ERISA: Consumers For Quality Care Releases Loophole Report
Consumers for Quality Care released a report Wednesday detailing how the federal Employee Retirement Income Security Act (ERISA) voids certain state HMO consumer protections. "Workers with employer-paid health coverage have no idea that they are second-class citizens and not entitled to the same state law protections as patients who buy their own health care," said Jamie Court, director of the group and author of "The ERISA Loophole: A Report To The Public." Court added, "It is a cruel hoax to pass laws that purport to help HMO patients but are unavailable for the majority of all patients. The fraud behind many new state HMO 'reform' proposals is that patients who receive their health care through employers may not be able to utilize the new benefits due to federal ERISA preemption."
The consumers group conducted an analysis of patient records, legal cases and judicial decisions and found that "state and federal HMO reform efforts will be a grave, public deception if they do not address the ERISA loophole." The report says that when ERISA was passed, managed care did not exist, and because the law "has not been reformed to respond to these dramatic changes in the health care industry," ERISA "now threatens rather than protects employees' health care." Fifth Circuit Court of Appeals Judge Carolyn Dineen King recently concurred, saying, "Fundamental changes ... seem to warrant a reevaluation of ERISA."
Null And Void
Among the HMO consumer protections effectively preempted for employees in employer-sponsored plans is California's Knox Keene Health Care Service Plan Act of 1975, which gave the state regulatory authority over managed care plans. "The court ruled that 'state regulation of plaintiffs' ERISA-covered employee benefit plans under Knox-Keene is expressly and validly preempted,'" the report says. In addition, the California Civil Code, "which provides for remedies to those who have been wronged in any case other than a contract dispute," and "California's Wrongful Death Statute" are also preempted by ERISA.
According to Consumers for Quality Care, "HMOs found guilty of a federal ERISA grievance must pay only the cost of the procedure they denied in the first place, no other damages or penalties. If the patient dies before getting treatment, the HMO pays nothing and the patient's family has no remedy." This means that "HMOs have no incentive to provide expensive, medically appropriate treatment because they are not held accountable for the consequences of their denials" (release, 3/5).