High Court to Rule On Managed Care, ERISA

The Supreme Court will soon decide the legality of Kentucky’s any-willing-provider law when it issues a ruling in the case Kentucky Association of Health Plans v. Janie Miller, Commissioner of the Kentucky Department of Insurance.

APA signed onto an AMA amicus brief that supports Miller’s position that the Kentucky law is exempt from the requirements of the 1974 Employee Retirement Income Security Act (ERISA).

“ The significance of this case is that the AMA brief supports our position that patients should have access to high-quality mental health care that can be provided by any willing psychiatrist who agrees to the managed care company’s terms and conditions,” said Renée Binder, M.D., chair of the APA Committee on Judicial Action, in an interview.

Managed care companies “have attempted to restrict access to care based on cost considerations,” Binder noted. “This brief argues against that position. In addition, if the Supreme Court finds in favor of our view, this is an additional blow to ERISA, which has generally protected managed care companies from being sued and being forced to take responsibility for their denials of care.”

Because ERISA doesn’t control state laws that regulate health insurance, the Supreme Court must determine whether the any-willing-provider (AWP) law regulates health insurance, explained Mark Rust, an attorney with the law firm Barnes and Thornburg, who wrote the AMA brief.

If it rules in favor of Kentucky (and the AMA/APA position), the state’s AWP law will be upheld. If it doesn’t, the ruling will mean that the state’s AWP law violates ERISA and the law will be struck down.

Rust, who is monitoring the Supreme Court case, told Psychiatric News that previous court rulings have affirmed that health insurance products such as employee benefit plans that employers purchase from insurance companies fall within the meaning of insurance.

In addition, the Supreme Court in Rush Prudential v. Moran defined an HMO as an insurance product, said Rust, who represented Moran in upholding the Illinois independent review law before the Supreme Court last year. That court decided last June to uphold an Illinois law that guarantees patients an independent medical review in disputes involving benefits denied by their health plans. The ruling preserved independent review laws and regulations in at least 40 states (Psychiatric News, July 19, 2002).

Rust quoted Robert Eccles, the attorney representing the managed care industry in the Kentucky case, as telling the Supreme Court justices in January that “the AWP law is pre-empted because it doesn’t regulate insurance. For example, it doesn’t mandate new insurance benefits for employees. The HMO provides all the care the employee needs, which doesn’t depend on specific physicians.”

Rust said that Justice Antonin Scalia responded to Eccles, “Do you mean if I am offered car insurance by two companies and one tells me I can have my car fixed anywhere and the other company says it will only pay for the repairs at garages a, b, and c, I am not choosing between two benefits?”

According to the January 15 Kaiser Daily Health Policy Report, the justices were “equally skeptical” of arguments made by Elizabeth Johnson, the attorney representing the Kentucky Department of Insurance. Johnson argued that the AWP law regulates health insurance “as a matter of common sense,” partly because the law is included in the state insurance code.

Scalia said, “I don’t like the common-sense test because I’m afraid we will just approve the things we like. I want a rule of law.”

Rust said he is optimistic that the Supreme Court will uphold the Kentucky AWP law and set a precedent for AWP laws in at least 20 states.

“That ruling, along with Rush v. Moran, will provide definitive guidance to the lower courts in states with similar managed care laws,” he said. “But the decision could have a more far-reaching effect on managed care laws if the justices agree with our reasoning . . .that the scope of ERISA should be narrowed. Congress never intended ERISA to govern relationships between physicians and managed care companies. Their intent was that ERISA would protect employee benefits by governing the relationships between employers and employees and their fiduciaries.”

The AMA brief is posted on the Web at http://supreme.lp.findlaw.com/supreme_court/briefs/00-1471/00-1471.mer.ami.ama.pdf. ▪