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ERISA's Impact on Medical Malpractice and Negligence Claims Against Managed Care Plans

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Abstract:

The Employee Retirement Income Security Act of 1974 (ERISA) provides a comprehensive federal scheme for the regulation of employee pension and welfare benefit plans offered by employers. To avoid the inconsistent regulation of employee benefit plans by state laws, ERISA preempts “any and all” state laws as they relate to any employee benefit plan. The effect of ERISA preemption on the ability to bring state medical malpractice and negligence claims against health insurers, namely health maintenance organizations (HMOs), has caused concern among participants who seek the generally larger remedies that are available under state tort law.

Litigation involving managed care plans and ERISA preemption has steadily increased. Various legislative proposals have been introduced to address managed care plans generally and the preemption issue specifically. The claims at issue fall basically into two categories. One type of claim brought against a managed care plan involves the plan's denial of a request for treatment or hospitalization. A second type of claim deals with the adverse consequences of treatment provided by a managed care plan through its employees or through a managed care affiliate. The use of cost containment practices by managed care plans and the treatment of cost containment decisions when determining liability remain constant issues.

This report will examine the preemption provisions of ERISA, the U.S. Supreme Court’s interpretation of these provisions, selected cases applying ERISA to state medical malpractice and negligence claims, and the congressional response to the issue.