Erisa: A Legal Shield for Hmos

Abstract

This paper explores the issue of the preemption of state medical malpractice claims against Health Maintenance Organizations (HMOs) by the Employee Retirement Income Security Act of 1974 (ERISA). Beginning with an analysis of the specific wording, relevant court cases, and historical significance of this act, it establishes the fact that Congress more than likely never foresaw its monumental effects on the legal liability of HMOs. Following this is a case study of the Texas Health Care Liability Act which successfully attempted to circumvent ERISA preemption by holding HMOs liable for practicing the ordinary standard of care. The result of this bill was that of creating accountability on the part of Texas HMOs while causing very few lawsuits to be filed, thereby increasing HMO premiums by a negligible amount. This example is then applied to controversial proposals being debated by Congress which would remove ERISA preemption of medical malpractice claims against HMOs nationally. While the opponents of such proposals claim that their enactment would cause a tremendous increase in the number of lawsuits filed against HMOs and thereby increase premiums significantly, this paper draws the conclusion from the Texas experiment that these claims are false and that any rise in premiums would be minute and wouldn't outweigh the benefit derived from the imposition of legal liability on the part of HMOs in the form of improved quality.

Keywords: Managed care, Patient Bill of Rights, ERISA