgeons.
Spina Bifida Association of America.
St Louis Breast Cancer Coalition.
Taconic Resources for Independence, Inc.
The Alexandria Graham Bell Association for the Deaf, Inc.
The American Society of Dermatophathology.
The Arc of the United States.
The Council on Quality and Leadership in Supports for
People with Disabilities (The Council).
The Endocrine Society.
The Paget Foundation for Paget's Disease of Bone and
Related Disorders.
The Society for Cardiac Angiography and Interventions.
The TMJ Associations, Ltd.
Title II Community AIDS National Network.
United Auto Workers.
United Cerebral Palsy Association.
United Church of Christ.
United Ostomy Association.
Very Special Arts.
World Institute on Disability.
Finally, let me just briefly talk about access to medical care,
because I think it is important. We have about 40 million Americans
that do not have health insurance. A large percentage of those people
are poor, a large percentage are children. We can do a lot more to get
those children and those poor people enrolled in the programs that they
qualify for than what we are
[[Page H8959]]
doing now. Fully half of the children in this country that are
uninsured qualify for either Medicaid or for the CHIP program. And we
ought to make a better effort to do that. But when we look at providing
better access for all Americans to health insurance, we need to be
careful that we do not make the situation worse.
There are some ideas that are in a bill that may come to the floor
that relate to expanding what are called association health plans or
geographic association type health plans, called health marts, that we
need to be careful of.
Madam Speaker, I have two letters here from the Blue Cross/Blue
Shield organization and the Health Insurance Association of America
that I will include for the Record.
BlueCross BlueShield
Association,
Washington, DC, July 13, 1998.
Hon. Greg Ganske,
House of Representatives,
Washington, DC.
Dear Representative Ganske: We are writing to express our
deep concerns about exempting Association Health Plans (AHPs)
and certain Multiple Employer Welfare Arrangements (MEWAs)
from state law.
This unwise proposal has surfaced again, this time as part
of a package of recommendations from the House Republican
health care quality working group. BCBSA is concerned about
many of the working group's recommendations, but we are
particularly troubled by the AHP/MEWA provision.
For good reason, exempting AHPs/MEWAs from state law is
strongly opposed by governors and other state officials,
consumer groups, health professionals, major health insurance
organizations and some small businesses. This proposal would:
Transfer regulation of these entities from states to an
unprepared federal government. The Department of Labor has
already testified that it does not now have the resources
needed to adequately oversee the ERISA plans already under
its purview. Consequently, exempting AHPs/MEWAs from state
law would necessitate a substantial increase in federal
regulators in order to set and enforce solvency standards and
other consumer protections
Increase premiums for many small employers and dramatically
hike rates for individuals who purchase their own coverage.
By exempting AHPs/MEWAs from state law, the proposal would
undermine state reforms that have improved the accessibility
and affordability of health coverage, such as risk-spreading
laws that assure cross-subsidization between low- and high-
cost groups.
Decrease health coverage for those who use the most medical
services. The proposal would give AHPs/MEWAs a strong
incentive to cover only the healthiest people. As a result,
sicker people--who are most in need of coverage--would be
left in state-regulated insurance pools. Their premiums would
increase as more health people joined AHPs/MEWAs, causing
many to lose their health coverage.
Reduce funding for state programs to improve access to
health coverage. Because AHPs/MEWAs would be exempt from
state law, they would not have to contribute to state
programs to improve access (e.g., high-risk pools), which are
typically funded by assessments on small group health
insurance premiums.
BCBSA shares the concerns of AHP/MEWA supporters who want
to make health coverage more affordable for small businesses
and others. But this proposal would undermine successful
state reforms, increase premiums for many and decrease health
coverage for those who need it the most.
When Congress considers the working group's proposal this
summer, we urge you to oppose exempting AHPs/MEWAs from state
law.
Sincerely,
Mary Nell Lehnhard,
Senior vice President.
Jack Ericksen,
Executive Director, Congressional Relations.
____
June 4, 1998.
Hon. Greg Ganske,
House of Representatives,
Washington, DC.
Dear Representative Ganske: We are writing to express our
opposition to proposals that would exempt certain health
insurance arrangements, such as association health plan
(AHPs) and multiple employer welfare arrangements (MEWAs),
from state insurance law and regulatory authority.
We remain very concerned about proposals to preempt state
regulatory of federally certified association health plans,
including many MEWAs (e.g., H.R. 1515/S. 729). These
proposals would undermine the most volatile segments of the
insurance market--the individual and small group markets.
AHPs could siphon off the healthy (e.g., through selective
marketing or by eliminating coverage of certain benefits
required by individuals with expensive illnesses), thus
leading to significant premium increases for those who remain
in the state-regulated pool. The ultimate result: an increase
in the uninsured and only the sickest and highest risk
individuals remaining in the states' insured market.
We have similar concerns regarding a proposal to create a
new type of purchasing entity, called HealthMarts, which has
not been reviewed via the committee hearing process. This
proposal would exempt health plans offered through a
HealthMart from state benefit standards and requirements to
pool all small groups for rating purposes. As with AHPs, this
proposal raises serious concerns regarding market
segmentation and the ability of states to protect their
residents. The combination of these two proposals could lead
to massive market segmentation and regulatory confusion.
Moreover, these proposals, over time, would lead our nation
toward increased federalization of health insurance
regulation. Preemption of state regulatory authority would
create a regulatory vacuum that would necessitate an
exponential increase in federal bureaucracy and federal
regulatory authority.
As representatives of the health insurance and health plan
community, we are concerned about the issue of access to
health coverage for small firms. However, we urge legislators
to avoid legislation that unravels the market by helping a
limited group of small employers at the expense of other
individuals and small groups.
We look forward to an opportunity to work with you
regarding proposals that expand coverage without damaging the
small group and individual markets.
Sincerely,
Blue Cross and Blue Shield Association,
Health Insurance Association of America.
Sometimes I agree with the insurance industry. In this situation I
do. I think that association health plans can siphon off the healthy.
They can thus lead to significant premium increases for those that
remain in State-regulated insurance pools.
{time} 2000
The ultimate result could be an increase in the uninsured, and only
the sickest and highest risk individuals remaining in the State's
insurance market. We have to be very careful about those types of
provisions.
Finally, Madam Speaker, let me just say that I appreciate the Speaker
of the House, the gentleman from Illinois (Mr. Hastert), sticking to
his word that we are going to have a debate on patient protection
legislation next week. I hope that we will have a clean and fair rule
that will allow the majority of the House to have its say on passing
good, strong patient protection legislation.
I think that we have been working on this for about 4 years. It is a
struggle when you are going up against an industry as powerful as the
HMO industry. But despite the fact that they have spent about $100
million lobbying against this, money that should, in my opinion, have
been spent on care for patients, the public overwhelmingly wants to see
Congress pass a strong Patient Bill of Rights, strong patient
protection legislation. They have heard from their friends, they have
heard from family members, they have heard from fellow employees about
problems with people in HMOs getting the kind of care that they should
be getting, and they are scared that that could happen to their own
family and their own children. They just want a fair chance at
reversing an arbitrary denial of care because some of those decisions,
as I pointed out in my speech tonight, and countless hundreds or
thousands of others that I could talk about have resulted in injury to
people, and it is occurring every day that goes by without our having
this debate, Madam Speaker.
I encourage my colleagues on both sides of the aisle to join with the
300 endorsing organizations, support H.R. 2723, avoid believing the
distortions that the industry is putting out about this bill. The sky
will not fall, HMOs will continue. In fact, they will be better HMOs if
we pass this legislation.
____________________