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May 17, 1999
Norwood Unveils Full Details Of Coordinated Enforcement Plans
Washington, DC —  House Republican leaders are now studying the  single provision that could open the door for bi-partisan managed care reform this year. The ERISA liability section of the Consensus Managed Care Reform Act of 1999 provides the most comprehensive reform of the controversial 1974 ERISA pre-emption of state law.  Congressmen Charlie Norwood (R-GA) delivered the bill to House Commerce Committee Chairman Tom Bliley last Friday. 
In the 105th Congress, that issue became the key stumbling block to reaching a consensus reform package, in spite of the fact that the majority of House members supported lifting the pre-emption for cases of wrongful injury and death.  However, even opponents of previous attempts to overturn the pre-emption admit that current law deprives patients of due process and provides unscrupulous insurers an incentive to deny care.  In response,  several provisions were submitted that attempted to address the problem short of fully restoring the right to sue in state court.  
A key argument against lifting the pre-emption has been fear that restoration would result in a rash of frivolous lawsuits against health plans and employers.  Even though frivolous suits  ultimately fail in court, many in the business community believe insurers and employers would be forced to settle for substantial cash awards out-of-court to avoid legal costs and bad publicity.
In addition, a historical trend towards escalating punitive damage awards raises concern that juries might be prone to awarding damages so excessive that the cost of health care would increase, forcing more low-income families into the ranks of the estimated 43 million uninsured.  
The Consensus Bill is the first legislation to systematically address these concerns, while providing full access to the courts for patients who are indeed injured by wrongful decisions to deny care. 
"One of the reasons we have not been able to move this issue so far is that we have all been guilty of looking at ERISA liability in a vacuum," says Norwood. "In truth, as a stand-alone measure, restoring the right to sue doesn’t provide the full reforms we need in managed care.  But without the right to sue as final enforcement, the other reforms won’t work, either.  This bill very carefully coordinates the universal standards of care that were supported by both sides of the aisle last year with ERISA liability, in a way that the standards now work in tandem with  legal accountability."   
The Consensus Bill accomplishes the goal by establishing liability as the final line of defense in coordinated levels of patient protections, beginning with the first time a patient is denied a benefit.  However, the bill does not prevent a patient from skipping the numerous protections and proceeding directly to state court if they believe they have been damaged. 
Before injury from lack of care occurs, patients have free access to an external appeals board, which is required to issue legally binding decisions within 78 hours, in non-emergency situations.  If plans don’t follow the decision, patients can sue in federal court for up to $250,000, plus court costs and attorney fees, with no injury required. ($750 a day for every day care is denied.)
If the health plan explicitly follows federal law in providing access to the board and adheres to the board’s decision, they remain immune from punitive damages, but are still liable for compensatory damages, including economic, pain, and suffering. 
To head off frivolous lawsuits, insurers can require the external review board to certify that an injury has occurred before the case advances to court.  The board does not decide what caused the injury, simply whether the injury actually exists.  This measure blocks the ability of "lawsuit mills" to file frivolous cases, with the intent of collecting cash settlements from insurers trying to avoid court costs. 
The new liability language also expressly defines what constitutes, and who faces liability to begin with.  If health plans simply provide the care requested by the patient and their doctor, they cannot be sued for any reason.  Plans cannot be sued for denying benefits that are expressly not covered by the plan.  If a health plan states in their contract that a given procedure is specifically not covered, trial attorneys cannot file suits that claim it should have been.  However, plans remain legally accountable for all treatments not specifically prohibited, and cannot hide behind vaguely-worded "experimental/investigational" clauses in their contracts.  Likewise, employers cannot be held liable for their decisions to purchase specific plans or benefits.  Furthermore, employers  remain immune from liability unless they exercise discretionary authority in making medical decisions against a patient’s treatment request.   
The Consensus Bill provides additional strong clarifying language on the "discretionary authority" issue.  If employers choose not to use their discretionary authority to weigh in on a disputed treatment, but instead choose to let the external appeals process work to completion, they remain immune.   
Norwood says the new ERISA liability provision brings to Congress what members have been looking for in the way of solutions.  "Under this bill, someone with real injuries from plans that ignore the law will have full access to all damages allowed in state court.  If bad plans continue improperly denying benefits, and dragging their heels on patient appeals, they face compensatory and punitive damages with no federal limitations on the award.  However, If the insurer gives the patient what they want, they remain immune.  If they contest a treatment, but follow the standards in the bill, they won’t face punitive damages. That’s a powerful economic incentive to follow the new standards to the letter of the law.  If plans do that, we won’t have patients being injured to begin with."
"What this bill really accomplishes is precisely what we wanted from day one on this issue - relief for the truly injured against the truly negligent."



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