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Carter Phillips wonders whether any statute has required more frequent interpretation than the Employee Retirement Income Security Act of 1974 (ERISA). It’s been “a nightmare,” he says, while discussing the law’s latest interpretation. On Feb. 11, the 2nd U.S. Circuit Court of Appeals ruled that a cancer patient’s state malpractice claim against his health maintenance organization (HMO) is not automatically pre-empted by ERISA. Cicio v. Vytra Healthcare, No. 01-9248. The 2nd Circuit cited the U.S. Supreme Court’s decision in Pegram v. Herdrich, 530 U.S. 211 (2000), which overturned a ruling that an HMO breached a fiduciary trust to a patient. Phillips, managing partner of the Washington, D.C., office of Chicago’s Sidley Austin Brown & Wood, represented the HMO. David Trueman, a solo practitioner from Mineola, N.Y., who represented the plaintiff in Cicio, calls it “a monumental victory for consumers and patients. It finally gives people the right to hold HMOs responsible.” But Phillips and three legal experts not involved in the case see it as merely an extension of Pegram. And three of the four are troubled by the state of the law, as is a dissenting judge from the 2nd Circuit’s three-judge panel. “Medical malpractice is not going to be pre-empted, so you’re going to have to figure out where you draw that line,” Phillips says of the court’s decision. “At least until Congress decides to clarify.” Asked whether he expected Congress to act, Phillips laughs. “I think ERISA is such a nightmare,” he says, “it’s difficult to imagine Congress trying to fix it.” What makes it so cumbersome, he adds, is the pre-emption provision, which is “largely imponderable. It’s hard to figure out what’s pre-empted and what isn’t.” Courts have tried to draw a distinction between benefits decisions, which are pre-empted by ERISA, and individual treatment decisions, which may not be; but they have also acknowledged the difficulty of distinguishing between them. What makes pre-emption so important, according to Yale University law professor John Langbein, is that Supreme Court decisions, most notably Mertens v. Hewitt Associates, 508 U.S. 248 (1993), have “stripped away the ability of plan participants to get make-whole relief, even in open-and-shut cases of ERISA fiduciary duty and benefit denial. You can get benefits, but they don’t remedy pain and suffering and they don’t do any good once you’re dead.” The Cicio saga began in 1997, when Carmine Cicio of Saint James, N.Y., was diagnosed with myeloma, a cancer. For nine months he received chemotherapy through a health plan administered by Vytra Healthcare. Then his oncologist requested approval of high-dose chemotherapy and a double stem-cell transplant. A month later, Dr. Brent Spears, Vytra’s medical director, denied the request. Cicio’s doctor asked him to reconsider, and three weeks later, Spears approved a single stem-cell transplant — never requested — but denied the double. By then, however, it was too late. Cicio died seven weeks later. Bonnie Cicio, Carmine’s widow, sued Vytra and Spears in state court alleging medical malpractice and negligence, among other claims. The defendants removed the case to federal court and moved to dismiss. A magistrate judge recommended dismissal based on ERISA pre-emption, and the district court agreed. The 2nd Circuit affirmed dismissal of the negligence claims, but remanded the malpractice claims to the district court. Writing for the majority in a case of first impression for the 2nd Circuit, Judge Robert Sack questioned whether the defendants’ decisions were “benefits determinations.” “Dr. Spears … seems to have been engaged in a patient-specific prescription of an appropriate treatment, and, ultimately, a medical decision that a single stem cell transplant was the appropriate treatment for Mr. Cicio,” Sack wrote. Though other courts had found malpractice claims pre-empted by ERISA, these decisions predated Pegram. Referring to that case, Sack wrote: “The Court decided that no fiduciary breach of action could be brought under ERISA because, in part, such an action would be a ‘mere replication of state malpractice actions with HMO defendants.’ … We thus infer that the continued availability of some state law malpractice actions based on at least some varieties of utilization review decisions was a predicate of the Court’s holding.” The problem with the Cicio decision, says Yale’s Langbein, is that ERISA is supposed to pre-empt state laws that “relate to” a benefits plan. “To say that this decision about whether or not the plan covers a proposed treatment does not ‘relate to’ the plan is a conclusion that only a lawyer could reach, and then only under great duress. “This is a mess of the Supreme Court’s making,” he continues. “What the Supreme Court did in Pegram is basically cowardice. The court did not want to take on itself the responsibility for destroying the HMO system. And, therefore, stretched to find a linguistic formulation that would not require it to do so. The distinction between treatment and coverage is unworkable.” To Boston University health law professor Wendy Mariner, the decision is evidence that “treating employee benefit plans differently from other kinds of health insurance makes no sense.” Mariner and the others interviewed found that the most cogent part of Cicio was Judge Guido Calabresi’s dissent. “The conclusion that my colleagues have reached today is a band-aid on a gaping wound,” Calabresi wrote. “It may provide justice to Mrs. Cicio … but the injury that the courts have done to ERISA will not be healed until the Supreme Court reconsiders the existence and consequential damages under the statute, or Congress revisits the law to the same end.”

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