ERISA preemption and regulation of managed health care: The case for managed federalism

American Journal of Law and Medicine

Volumn 23, Issue 2-3, 1997, Pages 251-290

  Farrell, Margaret G ^a,b,c,d  

^a WIDENER UNIVERSITY   (United States)

^b Department of Obstetrics Gynecology   (United States)

^c YALE UNIVERSITY   (United States)

^d UNIVERSITY OF CHICAGO LAW SCHOOL   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

HEALTH CARE MANAGEMENT; HEALTH CARE PLANNING; HEALTH CARE POLICY; HEALTH INSURANCE; LAW; MANAGED CARE; MANAGED CARE ORGANIZATION; REVIEW;

ANTITRUST LAWS; EMPLOYEE RETIREMENT INCOME SECURITY ACT; INSURANCE, LIABILITY; MALPRACTICE; MANAGED CARE PROGRAMS; MEDICAID; MEDICARE; REFUSAL TO TREAT; REIMBURSEMENT MECHANISMS; UNITED STATES;

EID: 0030876992     PISSN: 00988588     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (265)

1. Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1338 (5th Cir. 1992).
2. 29 U.S.C. §§ 1001-1461 (1994).
3. Catherine L. Fisk, Lochner Redux: The Renaissance of Laissez-faire Contract in the Federal Common Law of Employee Benefits, 56 OHIO ST. L.J. 153, 169 n.57 (1995) (citing Michael S. Gordon, Overview: Why Was ERISA Enacted, in U.S. SENATE SPECIAL COMM. ON AGING, 98TH CONG., 2D SESS., THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974: THE FIRST DECADE 25 (Comm. Print 1984).
4. Catherine L. Fisk, Lochner Redux: The Renaissance of Laissez-faire Contract in the Federal Common Law of Employee Benefits, 56 OHIO ST. L.J. 153, 169 n.57 (1995) (citing Michael S. Gordon, Overview: Why Was ERISA Enacted, in U.S. SENATE SPECIAL COMM. ON AGING, 98TH CONG., 2D SESS., THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974: THE FIRST DECADE 25 (Comm. Print 1984).
5. For the purposes of this Article, managed care organization (MCO) means an organization that accepts a premium or capitation payment for providing comprehensive, medically necessary health care.
6. The Health Maintenance Organization Act of 1973 encourages the voluntary formation of federally defined health maintenance organizations (HMOs), but does not regulate organizations that are not brought within its purview. See 42 U.S.C. §§ 300e to 300e-17 (1994). HMOs are health care delivery and underwriting organizations that offer benefits prescribed by state and federal law to subscribers on a prepaid basis.
7. It is reported that more than 58 million Americans are enrolled in prepaid health plans. See Milt Freudenheim, Market Place; HMOs Are Having Trouble Maintaining Financial Health, N.Y. TIMES, June 19, 1996, at D12.
8. Conventional insurance and managed care companies force that bidding out of the provider market and into the underwriting market.
9. California Proposition 219 would have imposed limitations and procedures in managed care utilization reviews. Part of the November 1996 California voter referendum, the measure failed to pass.
10. See generally Michael S. Sparer, Commentary, Great Expectations: The Limits of State Health Care Reform, HEALTH AFF., Winter 1995, at 191, 193 (describing obstacles to state health reform).
11. For instance, the fact that Congress has power under Article I to regulate commerce among the states does not mean that the states may not also regulate such commerce, so long as such regulation does not conflict with congressional legislation or burden interstate commerce.
12. See generally Pike v. Bruce Church, 397 U.S. 137 (1970) (invalidating a state official's order regarding cantaloupe packaging as burdensome on interstate commerce); South Carolina State Highway Dep't v. Barnwell Bros., 303 U.S. 177 (1938) (upholding a state's rule limiting the weight and width of vehicles using its highways and bridges as a reasonable safety measure); Julian N. Eule, Laying the Dormant Commerce Clause to Rest, 91 YALE L.J. 425 (1982) (proposing a diminished role for the dormant commerce clause); Mark Tushnet, Rethinking the Dormant Commerce Clause, 1979 WIS. L. REV. 125 (arguing for a smaller judicial role in state commerce legislation).
13. See generally Pike v. Bruce Church, 397 U.S. 137 (1970) (invalidating a state official's order regarding cantaloupe packaging as burdensome on interstate commerce); South Carolina State Highway Dep't v. Barnwell Bros., 303 U.S. 177 (1938) (upholding a state's rule limiting the weight and width of vehicles using its highways and bridges as a reasonable safety measure); Julian N. Eule, Laying the Dormant Commerce Clause to Rest, 91 YALE L.J. 425 (1982) (proposing a diminished role for the dormant commerce clause); Mark Tushnet, Rethinking the Dormant Commerce Clause, 1979 WIS. L. REV. 125 (arguing for a smaller judicial role in state commerce legislation).
14. See Tushnet, supra note 11, at 126-27.
15. In Kassel v. Consolidated Freightways Corp., 450 U.S. 662, 670 (1981), Justice Powell noted: [T]he incantation of a purpose to promote the public health or safety does not insulate a state law from Commerce Clause attack. Regulations designed for that salutary purpose nevertheless may further the purpose so marginally, and interfere with commerce so substantially, as to be invalid under the Commerce Clause. [Special deference to state safety regulations] derives in part from the assumption that where such regulations do not discriminate on their face against interstate commerce, their burden usually falls on local economic interests as well as other States' economic interests, thus insuring that a States own political processes will serve as a check against unduly burdensome regulations.
16. The two constitutional grounds for invalidation of the exercise of concurrent regulatory authority by the states - conflict preemption and commerce clause preemption - sometimes seem to involve the same weighing of local and national interests. See Note, Pre-emption as a Preferential Ground: A New Canon of Construction, 12 STAN. L. REV. 208, 220-21 (1959); see also City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 633 (1973) (invalidating local noise abatement ordinance as preempted by Federal Aviation Act). Because noise regulation has traditionally been an area of local, not national, concern, in determining whether congressional legislation has, by implication, foreclosed remedial local enactments "we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." This assumption derives from our basic constitutional division of legislative competence between the States and Congress; from "due regard for the presuppositions of our embracing federal system. . . ." Id. at 643 (Rehnquist, J., dissenting) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947); San Diego Bldg. Trades Council v. Garmon, 349 U.S. 236, 243 (1959).
17. 29 U.S.C. § 1144(a) (1994).
18. Shaw v. Delta Airlines, Inc., 463 U.S. 85, 95 (1983).
19. See, e.g., Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977).
20. See, e.g., id. For a discussion of the implications of this assumption, see Stephen Gardbaum, Rethinking Constitutional Federalism, 74 TEX. L. REV. 795 (1996). Gardbaum contends that there are constitutional constraints on Congress's powers of express preemption based on principles of federalism emanating from the Constitution which require that Congress engage in a deliberative process weighing the consequences of eliminating concurrent authority and the need for national uniform legislation before expressly preempting state law. See id. at 823-28. This Article contends that such limitations should be applied as a matter of sound jurisprudence rather than constitutional mandate.
21. See generally Catherine L. Fisk, The Last Article About the Language of ERISA Preemption? A Case Study of the Failure of Textualism, 33 HARV. J. ON LEGIS. 35, 38-39 (1996) (discussing how textual interpretations affect the development of law and public policy).
22. Shaw, 463 U.S. at 97-98 (considering whether state law prohibiting sex-based discrimination fell inside or outside the express preemption provision of ERISA).
23. See, e.g., District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 129 (1992).
24. Shaw, 463 U.S. at 96-97 n.16.
25. 115 S. Ct. 1671, 1677 (1995).
26. See id. at 1679.
27. Id. at 1672.
28. See id. at 1681-82. The Court notes that the same Congress which enacted the ERISA pre-emption provision enacted the National Health Planning and Resource Development Act of 1974, Pub. L. No. 93-641, 88 Stat. 2225, §§ 1-3, repealed by Pub. L. No. 99-660, tit. VII, § 701(a), 100 Stat. 3799 (1987), which sought to encourage the kind of cost-containment regulation involved in New York's surcharge system. See Travelers, 115 S. CL at 1672.
29. Justice Souter, writing for the majority, observed that "[i]f 'relate to' were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course, for 'really, universally, relations stop nowhere.'" Id. at 1677 (quoting HENRY JAMES, RODERICK HUDSON at xli (World's Classics 1980)).
30. This exercise is much like the effort to fathom the intent of the Constitution's framers regarding the permissibility of state regulation of something like cloning, that they could not have imagined. The Court supports its assumptions about the 1974 intentions of Congress with citation to Congress's almost simultaneous passage of the National Health Planning and Resources Development Act of 1974, which recognized state rate-making authority over the provision of health services without requiring exemption from ERISA preemption. See id. at 1681-82. That the Act was completely repealed is not mentioned, presumably because it was thought irrelevant for interpretative purposes. Neither the justices nor we can plumb the depths of that intent for there was none. Our imagining of it is pure fiction.
31. See id. at 1675.
32. See Gordon, supra note 3, at 6-25.
33. See id. at 19-20.
34. See id. at 7 (noting that the selection of the Department of Labor as the administering agency for ERISA "was intended to validate the Labor interest in benefit fund regulation").
35. 29 U.S.C. § 1144(b)(1)(1994).
36. See id. § 1144(b)(2).
37. See Shaw v. Delta Airlines, Inc., 463 U.S. 85, 98-100 nn.18-20 (1983) (analyzing legislative history of preemption provision). But see FMC Corp. v. Holliday, 498 U.S. 52, 67 (1990) (Stevens, J., dissenting) ("Although the compromise that produced the statutory language 'relate to any employee benefit plan' is not discussed in the legislative history, the final version is perhaps best explained as an editorial amalgam of the two bills rather than as a major expansion of the section's coverage.").
38. See Daniel M. Fox & Daniel C. Schaffer, Semi-Preemption in ERISA: The Legislative Process and Health Policy, 7 AM. J. TAX POL'Y 47, 48-52 (1988).
39. Nor can ERISA's broad preemptive sweep be justified as necessary for the growth of multi-state health insurers and MCOs, which were largely undeveloped at the time the ERISA-preemption scheme was conceived. Congress did not address that issue, and to the extent that HMOs were being developed, they were largely regulated by state insurance laws and hence excepted from ERISA's preemptive effect.
40. See supra Part I.A.
41. See supra Part I.A.
42. Many small employers can only "afford" to self-insure because they can purchase stop-loss insurance to protect them against certain large losses. States have an interest in assuring employees whose benefits are underwritten by stop-loss insurance that those insurance companies do not assume unacceptably large risks from "self-insuring" employers.
43. An exposition of those principles is beyond the scope of this Article, but they would include the principles used to determine whether state law burdens interstate commerce. See generally LAURENCE H. TRIBE, AMERICAN CONSTITUTIONAL LAW § 6-13, at 436 (2d ed. 1988) (describing elements considered by the Court: the distinction between economic and social regulation, the stress on local concerns, and the availability of less restrictive alternatives).
44. See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 115 S. Ct. 1671, 1676 (1995).
45. See supra Part I.A.
46. See supra Part I.A.
47. See Southern Pac. Co. v. Arizona ex rel. Sullivan, 325 U.S. 761, 766 (1945).
48. See Jones v. Rath Packing Co., 430 U.S. 519, 526, 543 (1977); Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
49. See. e.g., Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 737 (1985) (noting that the rejection of conflict-based analysis of the "relate to" general preemption provision in Shaw does not preclude a conflict-based analysis of the application of the "savings clause"); see also John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 114 S. Ct. 517, 540 (1993) (noting that ERISA leaves room for dual federal and state regulation but calls for federal supremacy if the two regimes cannot be harmonized); FMC v. Holliday, 498 U.S. 52, 72 (1990) (Stevens, J., dissenting) ("While the saving clause . . . exempts from the pre-emption clause all state laws that have the broad effect of regulating insurance, the deemer clause simply allows pre-emption of those state laws that expressly regulate insurance.").
50. See Travelers, 115 S. Ct. 1671, 1677 ("The goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government.").
51. Under traditional fee-for-service (FFS) payment structures, providers had an incentive to overprovide insurance subsidized care. Capitated managed care arrangements, on the other hand, create the reverse incentive for providers to underprovide care. See generally Michael J. Malinowski, Capitation, Advances in Medical Technology, and the Advent of a New Era in Medical Ethics, 22 AM. J.L & MED. 331 (1996) (contrasting FFS and managed care regimes).
52. See id. at 347.
53. 29 U.S.C. § 1144(a) (1994).
54. Id. §§ 1001-1461.
55. The Supreme Court has stated, with respect to ERISA's preemption provision, that "[s]ection 514(a) was intended to ensure that plans and plan sponsors would be subject to a uniform body of benefit law; the goal was to minimize the administrative and financial burden of complying with conflicting directions among the States or between States and the Federal Government." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990).
56. In 1993, 69% of employees at companies with 100 or fewer employees were covered by employer-based health insurance and 83% of employees at larger companies had employer-based coverage. See Gary A. Francesconi, Note, ERISA Preemption of "Any Willing Provider" Laws - An Essential Step Toward National Health Care Reform, 73 WASH. U. L.Q. 227, 228 n.7 (1995). In 1991, of the 212 million Americans covered by private health insurance, 67% obtained such coverage through an employer. See id. (citing ERNST & YOUNG, HEALTH CARE DATA REFERENCE CARD (Dec. 1993)).
57. In 1993, 69% of employees at companies with 100 or fewer employees were covered by employer-based health insurance and 83% of employees at larger companies had employer-based coverage. See Gary A. Francesconi, Note, ERISA Preemption of "Any Willing Provider" Laws - An Essential Step Toward National Health Care Reform, 73 WASH. U. L.Q. 227, 228 n.7 (1995). In 1991, of the 212 million Americans covered by private health insurance, 67% obtained such coverage through an employer. See id. (citing ERNST & YOUNG, HEALTH CARE DATA REFERENCE CARD (Dec. 1993)).
58. 29 U.S.C. § 1144 (1994). ERISA governs welfare benefit plans, including health plans, that are established or maintained by an employer for the purpose of providing medical, surgical or hospital care benefits. See id. § 1002(1).
59. U.S. CONST. art. VI. See generally TRIBE, supra note 41, § 6-26, at 481.
60. See TRIBE, supra note 41, § 6-26, at 481.
61. See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981). As Justice Blackmun subsequently observed: In early versions of ERISA, the general pre-emption clause pre-empted only those laws dealing with subjects regulated by ERISA. The clause was significantly broadened at the last minute, well after the "saving clause" was in its present form, to include all state laws that relate to benefit plans. The change was made with little explanation by the Conference Committee and there is no indication in the legislative history that Congress was aware of the new prominence given the "saving clause" in light of the rewritten pre-emption clause, or was aware that the "saving clause" was in conflict with the general pre-emption provision. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 745 (1985).
62. Metropolitan Life, 471 U.S. at 739. For a detailed analysis of the legislative history, see Shaw v. Delta Airlines, Inc., 463 U.S. 85, 98-100 nn. 18-20 (1983).
63. See 29 U.S.C. § 1144(a) ("preemption clause").
64. See id. § 1144(b)(1) ("saving clause").
65. See id. § 1144(b)(2) ("deemer clause").
66. See, e.g., Standard Oil Co. of California v. Agsalud, 633 F.2d 760 (9th Cir. 1980).
67. See generally Sparer, supra note 9, at 193.
68. See, e.g., Dearmas v. Av-Med., Inc., 865 F. Supp. 816 (S.D. Fla. 1994).
69. Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97 (1983).
70. See Mackey v. Lanier Collection Agency & Serv., 486 U.S. 825 (1988) (Georgia statute barred garnishment of ERISA benefits); see also District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 (1992) (District of Columbia law required employers to provide health insurance coverage as broad as that given under workers' compensation laws).
71. Corcoran v. United Healthcare, Inc., 965 F.2d 1321 (5th Cir. 1992).
72. Settles v. Golden Rule Ins. Co., 927 F.2d 505 (10th Cir. 1991) (ERISA preempts common law claims for death of health plan beneficiary who suffered heart attack when wrongly informed his coverage was terminated).
73. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137 (1990) (state common law cause of action seeking damages for wrongful discharge to avoid paying pension benefits related to a qualified plan and thus preempted by ERISA).
74. Ricci v. Gooberman, 840 F. Supp. 316, 317 (D.N.J. 1993); Dukes v. United States Health Care Sys., 848 F. Supp. 39, 43 (E.D. Pa. 1994) (holding both vicarious and direct causes of action against an HMO were preempted by section 514), rev'd on other grounds, 57 F.3d 350 (3d Cir. 1995) (holding district court lacked removal jurisdiction to determine preemption issue).
75. 115 S. Ct. 1672 (1995).
76. See id. at 1675.
77. See id.
78. See id. The Court emphasized the judicial presumption against federal preemption in areas of local concern, such as health care, but left open the possibility of preemption when state law has an indirect but "acute" effect on health plans. See id. at 1679.
79. Id. at 1677-78.
80. See id. at 1679-80.
81. See id. at 1678.
82. The Court distinguished Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724 (1985), in which it had found that a state law mandating coverage for mental health benefits imposed a substantive benefit requirement on ERISA plans and thus "related to" qualified plans. See Travelers, 115 S. Ct. at 1679.
83. See Travelers, 115 S. Ct. at 1674.
84. Cf. id. at 1679 (noting that state regulation schemes with indirect economic effects are not preempted by ERISA).
85. See Jonathan R. Macey & Geoffrey P. Miller, The McCarran-Ferguson Act of 1945: Reconceiving the Federal Role in Insurance Regulation, 68 N.Y.U. L. REV. 13, 14 (1993).
86. 29 U.S.C. § 1144(b)(2)(A) (1994).
87. See Francesconi, supra note 54, at 237.
88. See Metropolitan Life, 471 U.S. at 724. In 1993, states regulated only 24% of the total health care insurance market, due largely to Medicare, Medicaid and ERISA coverage. See U.S. GEN. ACCOUNTING OFFICE, HEALTH INSURANCE REGULATION: WIDE VARIATIONS IN STATES' AUTHORITY, OVERSIGHT AND RESOURCES, GAO/HRD-94-26 (Dec. 27, 1993).
89. See Metropolitan Life, 471 U.S. at 743.
90. See Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982); Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 231-33 (1979).
91. See Macey & Miller, supra note 82, at 47.
92. See U.S. Dep't of Treasury v. Fabe, 508 U.S. 491 (1993), on remand, 9 F.3d 1548 (6th Cir. 1993) (finding Ohio law giving preference to policyholders of insolvent insurance companies not preempted by conflicting federal statutory preference because it was a law regulating the business of insurance within the meaning of the McCarran-Ferguson Act's provision recognizing the state's authority to regulate insurance).
93. See Farmer v. Monsanto Co., 517 S.W.2d 129, 133 (Mo. 1974) (overturning a lower court decision imposing $185 million in penalties on Monsanto Company for providing a self-funded medical benefit plan without obtaining a license to do business as an insurance company). There was general concern at the time that insurance departments would seek to replace premium tax revenues lost when employers turned to self-insurance by taxing self-insuring companies like Monsanto. See Jay Conison, ERISA and the Language of Preemption, 72 WASH. U. L.Q. 619, 648-49 (1994).
94. See 29 U.S.C. § 1144(b)(1) (1994).
95. See FMC v. Holliday, 498 U.S. 52 (1990); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 738 (1985).
96. In Holliday, the Court examined a state law that precluded any program, group contract or arrangement paying benefits from exercising subrogation rights arising out of a tort recovery. See id. at 54. The law was challenged by a self-insured plan, and the Court held the law was preempted by virtue of the deemer clause. See id. at 65.
97. Interpreting state laws mandating health insurance benefits as laws regulating insurance, the Supreme Court noted that the deemer clause results in a distinction between insured and uninsured plans, leaving the former open to indirect regulation while the latter are not. By so doing we merely give life to a distinction created by Congress in the 'deemer clause,' a distinction Congress is aware of and one it has chosen not to alter. Metropolitan Life, 471 U.S. at 747.
98. See FMC Corp. v. Holliday, 498 U.S. 52 (1990) (Stevens, J., dissenting). See generally Fox & Schaffer, supra note 36, at 47-52.
99. This "semi-preemption" of self-insuring employers has increased their number because such employers seek to avoid mandated benefits, premium taxes, licensure, equal treatment of employees in different states, and to gain the profit to be made from high interest rates on retained earnings. See Fox & Schaffer, supra note 36, at 47-52.
100. Cf. Cynthia B. Sullivan et al., Employer Sponsored Health Insurance in 1991, HEALTH AFF., Winter 1992, at 172, 172.
101. See id. at 176-77.
102. "Stop loss insurance is acquired by a self-insurer to protect against excessive claims. A stop loss insurer reimburses a self-insured for all or an agreed upon portion of actual claims that exceed an amount preset by the insurer and self-insured." Reich v. Lancaster, 55 F.3d 1034, 1041 n.4 (5th Cir. 1995). See generally LEE R. RUSS & THOMAS F. SEGALLA, COUCH ON INSURANCE § 1:33 (3d ed. 1995).
103. See, e.g., Thompson v. Talquin Bldg. Prods. Co., 928 F.2d 649, 653 (4th Cir. 1991) (self-insured plan with stop-loss insurance for claims above $25,000 is self-funded for purposes of the deemer clause because the employer insured employees' liability for medical expenses and the reinsurer merely insured the employer); Drexelbrook Eng'g Co. v. Travelers Ins. Co., 710 F. Supp. 590, 595 (E.D. Pa. 1989) (stop-loss insurance coverage did not prevent a self-insured plan from enjoying protection of the deemer clause).
104. Nevertheless, some courts seem to hold that state laws governing this reinsurance sold to "self-insured plans" are free of ERISA preemption. See, e.g., Union Health Care, Inc. v. John Alden Life Ins. Co., 908 F. Supp. 429, 436 (S.D. Miss. 1995) (remanding state contract action by ERISA health plan against reinsurer to state court finding that ERISA did not preempt the claims).
105. See Fox & Schaffer, supra note 36, at 47-52.
106. See DeBuono v. NYSA-ILA Med. & Clinical Servs. Fund, 74 F.3d 28 (2d Cir.), cert. granted, 117 S. Ct. 292 (1996) (granting certiorari to consider whether New York's tax on plan-owned hospitals is preempted by ERISA).
107. See VICTOR FUCHS, THE HEALTH ECONOMY 17 (1986).
108. See Fox & Schaffer, supra note 36, at 49.
109. See id. at 50.
110. See id. at 49. Unions and other interest groups wanted to preclude state bar associations from dictating the terms of prepaid legal service plans offered as a welfare benefit by employers through state regulation. See id.
111. See id. at 50.
112. See generally id. at 47-52.
113. "I am persuaded that Congress did not intend this clause to cut nearly so broad a swath in the field of state laws as the Court's expansive construction will create." FMC Corp. v. Holliday, 498 U.S. 52, 66 (1990) (Stevens, J., dissenting).
114. 115 S. Ct. 1672 (1995).
115. See id. at 1679.
116. Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1331 (5th Cir. 1992).
117. Metropolitan Life Ins. v. Massachusetts, 471 U.S. 724 (1985).
118. United Health Servs. v. Upstate Admin. Servs. Inc., 573 N.Y.S.2d 851, 854 (Sup. Ct. 1991).
119. Cf. NYSA-ILA Med. & Clinical Servs. Fund v. Axelrod, 27 F.3d 823 (2d Cir. 1994), vacated, 115 S. Ct. 1671 (1995), reaff'd, 74 F.3d 28 (2d Cir. 1996) (tax on gross receipts from patient care services of all hospitals and medical facilities to fund a high risk pool was preempted when directly applied to jointly administered, multi-employer welfare benefit trust fund serving longshore workers and their dependents exclusively).
120. Altogether, 43 states have adopted laws to facilitate more adequate coverage for small business employees. See U.S. GEN. ACCOUNTING OFFICE, ACCESS TO HEALTH INSURANCE: STATES EFFORTS TO ASSIST SMALL BUSINESSES, GAO/HRD-92-90 (May 14, 1992).
121. Proposition 216 on the California ballot in November 1996 evidenced that fact. Although rejected, the proposition would have required HMOs to obtain a second opinion before denying services, prohibited HMOs from imposing "gag orders" on physicians (limiting the information they can give to patients), and proscribed the use of financial incentives for doctors to deny care. See, e.g., Richard C. Reuben, In Pursuit of Health, A.B.A. J., Oct. 1996, at 55, 58.
122. See 42 U.S.C. §§ 300e to 300e-17 (1994).
123. See, e.g., PA. STAT. ANN. tit. 40, §§ 1550-1567 (1995).
124. See id.; BARRY FURROW ET AL., HEALTH LAW § 11-11(b) (1995); see also Jordan v. Group Health Ass'n, 107 F.2d 239, 247 (D.C. Cir. 1939) (holding that HMO-like group practice was not subject to insurance regulation though it assumed risk, because the group's primary purpose was to deliver health services).
125. See Allison Overbay & Mark Hall, Insurance Regulation of Providers That Bear Risk, 22 AM. J.L. & MED. 361, 375 (1996).
126. See id.
127. See FURROW ET AL., supra note 121, § 11-11(b).
128. It can be argued that an employee benefit plan that contracts with an MCO to provide promised benefits is not a self-insured plan if enough underwriting risk is born by the MCO.
129. State regulation of solvency is part of the traditional regulation of insurance saved from ERISA preemption and state regulation of quality health care in the state does not "relate to" ERISA plans sufficiently to trigger preemption. As Justice Souter observed in Travelers, "[n]othing in the language of the Act or the context of its passage indicates that Congress chose to displace general health care regulation, which historically has been a matter of local concern." Travelers, 115 S. Ct. at 1680. On the other hand, picking up the failed arguments in Metropolitan Life, such regulation could be characterized as public health regulation and thus preempted insofar as it "relates to" ERISA plans.
130. The District of Columbia Council recently passed legislation setting standards for the formation, operation and regulation of HMOs. See District of Columbia: D.C. Council Approves Bill to Set Standards for HMO Formation, Operation, 5 Health L. Rep. (BNA) No. 48, at d22 (Dec. 12, 1996). Interestingly, the legislation would require employers who offer health benefit plan coverage through an HMO also to offer a point of service option. See id. Applied to self-insuring employers, this requirement would seem to run afoul of the deemer clause.
131. Several states have enacted laws requiring hospitals to provide new mothers at least forty-eight hours of care after delivery. See, e.g., Oregon: 'Patient Protection' Bill Passes House, Expected to be Signed Soon by Governor, 6 Health L. Rep. (BNA) No. 24, at d27 (June 12, 1997). These laws essentially impose mandatory benefit requirements on insurance companies, HMOs and self-insuring employers alike, and thus could be challenged as preempted by ERISA. Those who oppose preemption maintain that such laws are not "related to" ERISA health plans, but, in the words of the Travelers opinion, are essentially "quality standards . . . in one subject area of hospital services." Travelers, 115 S. Ct. 1671, 1679 (1995). As such, they have only an indirect economic effect on plans, which the Travelers Court found it unlikely Congress meant to preempt. In any event, congressional prohibition of "drive-through deliveries" in the Kennedy-Kassebaum legislation moots the point. For a discussion of the Kennedy-Kassebaum bill, see infra Part IV.D.
132. Most state HMO laws require qualified HMOs to provide comprehensive medical and other health services.
133. See FURROW ET AL., supra note 121, § 11-4(b) (reporting that as of 1989, state governments had imposed 732 mandates).
134. In Metropolitan Life Insurance Co. v. Massachusetts, the Supreme Court addressed whether Massachusetts' requirement that all insurance companies provide certain mental health benefits was preempted by ERISA. 471 U.S. 724, 727 (1985). The Court found that the regulation had the requisite effect on ERISA health plans to be "related to" ERISA plans. See id. at 739. The Court then applied the McCarran-Ferguson three-prong test to determine whether benefit coverage was part of the business of insurance that the states may regulate. See id. at 743. Finding that it was, the Court held the mandated benefit law was saved from preemption. See id. at 744. Metropolitan had argued that the mandated benefits laws were public health regulation, not the regulation of insurance and thus "related to" ERISA plans. See id. at 741. The Court rejected this argument and in Travelers indicated that most public health regulation will not be viewed as "related to" ERISA plans. See Travelers, 115 S. Ct. at 1680.
135. Preferred Provider Organizations (PPOs) vary broadly in the kinds of services they offer, the level of benefits and the way they pay providers.
136. See Any Willing Provider Laws Spreading, MANAGED CARE L. OUTLOOK, July 1994, at S4-5.
137. See FURROW ET AL., supra note 121, § 11-12, at 60.
138. See generally Recent Legislation, Arkansas Requires HMOs to Accept Any Provider Willing to Join Their Networks: Patient Protection Act, 1995, 109 HARV. L. REV. 2122 (1996); Francesconi, supra note 54, at 227.
139. See, e.g., VA. CODE ANN. § 38.2-3407 (Michie 1994).
140. 995 F.2d 500, 502 (4th Cir. 1993).
141. See supra Part II.B.
142. See Texas Pharmacy v. Prudential Ins. Co. of Am., 907 F. Supp. 1019, 1025-26 (W.D. Tex. 1995) (holding Texas's any willing provider law saved from preemption in part because it excludes self-insured plans from regulation).
143. 82 F.3d 642, 650 (5th Cir. 1996).
144. See id. at 647-49.
145. See, e.g., Zuniga v. Blue Cross & Blue Shield of Mich., 52 F.3d 1395 (6th Cir. 1995).
146. 680 A.2d 127, 131 (Conn. 1996).
147. See id. at 133.
148. See id. at 144.
149. See, e.g., Stroker v. Rubin, 1994 WL 71969L (E.D. Pa. Dec. 22, 1994); Visconti v. U.S. Health Care, 857 F. Supp. 1097 (E.D. Pa. 1996).
150. Independence HMO v. Smith, 733 F. Supp. 983, 987 (E.D. Pa. 1990). See generally Torin A. Dorros & T. Howard Stone, Implications of Negligent Selection and Retention of Physicians in an Age of ERISA, 21 AM. J.L. & MED. 383 (1995).
151. See, e.g., Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984).
152. See id. at 137.
153. For instance, in Rebaldo v. Cuomo, the Second Circuit reversed a lower court's holding that New York's hospital rate-setting program was preempted by ERISA. See id. at 140. The appeals court held ERISA did not preempt the law, despite the fact that the law prohibited hospitals from negotiating with self-insuring employers for rates lower than prevailing discounted rates with Blue Cross. See id. at 138. In an effort to control health care costs in 1982, New York expanded its 1970 demonstration hospital rate-setting program approved for Medicare reimbursement by the Secretary of Health and Human Services (HHS) as authorized by Congress. See id. at 136. In reaching its decision, the court relied, in part, on its review of the ways in which Congress had sought to control costs of Medicare. See id.
154. See id. at 139.
155. Blue Cross & Blue Shield v. Neilsen, 917 F. Supp. 1532, 1539-42 (N.D. Ala. 1996).
156. See id. at 1542.
157. See id. at 1540-41.
158. See id.
159. See discussion supra Part III.B.
160. 481 U.S. 41 (1987).
161. See id. at 57.
162. See id. at 42. The Court reiterated its rulings that state laws referring to or having a connection with qualified plans relate to them within the meaning of the ERISA preemption provision, and found the bad faith claim affected claims administration and, therefore, related to the plan. See id. at 46-47 (citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985); Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983)). Furthermore, the common law bad faith action could not be considered the regulation of insurance, because it was not specifically directed toward the insurance industry, and because it did not regulate "insurance," as defined by the McCarran-Ferguson three-prong test. See id. at 42; Union Labor Life Ins. Co. v. Perino, 458 U.S. 119 (1982) (The Court applied the three-prong test in a McCarran-Ferguson Act case, requiring that the regulated activity effect the spreading of policyholder risk, be an integral part of the insurer-insured relationship, and not affect those outside the insurance industry.).
163. Pilot Life, 481 U.S. at 52-54. The Court reasoned as follows: "In sum, the detailed provisions of section 502(a) set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans . . . ." Id. at 54.
164. Id. at 54.
165. See, e.g., Kuhl v. Lincoln Nat'l Health Plan, 999 F.2d 298 (8th Cir. 1993) (ERISA pre-empted claim against independent practice (IPA) association-type HMO for negligent denial of precertification for surgery); Elsesser v. Hospital College of Osteopathic Med., 802 F. Supp. 1286 (E.D. Pa. 1992) (claim against HMO for failure to fund the use of diagnostic medical device was pre-empted by ERISA).
166. See discussion infra Part III.F.
167. For suits in which state tort claims were asserted against MCOs, see Wilson v. Blue Cross, 271 Cal. Rptr. 876 (Ct. App. 1990); Hughes v. Blue Cross, 263 Cal. Rptr. 850 (Ct. App. 1989) and Wickline v. State, 239 Cal. Rptr. 810 (Ct. App. 1986). See also Corcoran v. United Healthcare, Inc., 965 F.2d 1321 (5th Cir. 1992). MCO subscribers may also bring breach of contract actions for failure to provide covered benefits, but contract remedies - recovery of out-of-pocket expenses in obtaining promised treatment or injunctive relief compelling coverage - are often inadequate to compensate injuries resulting from such breaches. At least one state legislature passed a bill that would have entitled subscribers to sue their HMOs for compensatory damages for injuries caused by failure to provided covered health care. See Christine Jordan Sexton, Fla. Gov. Rejects Plan to Allow Suits vs. HMOs, NAT'L UNDERWRITER, June 10, 1996, at 10.
168. The California Department of Corporations recently imposed a $500,000 fine on an MCO for denying medically necessary care to a cancer victim. The denial was found to be the result of a decision not shown to be unhindered by fiscal and administrative considerations. See California: FHP Won't Fight Fine Imposed on Health Plan for Denial of Care, 5 Health L. Rep. (BNA) No. 44, at d15 (Nov. 7, 1996).
169. See 965 F.2d 1321, 1323-24 (5th Cir. 1992).
170. W. at 1331.
171. See id. at 1332.
172. See id. at 1335.
173. See id. at 1337. Section 502 permits beneficiaries to bring a cause of action for violations of ERISA or plan obligations to obtain "appropriate equitable relief." See 29 U.S.C. § 1132(a)(3)(B) (1994). Because the Corcorans sought compensatory damages for mental anguish, not plan benefits or relief traditionally available for breach of fiduciary duties or contracts, section 502(a) was held not to encompass their request for relief. See Corcoran, 965 F.2d at 1337.
174. Id. at 1338.
175. See, e.g., Dukes v. United States Healthcare, Inc., 57 F.3d 350 (3d Cir. 1995), cert. denied, 116 S. Ct. 564 (1995).
176. See, e.g., Chaghervand v. CareFirst, 909 F. Supp 304, 309 (D. Md. 1995) (citing Kearney v. United States Healthcare, Inc., 859 F. Supp. 182 (E.D. Pa. 1994)) (direct negligence claims pre-empted by ERISA).
177. See Pappas v. Asbel, 675 A.2d 711, 718 (Pa. Super. Ct. 1996).
178. See id. at 716.
179. See, e.g., Burke v. Smithkline, 858 F. Supp. 1181, 1184 (M.D. Fla. 1994); Paterno v. Albeurne, 855 F. Supp. 1263 (S.D. Fla. 1994). But see Visconti v. United States Healthcare, Inc. 857 F. Supp. 1095 (E.D. Pa. 1994), consolidated on appeal, Dukes v. United States Healthcare, Inc., 57 F.3d 350 (3d Cir. 1995).
180. For a list of relevant cases, see Pacificare of Oklahoma, v. Burrage, 59 F.3d 151, 153 n.2 (10th Cir. 1995).
181. See id. at 154 (holding that tort laws of general application - not specifically targeting ERISA plans - having some economic impact on the plan, do not require invalidation).
182. See, e.g., Elsesser v. Hospital College of Osteopathic Med., 795 F. Supp. 142, 146 (E.D. Pa. 1992).
183. Id.
184. See Chaghervand v. CareFirst, 909 F. Supp. 304, 311 (D. Md. 1995) (holding direct negligence claim against the HMO for breaching its contractual duty to provide necessary care was withdrawn to avoid justification for removal); see also Prudential Health Care Plan v. Lewis, No. 95-6255, 1996 WL 77018, at *2 (10th Cir. Feb. 21, 1996).
185. See Prihoda v. Shpritz, 914 F. Supp. 113, 118 (D. Md. 1996).
186. See RUSS & SEGALLA, supra note 99, § 7:35.
187. See Brown v. Granatelli, 897 F.2d 1351, 1355 (5th Cir. 1990) (holding that a policy reimbursing the plan for all losses in excess of $30,000 per person up to $1 million per person was stop-loss insurance and not sickness and accident insurance).
188. See 1 NAIC MODEL LAWS, REGULATIONS AND GUIDELINES: NAIC STOP LOSS MODEL ACT 92 (1995). Stop-loss insurers may not assume more than 50% of the risk of loss. See id. If they assume more, they are subject to health insurance regulation. See id.
189. See, e.g., General Motors Corp. v. California Bd. of Equalization, 815 F.2d 1305 (9th Cir. 1987).
190. See Safeco Life Ins. Co. v. Musser, 65 F.3d 647, 651 (7th Cir. 1995) (Assessment of reinsurance premiums charged to self-insuring employers had only an indirect economic effect, and therefore, did not relate to ERISA plans.); see also Health Maintenance Org. v. Whitman, Civ. No. 93-5775,1994 WL 549626, at *4 (D.N.J. Oct. 3, 1994) (holding that ERISA does not preempt a state law designed to distribute insurance losses equitably without specifically targeting ERISA plans).
191. See NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS, DRAFT WHITE PAPER ON THE REGULATION OF RISK-BEARING ENTITIES (Sept. 24, 1996).
192. It should be noted that the law does not only apply to MCOs. In 1985, Congress amended ERISA to require all employer health plans to provide (generally for a limited time) continued benefits in the event of an employee's termination, divorce or death. See 29 U.S.C. §§ 1161-1166 (1994); 42 U.S.C. §§ 300bb-1 to -8 (1994).
193. See infra Part IV.D.
194. See 42 U.S.C. § 1395. Federally qualified HMOs and Competitive Medical Plans may contract with the Health Care Finance Administration (HCFA) if they provide adequate and accessible delivery systems, quality assurance programs, grievance procedures, are fiscally sound, have at least 5000 enrollees and not more than 50% are Medicare- or Medicaid-eligible. See id. § 1395mm. Qualifying plans receive, in capitation payments, 95% of the average FFS cost for plan enrollees, taking Part A, Part B, age, gender, employment and Medicaid eligibility into account. See id. § 1395w-4(g)(2)(D).
195. See 42 C.F.R. § 417.479 (1996).
196. See id. § 417.436.
197. See id. § 417.479. HCFA Final Rule to Set Limits on Physicians' Risk in Health Plans, 5 Health L. Rep. (BNA) No. 13, at 473 (1996). HCFA is reportedly planning to issue guidelines to provide uniform standards for the marketing of managed care plans to Medicare beneficiaries, such as advertising promotions, information about covered benefits and enrollment letters. See Managed Care: New Medicare HMO Marketing Guidelines to Provide National Standard, HCFA Says, 5 Health L. Rep. (BNA) No. 42, at d35 (1996).
198. See id. § 417.479. HCFA Final Rule to Set Limits on Physicians' Risk in Health Plans, 5 Health L. Rep. (BNA) No. 13, at 473 (1996). HCFA is reportedly planning to issue guidelines to provide uniform standards for the marketing of managed care plans to Medicare beneficiaries, such as advertising promotions, information about covered benefits and enrollment letters. See Managed Care: New Medicare HMO Marketing Guidelines to Provide National Standard, HCFA Says, 5 Health L. Rep. (BNA) No. 42, at d35 (1996).
199. See Ardary v. Aetna Health Plans, 98 F.3d 496 (9th Cir. 1996).
200. In a separate action, which some have hailed as a landmark decision, a U.S. district court in Arizona held that the federal government is responsible for providing due process appeals to Medicare beneficiaries enrolled in MCOs, listing ten requisite procedures. See Grijalva v. Shalala, 946 F. Supp. 747, 755 (D. Ariz. 1996). The decision seems to turn on the perception of competitive medical plans (CMPs) as extensions of the federal government, used to fulfill the government's obligation to provide Medicare benefits. See Managed Care: Arizona Federal Court Faults HCFA for HMO Notice, Hearing Methods, 5 Health L. Rep. (BNA) No. 43, at d32 (Oct. 31, 1996) [hereinafter Court Faults HCFA]. Consequently, the due process requirements may not apply to CMPs' treatment of non-Medicare subscribers. See id. HCFA has concurred with the decision and plans to develop regulations specifying grievance and appeal process requirements for HMOs. See id.
201. See Court Faults HCFA, supra note 196, at d32.
202. See 42 U.S.C. § 1396 (1994). See generally Judith M. Rosenberg & David T. Zaring, Managed Medicaid Waivers: Section 1115 and State Health Care Reform, 32 HARV. J. ON LEGIS. 545 (1995).
203. See U.S. GEN. ACCOUNTING OFFICE, MEDICAID: STATES TURN TO MANAGED CARE TO IMPROVE ACCESS AND CONTROL COSTS 3 (1993) [hereinafter 1993 GAO REPORT].
204. See id.
205. See U.S. GEN. ACCOUNTING OFFICE, MEDICAID: TENNESSEE'S PROGRAM BROADENS COVERAGE BUT FACES UNCERTAIN FUTURE (Sept. 1995).
206. See Tennessee: Problems Plague TennCare Program, Result of Hasty Planning. NAPH Says, 3 Health L. Rep. (BNA) No. 18, at d23 (May 5, 1994).
207. See id.
208. See Medicaid: Statewide Managed Care Demonstrations Spreading Rapidly, Despite Resistance, 3 Health L. Rep. (BNA) No. 40, at d3 (Oct. 13, 1994).
209. See Spencer S. Hsu, Managed Care for the Poor Tough to Manage VA Finds, WASH. POST, Apr. 29, 1996, at D1.
210. See 1993 GAO REPORT, supra note 199, at 16.
211. United States v. Health Choice, No. 95-6171-CV-SJ-6, 1996 WL 612878 (W.D. Mo. Oct. 22, 1996); United States v. Healthcare Partners, Inc., Civ. A. No. 395-CV-01946RNC, 1996 WL 193753 (D. Conn. Feb 15, 1996). When proposed, the consent orders were published for public comment. See Proposed Final Judgment and Competitive Impact Statement, 60 Fed. Reg. 52,014-01 (proposed Oct. 4, 1995), Proposed Final Judgment and Competitive Impact Statement, 60 Fed. Reg. 51,808-02 (proposed Oct. 3, 1995).
212. United States v. Health Choice, No. 95-6171-CV-SJ-6, 1996 WL 612878 (W.D. Mo. Oct. 22, 1996); United States v. Healthcare Partners, Inc., Civ. A. No. 395-CV-01946RNC, 1996 WL 193753 (D. Conn. Feb 15, 1996). When proposed, the consent orders were published for public comment. See Proposed Final Judgment and Competitive Impact Statement, 60 Fed. Reg. 52,014-01 (proposed Oct. 4, 1995), Proposed Final Judgment and Competitive Impact Statement, 60 Fed. Reg. 51,808-02 (proposed Oct. 3, 1995).
213. See Thomas L. Greaney, Regulating for Efficiency in Health Care Through Antitrust Laws, 2 UTAH L. REV. 465, 486-89 (1995).
214. 29 U.S.C. § 1181(a) (1994).
215. See id. § 1181(a)(1).
216. See id. § 1985(a)(1)(A)(i).
217. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110 (1989); see also Cutting v. Jerome Foods, Inc., 993 F.2d 1293, 1297 (7th Cir. 1993) (court willing to supply interpretive principles relating to the subrogation rule); Singer v. Black & Decker Corp., 964 F.2d 1449, 1453 (4th Cir. 1992) (to promote nationwide consistency courts should look to federal common law, not the law of particular states); Provident Life & Accident Ins. Co. v. Waller, 906 F.2d 985, 993 (4th Cir. 1990) (the federal common law doctrine of unjust enrichment is available to require beneficiary to repay sums advanced for medical expenses).
218. 116 S. Ct. 1065, 1068 (1996).
219. See id. at 1074-75.
220. See id. at 1074.
221. See 29 U.S.C. § 1132 (1994).
222. See, e.g., Corcoran v. United Healthcare, Inc., 965 F.2d 1321 (5th Cir. 1992).
223. A civil action may be removed from state to federal court only if the federal district courts have original jurisdiction over the claim as they would if it were a claim arising under the Constitution, law or treaties of the United States. See 28 U.S.C. §§ 1441(a), 1331 (1994); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1994). Thus, the action is within the federal court's jurisdiction and removable only if the party seeking removal has established that the case arises under federal law in a "well pleaded complaint." See Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 10 (1983); Taylor v. Anderson, 234 U.S. 74, 75 (1914).
224. The policy behind the rule is that the plaintiff should be the master of his action and be permitted to eschew federal claims so to bring his suit in state court, solely on state claims. However, if the relief sought by the plaintiff can be obtained only pursuant to federal law, the defendant may seek jurisdiction in federal court. See Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99 (1987).
225. Section 502(a) authorizes suits: (1) to recover benefits due under the terms of the plan; (2) to enforce rights under the terms of the plan; or (3) to clarify rights to future benefits under the terms of the plan. To do so, beneficiaries or participants may bring a civil action to enjoin any act that violates the Act or to obtain other appropriate equitable relief to redress such violations. See 29 U.S.C. § 1132.
226. 481 U.S. at 66.
227. See, e.g., Dukes v. U.S. Healthcare Inc., 57 F.3d 350, 354 (3d Cir. 1995) ("That the Supreme Court recognized a limited exception to the well-pleaded complaint rule for state law claims which fit within the scope of Section 502 by no means implies that all claims preempted by ERISA are subject to removal.").
228. See Warner v. Ford Motor Co., 46 F.3d 531 (6th Cir. 1995).
229. For example, a vicarious liability claim against an IPA-HMO for a physician's wrongful diagnosis was held not "completely preempted" by section 502(a) of ERISA and, therefore, not removable. See Prihoda v. Shpritz, 914 F. Supp. 113 (D. Md. 1996).
230. 57 F.3d 350, 351-52 (1995).
231. See id. at 358.
232. See id. at 359.
233. See id. at 361.
234. See id.
235. 116 S. Ct. 1065, 1076-77 (1996). Section 502(a)(3) authorizes beneficiaries to bring actions to enjoin practices violating ERISA or terms of the plan and to obtain other appropriate equitable relief, rather than only on behalf of the plan itself under section 502(a)(2). See Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985).
236. See Howe, 116 S. Ct. at 1070.
237. See id. at 1074.
238. See id. at 1079. Dissenting Justices Thomas, O'Connor and Scalia believed that Congress intended to protect only the financial integrity of the plan and plan administration, not the integrity of employers. See id. at 1090 (Thomas, J., dissenting). The majority observed that employee beneficiaries could not be expected to distinguish between an individual's role as a corporate officer and his other role as a plan fiduciary. See id. at 1073.
239. See id. at 1085 (Thomas, J., dissenting).
240. 107 F.3d 625 (8th Cir. 1997).
241. See id. at 627.
242. See id. at 628.
243. See id. Like many HMOs, Medica Corporation rewarded primary care doctors for not making covered referrals to specialists and reduced their fees if they referred too many patients. See Id. at 627. Medica's failure to disclose its incentive plan allegedly caused the plaintiff deceased beneficiary to rely unduly on his physician's determination that he did not need to see a cardiologist for the heart condition from which he later died. See id.
244. See 29 U.S.C. § 1132 (1994).
245. See Mertens v. Hewitt Assocs., 113 S. Ct. 2063, 2068-71 (holding section 502(a)'s equitable remedies do not encompass compensatory damages); cf. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148 (1985) (section 409(a), which provides that fiduciaries who breach ERISA obligations are liable for resulting losses, does not provide a cause of action for extracontractual damages).
246. See generally Medicare Supplement Insurance Policies, Hearing before the Subcomm. on Health of the House Comm. on Ways and Means, 101st Cong. (1990).
247. Pub. L. No. 101-508, § 4358, 104 Stat. 1388 (codified at 42 U.S.C. § 1395ss (1994)).
248. See id.
249. For a discussion of the act's substantive provisions, see Anthony Sebastian Cabrera, The Medigap Reforms of the Omnibus Budget Reconciliation Act of 1990: Are the Protections Adequate?, 6 ADM. L.J. 321 (1992). See generally Hearing before the Subcomm. on Health and Long-term Care of the House Select Comm. on Aging, 101st Cong. (1990) (statement of Anne Jewel & Kathryn M. Kwiatkowski); Rising Medigap Premiums: Symptom of a Failing System?, Hearing before the Senate Special Comm on Aging, 101st Cong. (1990); Medigap Fraud & Abuse: How Can Communities Stop These Problems?, Hearing before the Subcomm. on Human Services of the House Select Comm. on Aging, 101st Cong. (1990); High Pressure, Low Benefits: Unfair Practices in Selling Medigap and Other Insurance to the Elderly, Hearing before the Subcomm. on Housing & Consumer Interests of the Senate Select Comm. on Aging, 100th Cong. (1987).
250. For a discussion of the act's substantive provisions, see Anthony Sebastian Cabrera, The Medigap Reforms of the Omnibus Budget Reconciliation Act of 1990: Are the Protections Adequate?, 6 ADM. L.J. 321 (1992). See generally Hearing before the Subcomm. on Health and Long-term Care of the House Select Comm. on Aging, 101st Cong. (1990) (statement of Anne Jewel & Kathryn M. Kwiatkowski); Rising Medigap Premiums: Symptom of a Failing System?, Hearing before the Senate Special Comm on Aging, 101st Cong. (1990); Medigap Fraud & Abuse: How Can Communities Stop These Problems?, Hearing before the Subcomm. on Human Services of the House Select Comm. on Aging, 101st Cong. (1990); High Pressure, Low Benefits: Unfair Practices in Selling Medigap and Other Insurance to the Elderly, Hearing before the Subcomm. on Housing & Consumer Interests of the Senate Select Comm. on Aging, 100th Cong. (1987).
251. For a discussion of the act's substantive provisions, see Anthony Sebastian Cabrera, The Medigap Reforms of the Omnibus Budget Reconciliation Act of 1990: Are the Protections Adequate?, 6 ADM. L.J. 321 (1992). See generally Hearing before the Subcomm. on Health and Long-term Care of the House Select Comm. on Aging, 101st Cong. (1990) (statement of Anne Jewel & Kathryn M. Kwiatkowski); Rising Medigap Premiums: Symptom of a Failing System?, Hearing before the Senate Special Comm on Aging, 101st Cong. (1990); Medigap Fraud & Abuse: How Can Communities Stop These Problems?, Hearing before the Subcomm. on Human Services of the House Select Comm. on Aging, 101st Cong. (1990); High Pressure, Low Benefits: Unfair Practices in Selling Medigap and Other Insurance to the Elderly, Hearing before the Subcomm. on Housing & Consumer Interests of the Senate Select Comm. on Aging, 100th Cong. (1987).
252. For a discussion of the act's substantive provisions, see Anthony Sebastian Cabrera, The Medigap Reforms of the Omnibus Budget Reconciliation Act of 1990: Are the Protections Adequate?, 6 ADM. L.J. 321 (1992). See generally Hearing before the Subcomm. on Health and Long-term Care of the House Select Comm. on Aging, 101st Cong. (1990) (statement of Anne Jewel & Kathryn M. Kwiatkowski); Rising Medigap Premiums: Symptom of a Failing System?, Hearing before the Senate Special Comm on Aging, 101st Cong. (1990); Medigap Fraud & Abuse: How Can Communities Stop These Problems?, Hearing before the Subcomm. on Human Services of the House Select Comm. on Aging, 101st Cong. (1990); High Pressure, Low Benefits: Unfair Practices in Selling Medigap and Other Insurance
253. For a discussion of the act's substantive provisions, see Anthony Sebastian Cabrera, The Medigap Reforms of the Omnibus Budget Reconciliation Act of 1990: Are the Protections Adequate?, 6 ADM. L.J. 321 (1992). See generally Hearing before the Subcomm. on Health and Long-term Care of the House Select Comm. on Aging, 101st Cong. (1990) (statement of Anne Jewel & Kathryn M. Kwiatkowski); Rising Medigap Premiums: Symptom of a Failing System?, Hearing before the Senate Special Comm on Aging, 101st Cong. (1990); Medigap Fraud & Abuse: How Can Communities Stop These Problems?, Hearing before the Subcomm. on Human Services of the House Select Comm. on Aging, 101st Cong. (1990); High Pressure, Low Benefits: Unfair Practices in Selling Medigap and Other Insurance to the Elderly, Hearing before the Subcomm. on Housing & Consumer Interests of the Senate Select Comm. on Aging, 100th Cong. (1987).
254. See 42 U.S.C. § 1395ss(k); see also How Insurance Laws Are Made: The NAIC & State Adoption of NAIC Model Laws, Hearing before the Subcomm. on Antitrust Monopolies & Business Rights of the Senate Comm. on the Judiciary, 102d Cong. (1991). For a detailed discussion of the provisions of the NAIC model Medigap regulation, see Norman D. Holloway, Standardized Medicare Supplemental Policies Under OBRA 1990, 24 U. TOL. L. REV. 159 (1992).
255. See 42 U.S.C. § 1395ss(k); see also How Insurance Laws Are Made: The NAIC & State Adoption of NAIC Model Laws, Hearing before the Subcomm. on Antitrust Monopolies & Business Rights of the Senate Comm. on the Judiciary, 102d Cong. (1991). For a detailed discussion of the provisions of the NAIC model Medigap regulation, see Norman D. Holloway, Standardized Medicare Supplemental Policies Under OBRA 1990, 24 U. TOL. L. REV. 159 (1992).
256. See 42 U.S.C. § 1395ss(b)(1)(G); see also Social Security Act Amendments of 1994, Pub. L. No. 103-432, 108 Stat. 4398 (1994).
257. See 42 U.S.C. § 1395ss(d).
258. 42 U.S.C. § 300gg-91.
259. See New York v. United States, 505 U.S. 144, 177, 188 (1992) (holding that Congress's effort to mandate state toxic waste clean up violated the Tenth Amendment).
260. 42 U.S.C. § 1395ss(d)(3)(AHB). See generally Medigap Improvements, Joint Hearing before the Subcomm. on Health and the Environment and the Subcomm. on Commerce, Consumer Protection and Competitiveness of the House Comm. on Energy and Commerce, 101st Cong. (1990).
261. See Medicare Program; HHS' Recognition of NAIC Model Standards for Regulation of Medigap Policies, 57 Fed. Reg. 37,980 (1992). See generally Peter J. Strauss, Law and the Aging: Elder Law Issues in the 1990 Budget: Part II, N.Y. L.J., Apr. 25, 1991, at 3.
262. See Medicare Program; HHS' Recognition of NAIC Model Standards for Regulation of Medigap Policies, 57 Fed. Reg. 37,980 (1992). See generally Peter J. Strauss, Law and the Aging: Elder Law Issues in the 1990 Budget: Part II, N.Y. L.J., Apr. 25, 1991, at 3.
263. See 42 U.S.C. § 1395ss(b)(1)(c)(5).
264. The Act provides: In promulgating standards under this paragraph, the Association or Secretary shall consult with a working group composed of representatives of issuers of medicare supplemental policies, consumer groups, medicare beneficiaries, and other qualified individuals. Such representatives shall be selected in a manner so as to assure balanced representations among the interested groups. Id. § 1395ss(p)(1)(D).
265. Pub. L. No. 101-648, 104 Stat. 4969 (codified at 5 U.S.C. § 561 (1994)). See generally Philip J. Harter, Negotiating Regulations: A Cure for Malaise, 71 GEO. L.J. 1 (1982).