ERISA Preemption: Immunity for HMOs
Denise Chan | 1998 U. Ill. L. Rev.
In 1974, Congress enacted the Employee Retirement Income Savings Act (ERISA) to protect workers receiving employer-provided benefits from administrative and funding abuses. With the advent of managed care, many workers' health and well-being has become more a matter of business than of medicine. In an effort to contain costs, managed-care entities frequently limit patients' options for treatment and care, which unfortunately, at times, results in tragedy. These tragedies usually result in state claims of medical malpractice to which managed-care entities raise an ERISA preemption defense. Moreover, managed-care entities argue that they merely make compensation decisions and do not direct physicians' conduct, thereby precluding any liability.
The author argues that ERISA preemption should not abrogate state medical malpractice claims because such a broad use of ERISA preemption defeats Congress's intent to protect workers. The author further argues that the distinction between making compensation decisions and directing physician conduct is false because of managed-care entities' role. The author then discusses the role of the Supreme Court's most recent decision on preemption which, perhaps, will limit the preemption defense and encourage state legislatures to pass new laws to help workers secure necessary medical services. Finally, the author urges Congress to unequivocally decide the viability of ERISA preemption in state medical malpractice cases by passing legislation consistent with ERISA's goal of worker protection.