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A panel of the 5th U.S. Circuit Court of Appeals encouraged the full court in a recent opinion to re-examine a 10-year-old decision that health maintenance organizations have used to block patients’ suits against HMOs. On Sept. 17, the panel upheld a decision by U.S. District Judge Sidney Fitzwater of Dallas that the Employee Retirement Income Security Act of 1974 pre-empts a suit filed for a woman whose left leg had to be amputated because her HMO allegedly delayed and denied special treatments ordered by her doctor after she underwent skin graft operations and surgeries to create flaps over wounds caused by a spider. Gwen Roark died in November 2001 from injuries that were the basis of her suit, says George Parker Young, who represents Roark’s husband, Robert, and her estate. Judge Jerry Smith, writing for the panel in Roark v. Humana Inc., said the Roarks would have a strong case against ERISA pre-emption if the panel was “writing on a clean slate” or the 5th Circuit was deciding the case en banc in light of U.S. Supreme Court decisions in recent years. But Smith, who was joined in the opinion by Judges Fortunato Benavides and Robert M. Parker, said the panel was bound by the 1992 decision of a separate panel in Corcoran v. United Healthcare Inc. “That, in appellate terms, is an engraved invitation to the entire 5th Circuit to reconsider Corcoran,” Young says. Young, of Fort Worth, Texas’ Law Offices of George Parker Young, says he will file for en banc consideration of Roark by the 5th Circuit. “It’s obviously a heartfelt plea for en banc consideration of Corcoran,” Tom Mayo, a Southern Methodist University Dedman School of Law professor, says of Smith’s opinion. “I think Corcoran deserves to be re-examined,” adds Mayo, who specializes in health law and is of counsel at Haynes and Boone in Dallas. In the suit, Robert Roark alleges violations under the Texas Health Care Liability Act, passed by the state Legislature in 1997. The THCLA was the first statute in any state that allows patients to sue HMOs for liability in medical-malpractice cases, Young says. The opinion in Roark also covers other cases involving plaintiffs who brought claims under the THCLA. The other three cases will go back to state courts as a result of the panel’s ruling. Bob Eccles, attorney for Humana, says the HMO’s decisions regarding the treatment for Gwen Roark were fundamentally administrative decisions and thereby pre-empted by ERISA. Mayo says it will be interesting to see what the 5th Circuit does with a motion for en banc reconsideration given that Judge Carolyn King, now the court’s chief judge, wrote the opinion in Corcoran. The 5th Circuit said in Corcoran that an HMO makes benefit determinations as part of its mandate to decide what benefits are available under the ERISA plan. Such mixed eligibility determinations are pre-empted by ERISA, the court held, but it acknowledged in the opinion that its ruling would leave some patients with no remedy for potentially serious mistakes. After Roark filed the suit in state court, Humana had it removed to federal court. Fitzwater denied the Roarks’ motion to remand the suit to state court, citing the ERISA � 514 pre-emption. Since Corcoran, the U.S. Supreme Court has curtailed the scope of a � 514 pre-emption in a trilogy of cases decided between 1995 and 1997, Smith said in the Roark opinion. In 1995, the high court said in New York State Conference of Blue Cross and Blue Shield v. Travelers Insurance that a state statute’s indirect economic influence doesn’t bind HMO plan administrators to any particular choice and doesn’t run afoul of ERISA pre-emption. The court held in 1997′s California Division of Labor Standards Enforcement v. Dillingham Construction that a state law addressing wages in apprenticeship programs in state-approved and nonstate-approved programs was indifferent to ERISA coverage. Also in 1997, the court held in DeBuono v. NYSA-ILA Medical and Clinical Services Fund that ERISA didn’t pre-empt New York’s tax on gross receipts for patient services at health care facilities. The three decisions undermine Corcoran by establishing that courts should presume ERISA doesn’t pre-empt areas such as general health regulation that historically have been matters of local concern and that a state law’s economic impact on HMO plan structures isn’t enough to trigger � 514 pre-emption, Smith wrote. “If Corcoran is reviewed, it would be a significant development,” Eccles, Humana’s attorney, says. Eccles, a partner in O’Melveny & Myers in Washington, D.C., says Corcoran made it clear that a suit challenging an HMO’s decision regarding whether benefits are provided under a plan and whether the treatment is medically necessary are pre-empted by ERISA. Under ERISA, a plaintiff can receive only the amount of the benefit denied by an HMO plus attorney fees, Eccles says. A reversal of Corcoran could open HMOs to greater liability in the state courts, where plaintiffs can be awarded damages, he says. Angela Melina Raab, a University of Texas School of Law adjunct professor, says there is no incentive for HMOs not to deny care. Even if an HMO denies care wrongly, the worst that can happen is it will have to pay for the benefit denied, Raab says. Unless the patient’s medical bills resulting from the denied payment total at least $40,000, no lawyer will take the case, she says. Plaintiffs in the other cases decided by the 5th Circuit will have an opportunity to bring their claims in state courts. Young, who also represents the plaintiffs in Calad v. CIGNA Health Care of Texas, Davila v. Aetna U.S. Healthcare Inc. and Thorn v. Aetna, says the cases clearly narrow the scope of the ERISA pre-emption that the 5th Circuit has been narrowing for the past three years. But Raab, of counsel at Pittman & Fink in Austin, says she believes the opinion leaves unanswered questions. “This opinion does not make clear which facts will support a claim under the THCLA and which do not and will lead to further pre-emption litigation on this point,” Raab says. According to the opinion, Ruby Calad sued her HMO, alleging that she suffered complications from a hysterectomy after CIGNA’s discharge nurse sent her home following one day in the hospital. The opinion said Calad’s doctor had recommended that she be hospitalized longer. The 5th Circuit reversed the dismissal of Calad’s case by Senior U.S. District Judge Barefoot Sanders of Dallas. Stephen Shaver, CIGNA’s attorney, says it is clear that Calad was entitled to hospitalization but not to “blanket hospitalization.” Limitation of a benefit is the hallmark of an ERISA complaint, says Shaver, a partner in Dallas’ Wilson, Elser, Moskowitz, Edelman & Dicker. “This was an ERISA complaint,” Shaver says, adding that CIGNA can apply to the 5th Circuit for an en banc hearing. The 5th Circuit also reversed the dismissal of Juan Davila’s case by U.S. District Judge Terry Means of Fort Worth, Texas. The opinion said Davila, a post-polio patient with diabetes and arthritis, was required by Aetna to try two medications before he could get the drug that his doctor prescribed for arthritic pain. Davila suffered bleeding ulcers, which caused a near heart attack and internal bleeding, and he is unable to take any pain medication that’s absorbed through the stomach, the opinion said. The 5th Circuit held that Calad’s and Davila’s claims aren’t pre-empted by ERISA � 502(a)(1)(B), which allows a plan’s participant or beneficiary to sue to recover benefits due under terms of the plan. The U.S. Supreme Court held in 1987′s Pilot Life Insurance Co. v. Dedeaux that � 502(a)(1)(B) pre-empted a state court claim by an ERISA participant regarding denial of benefits. The court said states could not create alternative causes of actions for collecting benefits that expanded upon ERISA’s remedies. Because the THCLA doesn’t provide an action for collecting benefits, it’s not pre-empted by � 502(a)(1)(B), the 5th Circuit said. In the opinion, the 5th Circuit cited the Supreme Court’s admonition in 2000′s Pegram v. Herdrich that ERISA should not be interpreted to pre-empt state malpractice laws or to create a federal common law of medical malpractice. “We decline, two years after the [Supreme] Court expressed disbelief that Congress would federalize medical malpractice law under Section 502(a)(2), to hold that Congress has done so under Section 502(a)(1)(B),” the opinion said. Andrews & Kurth partner John Shely of Houston, attorney for Aetna, says his client anticipates that the court’s jurisdictional holding will be considered by the 5th Circuit sitting en banc. “Aetna remains confident that at the end of the day it will establish that the plaintiffs’ claims have neither a legal nor factual basis for success,” Shely says. Raab says she’s puzzled by the 5th Circuit’s ruling. The panel is saying that an HMO is liable in state courts for negligence in making a mixed eligibility determination, she says. What’s unclear, she says, is how the panel distinguished between the facts in the Roark case and the facts in the Calad and Davila cases. In the fourth case, the 5th Circuit upheld Sanders’ remand of Walter Thorn’s suit to a state court. Thorn, a government employee, sued Aetna, alleging that the HMO’s delay in authorizing surgery on his hand, which was injured in a car accident, diminished the hand’s mobility. Young says Thorn, a government employee, isn’t subject to ERISA.

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