The supreme court's assault on litigation: Why (and how) it might be good for health law

Boston University Law Review

Volumn 90, Issue 6, 2010, Pages 2323-2382

  Moncrieff, Abigail R ^a  

^a BOSTON UNIVERSITY   (United States)

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EID: 78651332853     PISSN: 00068047     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (261)

1. See Nicole Huberfeld, Bizarre Love Triangle: The Spending Clause, Section 1983, and Medicaid Entitlements, 42 U.C. DAVIS L. REV. 413, 415-18 (2008);
2. Abigail R. Moncrieff, Comment, Payments to Medicaid Doctors: Interpreting the "Equal Access" Provision, 73 U. Cm. L. REV. 673,673 (2006).
3. See, e.g., Aetna Health Inc. v. Davila, 542 U.S. 200,204-05 (2004).
4. See Riegel v. Medtronic, Inc., 552 U.S. 312, 319-21 (2008);
5. Catherine T. Struve, The Food and Drug Administration and the Tort System: Postmarketing Surveillance, Compensation, and the Role of Litigation, 5 YALE J. HEALTH POL'Y L. & ETHICS 587, 588 (2005) (explaining how in recent years, because "policymakers have stressed the need to bring innovative medical treatments to market," greater deference is paid to FDA's product approval).
6. See Abigail R. Moncrieff, Federalization Snowballs: The Need for National Action in Medical Malpractice Reform, 109 COLUM. L. REV. 844, 855-61 (2009) (reviewing the literature on medical malpractice reform).
7. See Erwin Chemerinsky, Closing the Courthouse Doors to Civil Rights Litigants, 5 U. PA. J. CONST. L. 537, 537-39 (2003) (listing a long line of Rehnquist Court decisions that prevent individuals from suing to enforce civil rights).
8. Gonzaga Univ. v. Doe, 536 U.S. 273, 273 (2002).
9. See Huberfeld, supra note 1, at 445-51 (observing that federal appellate courts have applied Gonzaga to limit or prohibit claims against state Medicaid agencies and predicting that the Roberts Court will further limit such claims).
10. Aetna Health Inc. v. Davila, 542 U.S. 200, 221 (2004) (holding that ERISA preempts state laws that would have provided causes of action against insurance companies denying benefits under "medical necessity" clauses).
11. See id. at 221 n.7 (reserving the question of whether one of ERISA's remedial provisions, § 502(a)(3), might allow for consequential or punitive damages);
12. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-18 (2002) (interpreting § 502(a)(3) extremely narrowly);
13. Davila, 542 U.S. at 222 (Ginsburg, J., concurring) (arguing that the Court's "encompassing interpretation of ERISA's preemptive force" coupled with its "cramped construction of the 'equitable relief allowable under § 502(a)(3)" creates a '"regulatory vacuum'" in which no remedy exists (citations omitted));
14. David A. Hyman, Regulating Managed Care: What's Wrong with a Patient Bill of Rights, 73 S. CAL. L. REV. 221, 229 (2000) (explaining that ERISA, while preempting state-law remedies, "contains no substantive regulation of its own, and provides only an exceedingly limited set of remedies").
15. Riegel v. Medtronic, Inc. 552 U.S. 312, 312-13 (2008).
16. Granted, the tort system probably wasn't doing a good job at deterring iatrogenic
17. For representative examples of scholarly chagrin at the curbing of private enforcement in each of the four stories described here, see TOM BAKER, THE MEDICAL MALPRACTICE MYTH 1 (2005) (arguing that attempts to limit medical malpractice litigation are fundamentally misguided);
18. David Brennan, Federal Preemption of All State Law Tort Claims in Riegel v. Medtronic: A Need to Undo a Serious Wrong, 36 W. ST. U. L. REV. 137, 165-66 (2008) ("Consumer organizations and groups were quick to realize that users of Class III medical devices had been effectively disenfranchised from any reasonable remedy for dangerous or defective devices by a sweeping doctrine of federal preemption doctrine.");
19. Margaret Cyr-Provost, Aetna v. Davila: From Patient-Centered Care to Plan-Centered Care, a Signpost or the End of the Road?, 6 Hous. J. HEALTH L. & POL'Y 171, 179 (2005) (descrying the fact that today's legal climate lacks "legal and moral accountability" and leaves health care consumers without recourse);
20. Huberfeld, supra note 1, at 414 (urging "legislative responses to the possible demise of the Medicaid entitlement");
21. Mark Andrew Ison, Note, Two Wrongs Don't Make a Right: Medicaid, Section 1983 and the Cost of an Enforceable Right to Healthcare, 56 VAND. L. REV. 1479, 1516-18 (2003) (highlighting the potentially "catastrophic" harms to beneficiaries that might result from under-enforcement after Gonzaga);
22. Theodore W. Ruger, The United State Supreme Court and Health Law: The Year in Review: The Supreme Court Federalizes Managed Care Liability, 32 J.L. MED. & ETHICS 528, 529 (2004) ("ERISA's remedial provisions are so penurious that Aetna's holding of complete preemption produces a legal regime that vastly under-compensates plan members who suffer a wrongful denial of care.").
23. See RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 383-84 (6th ed. 2003) (outlining circumstances in which we ought to prefer common law to administrative regulation and vice versa).
24. For a recent elaboration of this point, see Kyle D. Logue, Coordinating Sanctions in Tort (Univ. of Mich. Law Sch., Olin Ctr. for Law & Econ. Working Paper Series, Paper No. 105, July 2009), available at http://ssrn.com/abstract=1430596.
25. The Employee Benefits Security Administration (EBSA), an agency of the Department of Labor, is primarily responsible for administering the provisions of ERISA. The enactment of the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act, signed into law in March 2010, made some significant changes to the regulatory structure for employer-sponsored insurance. In particular, EBSA now shares "interpretive jurisdiction" with the Department of Treasury and the Department of Health and Human Services (HHS) over PPACA provisions applicable to employer-sponsored insurance. EBSA Unified Agenda, Regulations Implementing the Patient Protection and Affordable Care Act of 2010 (PPACA), available at http://www.dol.gov/ ebsa/regs/unifiedagenda/spring-2010/1210-AB41.htm (last visited Oct. 10, 2010). The EBSA Unified Agenda states that the three departments "are proceeding concurrently to provide regulatory guidance regarding [implementation of PPACA] provisions."
26. Id.
27. Thus, the agencies will jointly issue interpretations of relevant PPACA provisions. Id. According to EBSA, initial regulatory action will likely require insurers to extend dependent coverage and cover preventive health services without cost sharing and address PPACA provisions that prohibit insurers from establishing lifetime or annual limits on benefits, rescinding health coverage after coverage begins, excluding potential beneficiaries based on preexisting conditions and health status, and discriminating in favor of highly compensated individuals. Id. PPACA also imposes requirements on internal claims appeal and external review procedures that are applicable to group health plans.
28. See infra note 86 and accompanying text.
29. Eleanor Kinney and Bill Sage have already proposed at least a limited version of this idea, arguing that CMS should adjudicate malpractice claims brought by Medicare and Medicaid beneficiaries. See Eleanor D. Kinney & William M. Sage, Dances with Elephants: Administrative Resolution of Medical Injury Claims by Medicare Beneficiaries, 5 IND. HEALTH L. REV. 1, 2 (2008);
30. Eleanor D. Kinney & William M. Sage, Resolving Medical Malpractice Claims in the Medicare Program: Can It Be Done?, 12 CONN. INS. LJ. 77, 90 (2005-2006);
31. William M. Sage, The Role of Medicare in Medical Malpractice Reform, 9 J. HEALTH CARE L. & POL'Y 217,225-28 (2006).
32. That said, the relevant administrative agencies do not have sufficient financial resources to engage in the projects that I urge here. That is, they have legal tools but lack practical resources. For more on this point, see infra Part IV.B.3.
33. Jon Donenberg, Medicaid and Beneficiary Enforcement: Maintaining State Compliance with Federal Availability Requirements, 117 YALE L.J. 1498, 1501 (2008) (finding that CMS's withdrawal power is "rarely, if ever, invoked" (quoting Lisa E. Key, Private Enforcement of Federal Funding Conditions Under § 1983: The Supreme Court's Failure to Adhere to the Doctrine of Separation of Powers, 29 U.C. DAVIS L. REV. 283, 293 (1996))).
34. For discussion of CMS's growing interest in quality regulation, particularly including its "never events" and "pay for performance" policies, see infra Part II.A.4.
35. See Lawrence Gostin, The Formulation of Health Policy by the Three Branches of Government, in SOCIETY'S CHOICES: SOCIAL AND ETHICAL DECISION MAKING IN BIOMEDICINE 335, 339-40 (Ruth Ellen Bulger et al. eds., 1995) (describing the limits of courts in healthcare policymaking);
36. William M. Sage & Rogan Kersh, Introduction to MEDICAL MALPRACTICE AND THE U.S. HEALTH CARE SYSTEM 4 (William M. Sage & Rogan Kersh eds., 2006) (outlining potential changes to the medical malpractice litigation process which could substantially increase the "accuracy and consistency of outcomes");
37. NEIL VIDMAR, MEDICAL MALPRACTICE AND THE AMERICAN JURY 3-6 (1995) (reviewing criticism of juries by American Medical Association and others);
38. Peter Huber, Safety and the Second Best: The Hazards of Public Risk Management in the Courts, 85 COLUM. L. REV. 277, 319-20, 332-33 (1985) (arguing that juries are institutionally unable to make risk choices and that decisions should be made by regulatory agencies);
39. Kimberly A. Moore, Judges, Juries, and Patent Cases - An Empirical Peek Inside the Black Box, 99 MICH. L. REV. 365, 370 (2000) ("[P]opular perceptions of juror incompetence and bias have caused commentators to argue that the role of the jury in patent litigation should be severely limited, and many alternatives have been proposed.");
40. David M. Studdert & Michelle M. Mello, When Tort Resolutions Are "Wrong": Predictors of Discordant Outcomes in Medical Malpractice Litigation, 36 J. LEGAL STUD. S47, S48-52 (2007). But see VIDMAR, supra, at 161-82 (arguing that juries are competent and that medical malpractice liability system is generally sound).
41. Timothy Stoltzfus Jost, Health Law and Administrative Law: A Marriage Most Convenient, 49 ST. LOUIS U. L.J. 1, 16-30 (2004) (describing the executive's comparative advantages over both the judiciary and the market for regulating healthcare);
42. Huber, supra note 20, at 285, 307-26.
43. See Moncrieff, supra note 4, at 848.
44. See Chemerinsky, supra note 5, at 537-39 (listing cases from 2001 and 2002 that limited civil rights plaintiffs' access to courts).
45. See, e.g., Barnes v. Gorman, 536 U.S. 181 (2002) (holding that punitive damages are unavailable under § 202 of the Americans with Disabilities Act and § 505(a)(2) of the Rehabilitation Act);
46. Bd. of Trs. of the Univ. of Ala. v. Garrett, 531 U.S. 356 (2001) (holding that state governments cannot be sued for violating the Title I of the Americans with Disabilities Act).
47. See, e.g. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001) (requiring arbitration of employment-related claims of state discrimination).
48. Porter v. Nussle, 534 U.S. 516, 532 (2002) (requiring prisoners to exhaust administrative remedies before filing suit alleging excessive force by corrections officers);
49. Booth v. Chumer, 532 U.S. 731, 740-41 (2001) (finding that prisoners must exhaust prison administrative remedies before seeking money damages in court);
50. Alexander v. Sandoval, 532 U.S. 275, 293 (2001) (finding that Title VI of the Civil Rights Act of 1964 does not contain a private right of action).
51. The empirical evidence so far indicates that damages caps have had little if any effect on awards recovered in medical malpractice cases and have had little impact on healthcare costs. See Moncrieff, supra note 4, at 855 n.37. That said, the spirit of the caps is the same as the spirit of the other limits on private enforcement; the attempt is to dissuade litigation.
52. 536 U.S. 273 (2002).
53. Erwin Cheraerinsky & Martin A. Schwartz, Section 1983 Litigation: Supreme Court Review, 19 TOUROL. REV. 625,663 (2003).
54. Gonzaga, 536 U.S. at 276.
55. 42 U.S.C. § 1983 (2006).
56. 20 U.S.C. §1232g (2006).
57. Gonzaga, 536 U.S. at 276.
58. Id. at 278-79.
59. Of course, even after Gonzaga, Congress can pass provisions under its Spending Clause power that create and confer individual rights. The text of the provision is the first line of inquiry, and if it seems to be rights-creating text, then the courts will still allow private enforcement. See Huberfeld, supra note 1, at 446-47 (observing that several circuits still allow Medicaid beneficiaries to use § 1983 to enforce the "minimum services" provision, which vests individual rights in beneficiaries).
60. See Andrew R. Gardella, Note, The Equal Access Illusion: A Growing Majority of Federal Courts Erroneously Foreclose Private Enforcement of § J396a(a)(30) of the Medicaid Act Using 42 U.S.C. § 1983, 38 U. MEM. L. REV. 697, 733-42 (2008) (discussing cases in which the First, Fifth, Sixth, Ninth, and Tenth Circuits have held that the Equal Access Provision does not create an individual right enforceable under § 1983 while only the Eight Circuit has held that it does).
61. 42 U.S.C. § 1396a(a)(30)(A) (2006).
62. See Moncrieff, supra note 1, at 685-87.
63. Id. at 684-85 (explaining that the basic purpose of the Equal Access Provision was to avoid a "dual-tracked" medical system in which Medicaid beneficiaries would have access to different and worse doctors than patients with non-Medicaid insurance).
64. See id. at 677-78 (describing pre-Gonzaga cases).
65. See AlohaCare v. Haw. Dep't Human Servs., 572 F.3d 740, 746 (9th Cir. 2009) (finding that AlohaCare did not have a private right of action under several Medicaid sections related to the state's ability and limitations in contracting with providers);
66. Equal Access for El Paso, Inc. v. Hawkins, 509 F.3d 697, 703 (5th Cir. 2007);
67. Long Term Care Pharmacy Alliance v. Ferguson, 362 F.3d 50, 51, 57-59 (1st Cir. 2004);
68. Devi M. Rao, Note, "Making Medical Assistance Available": Enforcing the Medicaid Act's Availability Provision Through § 1983 Litigation, 109 COLUM. L. REV. 1440, 1461-62 n.155. But see Indep. Living Or. of S. Cal., Inc. v. Maxwell-Jolly, 572 F.3d 644, 655-57 (9th Cir. 2009) (upholding a preliminary injunction against California's rate reduction legislation on the ground that it would violate the Supremacy Clause).
69. See Jerry L. Mashaw & Dylan S. Calsyn, Block Grants, Entitlements, and Federalism: A Conceptual Map of Contested Terrain, 14 YALE L. & POL'Y REV. 297, 304-05 (1996) (describing the interactions of state and federal funding in Medicaid and the interactions of state and federal law in Medicaid before Conzaga).
70. See South Dakota v. Dole, 483 U.S. 203, 206 (1987) (stating that Congress has constitutional authority to "attach conditions on the receipt of federal funds").
71. There are, however, several individual provisions of the Medicaid Act that have been found to confer individual rights. See Grammer v. John J. Kane Reg'l Ctrs.-Glen Hazel, 570 F.3d 520, 527 (3d Cir. 2009) (finding that Medicaid's Federal Nursing Home Reform Amendments created individuals rights);
72. Rabin v. Wilson-Coker, 362 F.3d 190, 201-02 (2d Cir. 2004) (holding that an eligibility provision codified as § 1396r-6 does create and conferenforceable rights);
73. Gean v. Hattaway, 330 F.3d 758, 772-73 (6th Cir. 2003) (finding that the "right to fair hearing" provision, § 1396a(a)(3), "creates an obligation on the part of the State and is phrased in terms of benefitting Medicaid recipients");
74. see also Brian J. Dunne, Comment, Enforcement of the Medicaid Act Under 42 USC § 1983 After Gonzaga University v Doe: The "Dispassionate Lens" Examined, 74 U. CHI. L. REV. 991, 996-1012 (2007) (discussing the circuit courts' various interpretive methodologies for determining whether an enforceable right exists and noting some provisions that continue to be enforceable after Gonzaga);
75. Rao, supra note 41, at 1463-80 (explaining that the Medicaid Act's Availability Clause has been found enforceable under Gonzaga and urging that Clause's continued enforcement even after recent amendments to the Medicaid Act).
76. See Mashaw & Calsyn, supra note 42, at 304 (describing the importance of § 1983 litigation, before Gonzaga, for enforcing federal Medicaid requirements). Employee Retirement Income Security Act, Pub. L. No. 93-406, § 502(a)(1)(B), 88 Stat. 891 (1974) (codified at 29 U.S.C. § 1132(a)(1)(B) (2006))
77. 542 U.S. 200,204 (2004).
78. This case looks ironic in retrospect, given what we now know about Vioxx and its impact on heart health. See Juhana Karha & Eric J. Topol, The Sad Story of Vioxx, and What We Should Learn from It, 71 CLEV. CLINIC J. MED. 933, 933 (2004) (discussing the implications of the Vioxx scandal on the prescription drug market);
79. Editorial, Vioxx: An Unequal Partnership Between Safety and Efficacy, 364 LANCET 1287, 1288 (2004) (describing one study on the use of Vioxx that "revealed a significant increase in the number of myocardial infarctions in patients taking rofecoxib [(Vioxx)] compared with those receiving naproxen [(Aleve)]");
80. Peter Loftus & Jonathan D. Rockoff, Merck Settles Some Vioxx Suits, WALL ST. J., Feb. 11, 2010, at B4 ("[Merck] removed Vioxx from the market in 2004, after a study showed the painkiller doubled the risk of heart attack or stroke.").
81. ERISA, Pub. L. No. 93-406, § 502(a)(1)(B), 88 Stat. 891, 891 (1974) (codified at 29 U.S.C. § 1132(a)(1)(B) (2006)).
82. Davila, 542 U.S. 200, 200, 210-14.
83. Id. at 221 n.7 (holding that ERISA preempts state law but reserving the question of whether one of ERISA's remedial provisions, 29 U.S.C. § 1132(a)(3), might allow for consequential or punitive damages).
84. See ERISA § 502.
85. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-18 (2001) (interpreting ERISA's remedial provision extremely narrowly).
86. ERISA, § 502(a)(3).
87. Davila, 542 U.S. at 222 (Ginsburg, J., concurring) (arguing that the Court's "encompassing interpretation of ERISA's preemptive force" coupled with its "cramped construction of the 'equitable relief allowable under § 502(a)(3)" creates a '"regulatory vacuum'" in which no remedy exists (citations omitted)).
88. Riegel v. Medtronic, 552 U.S. 312, 320-29 (2008).
89. 21 U.S.C. § 360k(a) (2006).
90. Riegel, 552 U.S. at 320.
91. See id. at 316-20 (describing the premarket approval process for Class in medical devices); Jordan Paradise et al., Evaluating Oversight of Human Drugs and Medical Devices: A Case Study of the FDA and Implications for Nanobiotechnology, 37 J.L. MED. & ETHICS 598, 601-02 (2009) (describing FDA approval processes for medical devices in various classes).
92. See 21 U.S.C. § 360k(a), quoted in Riegel, 552 U.S. at 316.
93. See Riegel, 552 U.S. at 319-21.
94. Id. at 322-23.
95. See Lawrence O. Gostin, The Deregulatory Effects of Preempting Tort Litigation: FDA Regulation of Medical Devices, 299 JAMA 2313, 2315 (2008) (outlining the benefits of a tort system for device regulation, including tort's ability "through the discovery process ⋯ [to] compel corporations to disclose everything they know, or reasonably should know, about [a medical device's] safety and effectiveness").
96. See id, at 2313 (explaining that Riegel "removes all means of judicial recourse for most consumers injured by defective medical devices").
97. But see Bruce Patsner, Riegel v. Medtronic, Inc.: Revisiting Preemption for Medical Devices, 37 J.L. MED. & ETHICS 305, 306 (Summer 2009) (describing the limits of the Riegel holding);
98. Malika Kanodia, Note, The Fate of the Injured Patient in the Wake of Riegel v. Medtronic: Should Congress Interject?, 32 HAMLINE L. REV. 791, 813-14 (2009) (explaining that the FDCPA does not preempt some limited tort claims as long as the requirements of the tort claim are sufficiently similar to federal requirements).
99. See, e.g., Martin H. Redish, Legislative Responses to the Medical Malpractice Insurance Crisis: Constitutional Implications, 55 TEX. L. REV. 759, 759-61 (1977);
100. Comment, An Analysis of State Legislative Responses to the Medical Malpractice Crisis, 1975 DUKE L.J. 1417, 1417 (1975).
101. But see, e.g., NEAL C. HOGAN, UNHEALED WOUNDS: MEDICAL MALPRACTICE IN THE TWENTIETH CENTURY 129-33 (Eric Rise ed., 2003) (recounting the emergence of the malpractice crisis and dating it back to the 1950s);
102. Cecilia Loh, An Overview of Medical Malpractice and the Tort Reform Debate, CASE WESTERN (Apr. 23, 2003), http://www.case.edu/med/epidbio/mphp439/ Malpractice.htm (dating the first medical malpractice "crisis" to 1840).
103. See Ronen Avraham, Database of State Tort Law Reforms (DSTLR, 3rd) (Apr. 1, 2010) (unpublished manuscript) (on file with author), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=902711 (listing several state limitations on punitive and noneconomic damages);
104. Medical Malpractice/Medical Liability, NAT'L CONFERENCE OF STATE LEGISLATURES, http://www.ncsl.org/default.aspx?tabid=18516 (last updated Mar. 22, 2010) [hereinafter NCSL].
105. NCSL, supra note 67. Of the nine states that do not currently have damages caps, two have had such caps declared unconstitutional, and one has a constitutional provision specifically prohibiting such caps. In Oregon, the monetary cap was deemed unconstitutional, but the State continues to prohibit punitive damages absent a showing of malice. Id.
106. As previously noted, these caps have not been terribly successful at limiting malpractice awards, according to most empirical studies. Nevertheless, the motivation for the legislation seems to be the same as the motivation for the Supreme Court's holdings. See supra note 27.
107. But see Richard A. Epstein & David A. Hyman, Controlling the Cost of Medical Care: A Dose of Deregulation 1-2 (Feb. 17, 2010) (unpublished manuscript), available at http://ssrn.com/abstract=1 158547 (arguing that private markets will provide better results for the healthcare industry, at least in terms of cost controls, than public regulators).
108. CMS is a division of the Department of Health and Human Services. See CENTERS FOR MEDICARE & MEDICAID SERVICES, www.cms.hhs.gov/home/medicaid.asp (last visited Sept. 12,2010).
109. Pub. L. No. 89-97, § 1901, 79 Stat. 343, 344 (1965) (codified at 42 U.S.C. § 1396-1 (2006)) ("The sums made available under this section shall be used for making payments to States which have submitted, and had approved by the Secretary, State plans for medical assistance.").
110. § 1902,79 Stat, at 344-48 (listing twenty-two requirements).
111. 42 U.S.C.A. § 1396a(a)(1)-(73) (West 2009)
112. For example, 42 U.S.C. § 1396a passed in 1965 with three subsections, (a)-(c); even before the Patient Protection and Affordable Care Act (PPACA) passed, the list went all the way through subsection (ee). The Medicaid statute as a whole consisted of five sections when first passed: §§ 1901-1905. Even before PPACA, the statute included forty-five sections, codified between 42 U.S.C. § 1396a and 42 U.S.C. § 1396w-2. PPACA adds even more.
113. See Dunne, supra note 44, at 994-95 (discussing the options available to CMS for enforcing federal Medicaid requirements).
114. See Administrative Procedure Act, 5 U.S.C. § 706(2)(A) (2006).
115. See Edward A. Tomlinson & Jerry L. Mashaw, The Enforcement of Federal Standards in Grant-in-Aid Programs: Suggestions for Beneficiary Involvement, 58 VA. L. REV. 600, 619-20 (1976) (describing the weakness of the federal agency's incentives to enforce federal requirements against state agencies);
116. Dunne, supra note 44, at 994-95 (explaining that CMS rarely, if ever, enforces federal requirements "in a punitive sense" and discussing reasons for that failure).
117. See sources cited infra note 107.
118. See Huberfeld, supra note 1, at 466.
119. See generally U.S. GEN. ACCOUNTING OFFICE, GAO-04-574T, MEDICAID: INTERGOVERNMENTAL TRANSFERS HAVE FACILITATED STATE FINANCING SCHEMES (2004) (describing CMS and Congressional efforts to curtail state financing schemes that inappropriately increase federal Medicaid matching payments).
120. See Huberfeld, supra note 1, at 465.
121. Id. Part of the reason for this failure, as many commentators have noted, is that the only regulatory tool that CMS has in the Medicaid program is withdrawal or withholding of funds. Dunne, supra note 44, at 994-95. That enforcement mechanism would have perverse effects if CMS's goal were to force states to provide more generous - rather than less
122. The Department of Health and Human Services has become an important secondary regulator with the passage of the Patient Protection and Affordable Care Act, which charges the HHS Secretary with enforcing external review requirements. See Patient Protection and
123. 29 U.S.C. § 1135 (2006) (authorizing the Secretary of Labor to promulgate regulations for interpretation and enforcement of ERISA); Dietz et al., Pensions and Retirement Funds, 60A AM. JUR. 2D Pensions § 764 (2009) (outlining DOL's authority and obligations as ERISA administrator).
124. Between 1995 and 2001, Congress regularly considered legislation to increase DOL's
125. 29 U.S.C. § 1132(a)(5) (2006) (allowing the Secretary of Labor to bring a civil action against the administrator of an employee benefit plan for an injunction against ERISA violations or for other equitable relief). See also supra text accompanying notes 52-53 (explaining that individuals have the same access to civil actions as the Secretary under the terms of the statute, 29 U.S.C. § 1132(a)(3)).
126. § 1132(a)(5).
127. See Chevron v. Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984) (holding that an agency's interpretation of its governing statute is entitled to judicial deference as long as the statute's meaning is ambiguous and the agency's interpretation is reasonable).
128. ERISA and DOL already require employer-sponsored benefits plans to submit annual reports with information about their financial and accounting statuses and practices. See 29 U.S.C. § 1132(c) (2006); DOL Administration and Enforcement of ERISA, 29 C.F.R. § 2520.103-1(b) (2010). DOL has authority to impose civil penalties against non-complying plans. See 29 U.S.C. § 1132(c)(2); DOL Administration and Enforcement of ERISA, 29 C.F.R. § 2560.502c-2 (2010). ERISA and DOL do not, however, require any reporting related to claims processing or claim denials.
129. For pre-PPACA regulations, see 29 C.F.R. § 2560.503-1 (2010); Employee Retirement Income Security Act of 1974; Rules and Regulations for Administration and Enforcement, 65 Fed. Reg. 70,246 (Nov. 21, 2000) (codified at 29 C.F.R.§ 2560 (2010)). PPACA set additional rules for external review and involved HHS in the enforcement of those rules. See Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 1001(4), 124 Stat. 119(2010).
130. Indeed, DOL holds that exhaustion of internal appeals to the benefits plan constitutes exhaustion of administrative remedies for purposes of litigation. 29 C.F.R. § 2560.503-1 (1) (2010).
131. See, e.g. Brief for the United States as Amicus Curiae at 8-15, Amschwand v. Spherion Corp., 128 S. Ct. 2995 (2008) (No. 07-841) (signed by the United States Solicitor General as well as the Department of Labor's Solicitor, Associate Solicitor, and Counsel for
132. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212 (1988) ("We have never applied [deference rules] to agency litigating positions that are wholly unsupported by regulations, rulings, or administrative practice."); see also United States, v. Mead Corp., 533 U.S. 218, 226 (2001) (holding that agency enactments are entitled to deference only if they carry the "force of law").
133. See Riegel v. Medtronic, Inc., 552 U.S. 312, 319-20 (2008) ("The FDA has the power to withdraw premarket approval based on newly reported data or existing information and must withdraw approval if it determines that a device is unsafe or ineffective under the conditions in its labeling." (citing 21 U.S.C. §§ 360(e)(1), 360h(e) (2006)).
134. Id. (citing 21 U.S.C. § 360i (2006); 21 C.F.R. § 803.50(a) (2005); 21 C.F.R. § 814.84(b)(2) (2007)).
135. See FDA Premarket Approval of Medical Devices Rule, 21 C.F.R. § 814.46(a)(2) (2010) (authorizing FDA to withdraw market approval if manufacturer has failed to meet "any postapproval requirement imposed by⋯ regulation").
136. See, e.g., Richard Piatt et al., The New Sentinal Network - Improving the Evidence of Medical-Product Safety, 361 NEW ENG. J. MED. 645, 645 (Aug. 13, 2009) (describing FDA's new efforts, congressionally authorized in 2007, to use electronic medical records to
137. See Gostin, supra note 63, at 2314 (describing FDA's severe "resource deficits" and observing that those deficits "have resulted in high-profile regulatory failures");
138. The Medical Device Safety Act of 2009: Hearing on H.R. 1346 Before the Subcomm. on Health of the H. Comm. on Energy and Commerce, 111th Cong. 14 (2009) (statement of Richard M. Cooper), http://energycommerce.house.gov/Press-111/ 20090512/testimony-cooper.pdf (admitting, in the context of testimony supporting the Court's decision, that "better systems and methods are needed generally to monitor the safety of medical products after they have been approved").
139. See NAT'L QUALITY FORUM, SERIOUS REPORTABLE EVENTS IN HEALTHCARE 2006 UPDATE: A CONSENSUS REPORT 8-16 (2007) (examples of "never events" include surgery performed on the wrong body part, surgery performed on the wrong patient, and wrong surgical procedure performed on patient.).
140. See Details for: Medicare "Pay for Performance (P4P)" Initiatives, CTRS. FOR MEDICARE & MEDICAID SRVS. (Jan. 31, 2005), http://www.cms.hhs.gov/apps/media/press/release.asp?counter=1343 (describing CMS's initiatives that link hospital and physician reimbursement rates to quality measures).
141. PPACA prohibits Medicaid plans from paying for services associated with hospital- acquired conditions (HACs), i.e., complications or co-morbidities contracted by patients during a hospital stay. See Patient Protection and Affordable Care Act, Pub. L. No. 111- 148, § 2702, 124 Stat. 119, 318-19 (2010). The Secretary is required to identify HACs and implement appropriate regulations by July 1, 2011. Id. Similarly, PPACA also adjusts Medicare payments for hospitals to incentivize reductions in HACs. Beginning January 1,
142. See, e.g., MED. BOARD CAL. (last visited Sept. 16, 2010), http://www.medbd.ca.gov/
143. MINN. BOARD MED. PRAC, http://www.state.mn.us/portal/mn/jsp/home.do7age ncy=BMP (last visited Sept. 16, 2010) ("The mission of the Minnesota Board of Medical Practice is to protect the public's health and safety by assuring that the people who practice medicine or as an allied health professional are competent, ethical practitioners with the necessary knowledge and skills appropriate to their title and role.");
144. State Board of Medical Examiners, N.J. Div. OF CONSUMER AFFAIRS, http://www.state.nj.us/lps/ca/bme/index.html (last visited Sept. 16, 2010) ("New Jersey's Medical Board is responsible for protecting the public's health and safety by determining qualifications of applicants for licensure, establishing standards for practice, and disciplining licensees who do not adhere to those requirements.").
145. See, e.g., Sandra J. Tanenbaum, Pay for Performance in Medicare: Evidentiary Irony and the Politics of Value, 34 J. HEALTH POL. POL'Y & L. 717, 717 (2009) (evaluating the pay for performance initiative and concluding that it does not function as intended but is instead a useful political tool).
146. Studdert & Mello, supra note 20, at S47-49.
147. Cooperative federalism is the "[distribution of power between the federal government and the states in which each recognizes the power of the other while jointly engaging in certain governmental functions." BLACK'S LAW DICTIONARY 664 (8th ed. 2004).
148. See Joseph Fastiggi, New York Medicaid: Never Can Say Goodbye, 16 CORNELL J.L. & PUB. POL'Y 581, 609-10 (2007) (lamenting the lack of information made available to Medicaid recipients regarding "their health and the courses of recommended treatment" and discussing government administrators' propensity to shirk responsibility for Medicaid beneficiaries' well being);
149. Joshua Tenzer, Reaching the Final Frontiers in Medicaid Managed Care, 62 N.Y.U. ANN. SURV. AM. L. 329, 354-57 (2006) (explaining that states shirk fiscal responsibility with Medicaid funds while the federal government "push[es] more responsibility on the states");
150. Sara Kay Wheeler & Tizgel K.S. High, Medicaid Enforcement Amidst the Perfect Storm, 9 J. HEALTH CARE COMPLIANCE 25, 25-26 (2007) (explaining how the joint regulatory nature of Medicaid forms the "perfect storm," creating a regulatory vacuum which neither CMS nor states feel compelled to fix).
151. See Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. POL. ECON. 416,
152. see also John D. Donahue, Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate, 11 J. ECON. PERSP. 73, 75-77 (1997);
153. Robert P. Inman & Daniel L. Rubinfeld, Rethinking Federalism, 11 J. ECON. PERSP. 43, 45-52 (1997);
154. Moncrieff, supra note 4, at 869 (outlining the basic Tiebout theory);
155. Larry Ribstein & Bruce Kobayashi, The Economics of Federalism 3-4 (Jan. 2006) (unpublished manuscript), available at http://ssrn.com/ abstracts875626.
156. See Scott L. Greer & Peter D. Jacobson, Health Care Reform and Federalism, 35 J. HEALTH POL. POL'Y & L. 203, 219-21 (2010) (explaining that fiscal competition among states limits the ability of the states to raise revenue for redistributive health care programs).
157. Susan Dorr Goold et al., Choosing Health plans All Together: A Deliberative Exercise for Allocating Limited Health Care Resources, 30 J. HEALTH POL. POL'Y & L. 563, 594 (2005) (explaining that decisions regarding Medicaid are subject to "the usual methods of political accountability").
158. This point presupposes, of course, that the Medicaid violations are politically unpopular. If such cuts are politically popular, then we need to ask whether the statutory violation is a problem at all and whether the state should continue to participate in the Medicaid program at all.
159. Lisa Colosi, Wilder v. Virginia Hospital Association: Making the Medicaid Reimbursement Rate Challenge a Federal Case, 12 PACE L. REV. 139, 142 (1992) ('To cover the costs of providing medical services to the poor, states primarily rely on federal contributions ").
160. In many of the Equal Access Provisions cases that reached the federal appellate level, the states' justification for cutting reimbursement rates was purely budgetary. For a list of such cases, see Orthopaedic Hosp. v. Belshe, 103 F.3d 1491,1499 n.3 (9th Cir. 1997);
161. Ark. Med. Soc'y, Inc. v. Reynolds, 6 F.3d 519, 531 (8th Cir. 1993) (rejecting 'exclusively budgetary' justification for rate cuts to Medicaid providers);
162. AMISUB v. Colo. Dep't of Soc. Servs., 879 F.2d 789, 801 (10th Cir. 1989) (rejecting state Medicaid plan that resulted in forty-six percent reduction in provider reimbursement as being based solely on budgetary constraints: "While budgetary constraints may be a factor to be considered by a state when amending a current plan ⋯ budgetary constraints alone can never be sufficient"). See generally Moncrieff, supra note 1 (explaining the budgetary strain that Medicaid creates for states and discussing the cases in which states reduced reimbursement rates in an attempt to avoid budget overruns).
163. See Frank J. Thompson & Courtney Burke, Executive Federalism and Medicaid Demonstration Waivers: Implications for Policy and Democratic Process, 32 J. HEALTH POL. POL'Y & L. 971, 993-95 (2007) (discussing the impact of the Medicaid waiver process on democratic transparency and legitimacy). Some of this flexibility may diminish with the Medicaid expansions in PPACA, though, of course, we do not yet know how CMS will administer the new requirements. PPACA expands Medicaid eligibility to include all individuals with income at or below 133% of the federal poverty line, who are otherwise ineligible for Medicaid or Medicare coverage, and also allows for federal matching of state expenditures associated with expanded enrollment criteria.
164. Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 2001(a)(1)(C), 124 Stat. 119, 271 (2010). The statute requires states to provide this population with "benchmark" or "benchmark equivalent" benefits by January 1, 2014. Id. at §§ 2001(a)(1)(C), 2001(a)(2)(A)
165. A benchmark plan is equivalent to federal employees health benefit plan coverage, state employee coverage, coverage offered by the HMO plan that has the largest insured commercial, non-Medicaid enrollment in the state, or other DHHS secretary approved coverage. 42 C.F.R. § 440.330 (2010)
166. PPACA also establishes Federal Medical Assistance Percentage (FMAP) rate for this category of Medicaid coverage to offset related state expenditures. Patient Protection and Affordable Care Act § 2001(a)(3)(B)
167. From 2014 to 2016, FMAP is 100%, i.e., the federal government will match 100% of states' funds used for providing Medicaid coverage to this new category of enrollees
168. Id.
169. The FMAP is scaled downward from 2017 onwards, and will be 90% from January 1, 2020. 42 U.S.C.A. § 1396d(y)(1) (West 2010). Additionally, PPACA requires states to provide Medicaid coverage to former foster children under twenty-six years of age by 2014. Patient Protection and Affordable Care Act § 10201. Previously, this requirement was optional for states. 42U.S.C. 1396(a)(10)(2006).
170. Beneficiaries who are harmed by federal violations, of course, act rationally when they collect information about statutory violations, so long as the harm of the violation is sufficiently costly to outweigh the cost of the information. This point is one reason that litigation - or administrative adjudication - is a useful tool; it allows individuals who have an incentive to monitor lawfulness to blow a whistle, rather than relying on general voting populations.
171. Tiebout, supra note 108, at 418; Moncrieff, supra note 4, at 869.
172. Tiebout, supra note 108, at 418.
173. See Jan K. Brueckner, Welfare Reform and the Race to the Bottom: Theory and Evidence, 66 S. ECON. J. 505 (2000);
174. Craig Volden, The Politics of Competitive Federalism: A Race-to-the-Bottom in Welfare Benefits?, 46 AM. J. POL. Sci. 352 (2002) (explaining that some have argued interjurisdictional competition may lead to an undersupply of welfare services as jurisdictions cut services to repel undesirable welfare recipients).
175. See Greer & Jacobson, supra note 109, at 219;
176. Paul E. Peterson, Devolution's Price, 14 YALE L. & POL'Y REV. 111,118 (1996).
177. See 42 U.S.C. § 1396(a)(10) (2006) (listing eligibility groups).
178. See David Blumenthal, Employer-Sponsored Health Insurance in the United States - Origins and Implications, 335 NEW ENG. J. MED. 82, 82 (2006) ("More than 159 million Americans - 62.4 percent of the nonelderly population - had health care coverage through employer-sponsored insurance in 2004.").
179. See James Maxwell & Peter Temin, Corporate Management of Quality in Employee Health Plans, 28 HEALTH CARE MGMT. REV. 27, 27 (2000) [hereinafter Corporate Management] (finding that employers have been "conducting intensive price negotiations with health plans");
180. see also JAMES MAXWELL ET AL., CORPORATE HEALTH CARE PURCHASING AMONG THE FORTUNE 500, at 8 (2001) [hereinafter FORTUNE 500] ("Large companies have a competitive need to attract and retain skilled employees, especially in today's tight labor markets.").
181. See Robert S. Galvin & Suzanne Delbanco, Why Employers Need to Rethink How They Buy Healthcare, 24 HEALTH AFF. 1549, 1550 (2005) ("Quantitative data are critical to procurement, yet fewer than half of firms perform financial analysis on their health care costs, and fewer than a third use hard-dollar 'return-on-investment' calculations in their decision making.").
182. See, e.g. Corporate Management, supra note 122, at 28 (finding that Fortune 500 employers use a broader definition of health care quality that focuses more on service quality and less on clinical quality).
183. See James Maxwell et al., Corporate Health Care Purchasing and the Revised Social Contract with Workers, 39 Bus. & SOC'Y 281, 287 (2000) [hereinafter Revised Social Contract] ("Consumers (employees) keep down the cost of health care by forcing health plans to compete among themselves, just as the producers of other goods and services do.").
184. See Galvin & Delbanco, supra note 123, at 1549 (arguing that employers' economic interest and expertise in supply-management chain "should result in employers' using their procurement expertise to increase the value of their health care expenditures");
185. Pamela B. Peele et al., Employer-Sponsored Health Insurance: Are Employers Good Agents for Their Employees?, 78 MILBANK Q. 5, 7 (2000) (hypothesizing that if employers are good agents, they will "understand!] their employees' health plan preferences" and "establish mechanisms for ⋯ providing useful information to their employees about their health insurance offerings");
186. WATSON WYATT WORLDWIDE, 12TH ANNUAL NATIONAL BUSINESS GROUP ON HEALTH/WATSON WYATT SURVEY REPORT 2 (2007), available at http://www.corp syn.net/Special/images/SPC-090607-WatsonWyatt.pdf (declaring that "best-performing companies" have significantly lower annual expenditure increases for their health care programs).
187. One reason that the ERISA shield applies only to self-insured employer plans - i.e., plans under which employers directly bear the risk of their employees' healthcare losses - is that the MCO that processes claims in the relevant case does not have a financial incentive to deny claims. Because the MCO's finding that a claim is "medically necessary" and therefore valid will cause the employer rather than the MCO to lose money, the likelihood of malicious denial is relatively low in the relevant case, as compared to the non-relevant case of a fully insured employer.
188. See Stephen Blakely, The Backlash Against Managed Care, NATION'S BUS. At 16 (July 1998), available at http://findarticles.eom/p/articles/mi-mll54/is-n7- v86/ai-20797610/?tag=content;coll (describing patients' growing discontent with managed care).
189. See Peele et al., supra note 126, at 15-16 (finding that employees were hesitant about making plan choices on their own and felt that employers "were much better equipped to sort through the plans and options than they were individually").
190. For a thorough review of health care consumer and provider incentives, see generally CHARLES E. PHELPS, HEALTH ECONOMICS (Addison Wesley 3d ed. 2002).
191. Peele et al., supra note 126, at 15-16.
192. See Corporate Management, supra note 122, at 38 (stating that Fortune 500 companies "routinely collect large amounts of data and use them in their purchasing decisions"). This distinction is, incidentally, part of why the individual market for MCOs fails so completely, and it is a good reason for maintaining private actions against MCOs
193. See, e.g., Blumenthal, supra note 121, at 86 ("Pressed by rising costs, private employers have pushed insurance companies to develop new approaches to organizing and
194. Galvin & Deblanco, supra note 123, at 1550 ("[A] minority [of employers] factor quality information into health plan selection and contracting.");
195. James Maxwell et al., Corporate Health Care Purchasing Among Fortune 500 Firms, 20 HEALTH AFF. 181, 186 (2001) [hereinafter Corporate Health Care Purchasing] ("The study documents relatively widespread awareness of quality measurement among the Fortune 500, with companies reporting the routine collection of large amounts of quality related data.").
196. See, e.g., Galvin & Delbanco, supra note 123, at 1550 (arguing that employers do not focus enough resources or the right resources for employees' ESI plans).
197. See, e.g., Blumenthal, supra note 121, at 85 ("This dynamic leads economists to argue that ultimately employers pass the costs of health care on to workers who pay for their own health insurance in the form of wages or others benefits foregone."); Peele et al., supra note 126, at 5 ("Economists argue that employees effectively pay for most of their nonwage benefits through lower wages.").
198. FORTUNE 500, supra note 122, at 9 ("Health benefits were viewed as contributing most to employee attraction ").
199. Corporate Health Care Purchasing, supra note133, at186 (suggesting that employers care more about driving down cost than quality of care).
200. See James T. O'Reilly, Pin the Tail on the Other Donkey: Allocating and Avoiding Injury Losses After Drug or Device Approval, 62 FOOD & DRUG L.J. 559, 571 (2007) ("No one looks forward to being an injured plaintiff, no one aspires to be the subject of Form FDA-3500 adverse experience reports, so the loss from medical and product error stays with the least effective lobbying force, the patients.").
201. INST, OF MED., REWARDING PROVIDER PERFORMANCE: ALIGNING INCENTIVES IN MEDICARE 4 (2006) (suggesting that fee-for-service pay structures encourages over use and thus higher costs and substandard care).
202. See supra Part II.A.4.
203. Who Is Eligible for Medicare?, MEDICARE, http://questions.medicare.gov/ app/answers/detail/a-id/10/kw/eligibility (last updated June 10,2009).
204. See Largest U.S. Health Insurer Rewarded Employees That Cancelled Coverage Of Sick Patients - Consumer Watchdog Calls on Congress to Ban Bonuses for Canceling, Delaying or Denying Medical Care, CONSUMERWATCHDOG.ORG (June 16, 2009), http://www.consumerwatchdog.org/patients/articles/?storyld=27969.
205. PPACA prohibits all group health plans from establishing lifetime limits from September 23, 2010 onwards or January 1, 2011 for calendar year plans. Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 10101(a), 124 Stat. 119, 883-84 (2010).
206. Id.
207. With respect to benefits that are not "essential health benefits ⋯ a plan or issuer may impose annual or lifetime per-individual dollar limits on specific covered benefits." Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections, 75 Fed. Reg. 37,191 (June 28, 2010) (to be codified at 26 C.F.R. 54.9815-271 IT, 29 C.F.R. 2590.715-2711, 45 C.F.R. 147.126).
208. Finally, the PPACA forbids plans from rescinding coverage, except in case of fraud or misrepresentation. Id. at 37,192. PPACA also prohibits group and individual health plans from denying coverage based on an applicant's preexisting condition. Patient Protection and Affordable Care Act, § 2704,124 Stat, at 154-55. Although this prohibition is generally effective for plan years beginning on or after January 1, 2014, it became effective for plan years beginning on or after September 23, 2010 for enrollees who are under nineteen. Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections, 75 Fed. Reg. at 37,189-90.144 This point holds less true in states with "any willing provider" laws, which require MCOs to enlist any provider that wants to participate in the MCO's "preferred provider" network, but even under those laws MCOs can place conditions on participating providers, presumably including quality controls.
209. For an example of risk-adjusted morbidity and mortality rates, see David Emmons, Data on Employee Physician Profiling, 26 AM. HOSP. ASS'N J. HEALTH & LIFE SCI. L. 73 (1993) (outlining physician profiles created by the New York Department of Health).
210. See Meredith B. Rosenthal et al., Early Experience With Pay-for-Performance: From Concept to Practice 294 J. AM. MED. ASS'N 1788, 1788, 1792-93 (2005) (noting the growing adoption of pay-for-performance programs among private payers but concluding that the programs do little to increase provider quality);
211. Devin S. Schindler, Never Events, Defensive Medicine and the Continued Federalization of Malpractice, 12 QUINNIPIAC HEALTH L.J. 209, 213-14 (2008-2009) (discussing CMS' advent of "never-events" and the growing trend that doctors and hospitals are not reimbursed for provider-induced injuries); Maura Lerner, Minnesota Is First State With Policy to Stop Billing After Medical Errors, STAR TRIB. (Minneapolis-St. Paul), Sept. 19, 2007, http://www. startribune.com/local/11590481.html (describing how Minnesota hospitals decided to stop charging for follow-up care caused by their own mistakes);
212. Stephen Smith, Medical Mistakes No Longer Billable: Bold Steps Taken to Reduce Hospital Errors, BOSTON GLOBE, June 19, 2008, http://www.boston.com/news/ local/articles/2008/06/19/medical-mistakes-no-longer-billable/. See generally Kristin Madison, The Law and Policy of Health Care Quality Reporting, 31 CAMPBELL L. REV. 215 (2009) (discussing payers' use of quality "report cards" as a possible means of improving provider quality).
213. And, as noted, the systems that are in place so far do not seem to be working very well. See, e.g., Rosenthal et al., supra note 146, at 1792-93 (concluding that current private insurers' quality improvement programs do not work well for some kinds of providers).
214. Tanenbaum, supra note 104, at 722-40 (reviewing empirical studies of pay-for-performance initiatives in CMS and private insurers and concluding that they generally have not effected quality improvements).
215. See supra Parts II.B.2 & II.B.3. Furthermore, the agency slack between employers and employees, see supra Part II.B.2, might cause employers to under-invest in information about MCO quality controls.
216. See generally Neil D. Weinstein & William M. Klein, Resistance of Personal Risk Perceptions to De-biasing Interventions, in HEURISTICS AND BIASES: THE PSYCHOLOGY OF INTUITIVE JUDGMENT 313 (Thomas Gilovich, Dale Griffin & Daniel Kahneman eds., 2002) (describing the persistence of optimism bias in patients' judgments of their own health risks).
217. See supra Part II.B.3.
218. See generally INST. OF MED., supra note 11 (describing and quantifying the many
219. See Administrative Procedure Act of 1946, Pub. L. No. 89-554, §§ 701-706, 80 Stat. 392, 392 (1966) (codified at 5 U.S.C. §§ 701-706 (2008)); Chevron v. Natural Res. Def. Council, 467 U.S. 837, 844 (1984) ("Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.").153 See Chevron, 467 U.S. at 844.
220. See Donenberg, supra note 18, at 1520 n.131 (citing Pa. Pharmacists Ass'n v. Houston, 283 F.3d 531, 543-44 (3d Cir. 2002); Evergreen Presbyterian Ministries, Inc. v. Hood, 235 F.3d 908, 927-28 (5th Cir. 2000); Visiting Nurse Ass'n v. Bullen, 93 F.3d 997, 1004 n.7 (1st Cir. 1996); Ark Med. Soc'y, Inc. v. Reynolds, 6 F.3d 519, 528 (8th Cir. 1993)).
221. Moncrieff, supra note 4, at 857-58 (describing congressional and presidential interest in medical malpractice reform).
222. Which it certainly doesn't seem to do. See Christopher T. Robertson, Blind Expertise, 85 N.Y.U. L. REV. 174, 177-78 (2010) (discussing how biased expert witnesses deprive
223. Admittedly, the tort system does not generally draw such wholesale conclusions; liability rules do not put manufacturers, MCOs, or providers out of business. Instead, the damages recoverable in tort are specifically designed to allow injuries where efficient, such that a device manufacturer, MCO, or doctor will go out of business only if held liable on several occasions.
224. See MARQUIS DE CONDORCET, Essay on the Application of Mathematics to the Theory of Decision-Making, in CONDORCET: SELECTED WRITINGS 33, 52-55 (Keith Michael Baker ed., 1976) (stating a mathematical theorem that voting groups become increasingly likely to choose correct results as the groups grow in membership, as long as the groups' members are, on average, more likely to vote for the right answer than the wrong one);
225. see also Adrian Vermeule, Forward: System Effects and the Constitution, 123 HARV. L. REV. 4, 13 (2009) ("[W]here a group votes sincerely on two alternatives, one of which is correct, and the members of the group are even slightly more likely to be right than wrong, then as the number of members in the group increases, the probability that a majority vote of the group is correct tends towards certainty.").
226. States, of course, have high courts that can gather and see cases from all jurisdictions in the state, but they are not usually in the habit of punishing repeat tortfeasors more harshly because of the repetition. Furthermore, although it would not be difficult for one state court to see what other state courts have decided, they are certainly not bound by one another's law and probably do not bother to research foreign jurisdictions' experiences and decisions.
227. See supra note 158 and accompanying text.
228. Moncrieff, supra note 1, at 687-88 (discussing the difficulty that courts faced in
229. See infra Part IV.B.l for further discussion of this function of private litigation and for the suggestion that the function can be replicated in agencies.163 See generally Jody Freeman, The Private Role in Public Governance, 75 N.Y.U.L. REV. 543, 586-87 (2000).
230. That said, administrative law provides significant incentives for agencies to develop records of their decision-making processes and to give public reasons for their decisions. See United States v. Mead Corp., 533 U.S. 218, 237-38 (2000) (holding that only formal rules, which require creation of a public record, will be entitled to judicial deference).
231. See Robert W. Gordon, A New Role for Lawyers?: The Corporate Counselor After Enron, 35 CONN. L. REV. 1185, 1199 (2003) ("Big American business firms are not discrete and insular minorities. They have exceptional access to influence in legislatures, administrative agencies, and the courts through government advisory commissions, trade associations, lobbies, and lawyers.");
232. Thomas W. Merrill, Institutional Choice and Political Faith, 22 LAW & Soc. INQUIRY 959, 961 (1997) (discussion of public choice theory in relation to business lobbies influence on regulators); Jennifer Arlen, Comment, The Future of Behavioral Economic Analysis of Law, 51 VAND. L. REV. 1765, 1785 (1998) ("[PJowerful business lobbies may induce regulators to declare as safe products that are not in fact safe.").
233. Stephen J. Choi et al., Professionals or Politicians: The Uncertain Empirical Case for an Elected Rather Than Appointed Judiciary (Univ. of Chic. Law Sch., Olin Ctr. for Law & Econ. Working Paper Series, No. 357, 2007), available at http://ssrn.com/abstract= 1008989 (observing that most state judges are elected, not appointed).
234. See Einer R. Elhauge, Does Interest Group Theory Justify More Intrusive Judicial Review?, 101 YALE L.J. 31, 77 (1991) ("Small intensely interested groups are still likely to spend more on their litigation efforts than any large diffuse groups opposing them.").
235. We have evidence of this kind of distortion in medical malpractice litigation, where juries are significantly more likely to err on the doctor's side than on the patient's side. See Studdert & Mello, supra note 20, at S49-S53.
236. Such a process would therefore replicate many of the informational successes of state courts. See supra note 162 and accompanying text.170 See Edward Alan Miller, Federal Administration and Judicial Oversight of Medicaid: Policy Legacies and Tandem Institutions under the Boren Amendment, 38 PUBUUS: J. OF FEDERALISM 315, 328-29 (2008) (celebrating the combination of judicial and regulatory oversight under the predecessor of the Equal Access Provision).
237. See, e.g., Lars Noah, Rewarding Regulatory Compliance: The Pursuit of Symmetry in Products Liability, 88 GEO. L.J. 2147, 2165 (1999) (arguing in favor of a regulatory compliance defense for drug and device torts).
238. Gonzaga Univ. v. Doe, 536 U.S. 273, 273 (2001).
239. Miller, supra note 86, at 1303.
240. See discussion supra Part II.A.2.
241. Under the second step of deference analysis, the court asks whether the agency's
242. See Perry H. Apelbaum & Samara T. Ryder, The Third Wave of Federal Tort Reform: Protecting the Public or Pushing the Constitutional Envelope?, 8 CORNELL J.L. & PUB. POL'Y 591, 593 (1999) (observing that federal medical malpractice reform raises difficult constitutional questions); Betsy J. Grey, The New Federalism Jurisprudence and National Tort Reform, 59 WASH. & LEE L. REV. 475, 534 (2002) (suggesting that medical malpractice might not be "economic activity" that can be subject to federal regulation under the Commerce Clause); Collin Suit, Note, Questionable Medicine - Why Federal Medical Malpractice Reform May Be Unconstitutional, 47 ARIZ. L. REV. 195, 198 (2005) (expressing skepticism about the constitutionality of federal medical malpractice reform under the "Supreme Court's more recent pronouncements defining the scope of congressional power under the Commerce Clause").
243. Environmental law and its regulatory regime is one example of such success. See Lois Schiffer & Timothy Dowling, Remark, Reflections on the Role of the Courts in Environmental Law, 27 ENVTL. L. 327, 331-32 (1997) (attributing the effectiveness of environmental policy to both legislation, such as the Clean Air Act, and to the courts for their "vigorous enforcement and resolution of exactly what the new [environmental] statutes required from the executive and from private parties"). But see Thomas O. McGarity, The Complementary Roles of Common Law Courts and Federal Agencies in Producing and Using Policy-Relevant Scientific Information, 37 ENVTL. L. 1027, 1044 (2007) (exploring the limits on communication between common law courts and EPA, and suggesting reforms to enhance information exchange).
244. Moncrieff, supra note 4, at 859-61 (reciting the arguments against a uniformity need for medical malpractice).
245. It is a reasonable question, however, whether this is an artifact of fifty different legal regimes - whether nation-wide providers (perhaps on a Kaiser-like model, but across state lines) would emerge if the federal government took over regulation.
246. See ADRIAN VERMEULE, JUDGING UNDER UNCERTAINTY (2006) (discussing the limits of judicial decision-making and urging a greater executive role in interpreting statutes).
247. See supra Part II.B.2 & Part II.B.4.
248. This point is perhaps best-known in the malpractice context, where arbitrary litigation rules incentivize defensive medicine on the part of individual providers rather than appropriate precaution on the part of systemic entities.
249. The problem here is not merely one of "coordinating sanctions" between the executive and the judiciary, as a recent manuscript puts it. See Logue, supra note 14.184 See Gostin, supra note 63, at 2315 ("The tort system has another benefit that is not often fully recognized - through the discovery process, it can compel corporations to disclose everything they know, or reasonably should know, about the product's safety and effectiveness."); Robert L. Rabin, Keynote Paper: Reassessing Regulatory Compliance, 88 GEO. L.J. 2049, 2068-70 (1999) (describing the information-gathering and information-revealing virtues of tort). Administrative regulators can then take advantage of that information in making later regulatory decisions. Gostin, supra, at 2315 ("The discovery process provides a 'feedback loop' to the FDA, which in the past has changed its regulatory decisions in light of information revealed in court.").
250. For example, tobacco regulation is often cited as an instance in which litigation revealed information of corporate abuses, see Gostin, supra note 63, at 2315, but FDA was
251. See David A. Kessler & David C. Vladeck, A Critical Examination of the FDA's Efforts to Preempt Failure-to-Warn Claims, 96 GEO. L.J. 461, 492 (2008) (asserting that "the information-gathering tools lawyers have in litigation are, by any measure, more
252. The Vioxx litigation is a good example of this function of tort; plaintiffs were able to discover, relevantly for FDA, that Merck knew about the heart risks of Vioxx and hid that information from FDA during the drug's approval process.
253. In the tobacco case, for example, FDA would have jurisdiction over nicotine only if the tobacco companies knew that nicotine was addictive and intended to sell tobacco products as a drug.Knowledge and intent were therefore central to FDA's assertion of jurisdiction. See KESSLER, supra note 185, at 355-58.
254. See Rabin, supra note 184, at 2070-74 (describing the compensation goals of tort and their failure in most administrative regimes, but noting that some administrative schemes do replicate compensation).
255. Moncrieff, supra note 4, at 880.
256. See id.
257. Assuming they aren't captured. See supra Part III.B.2.
258. See Rabin, supra note 184, at 2074.
259. See U.S. GOV'T ACCOUNTABILITY OFFICE, GAO-09-581, FOOD AND DRUG ADMINISTRATION: FDA FACES CHALLENGES MEETING ITS GROWING MEDICAL PRODUCT RESPONSIBILITIES AND SHOULD DEVELOP COMPLETE ESTIMATES OF ITS RESOURCE NEEDS 34 (2009) (raising concern for the lack of funding and resources devoted to FDA's medical products oversight); U.S. GOV'T ACCOUNTABILITY OFFICE, GAO-09-106, WHISTLEBLOWER PROTECTION PROGRAM: BETTER DATA AND IMPROVED OVERSIGHT WOULD HELP ENSURE PROGRAM QUALITY AND CONSISTENCY 40-41 (2009) (asserting that the Department of Labor's Occupational Safety and Health Administration lacks funds to fully implement its program to investigate whistleblower complaints); U.S. GOV'T ACCOUNTABILITY OFFICE, GAO-08-54, CENTERS FOR MEDICARE AND MEDICAID SERVICES: INTERNAL CONTROL DEFICIENCIES RESULTED IN MILLIONS OF QUESTIONABLE CONTRACT PAYMENTS 45 (2007) (finding that CMS neglected to devote sufficient resources to appropriately process contract awards). CMS's response to its oversight deficiencies, the Recovery Audit Contractor program, came under a substantial amount of criticism during its initial years.
260. See, e.g., Margaret G. Farrell, ERISA Preemption and Regulation of Managed Health Care: The Case for Managed Federalism, 23 AM. J.L. & MED. 251, 277-81 (1997) (observing that six federal agencies have jurisdiction over some aspect of managed care).
261. See EBSA Unified Agenda, supra note 15.