The Ganske-Dingell bill provides new remedies for patients that are killed or injured by the actions of HMOs, insurance companies, or other health plans. The division of responsibility between state and Federal court is very clear under the bill and would, except for very exceptional circumstances, preclude a suit in both federal and state court for the same injury.

While both state and federal remedies could, in rare instances, be available to injured patients under the Ganske-Dingell bill, that is also true under present law, where certain managed care claims brought by employees go to state court and others are considered to be ERISA claims and are often heard in federal court.

Under Ganske-Dingell, state law and state courts would be relevant where medical injuries are involved; state court remedies apply to medical negligence claims involving HMO physicians whose medical judgements hurt people. The federal court remedies are for injuries stemming from purely administrative HMO decisions that have nothing to do with medical judgment. There could be the extremely rare instance that a health plan could make two types of bad decisions in the same case. However, in such a situation, the judicial rule of "pendant jurisdiction" would permit a single federal court to hear the state claims as part of the federal case. No additional court time would be needed. The federal court would apply the state law, but the case would be heard in federal court.

The Ganske-Dingell bill would vastly reduce the current confusion over the appropriate venue for such cases and would therefore eliminate much of the current litigation over whether a case filed in state court is preempted by ERISA and removable to Federal court.

Criticism: The creation of a "dual liability system" in the Ganske-Dingell bill will dramatically increase forum shopping and duplicative litigation.

The remedies under the state and federal cause of action in the Ganske-Dingell bill are for two mutually exclusive wrongs. If a patient is injured by a medical decision, federal court would not be available. There is no federal remedy under the Ganske-Dingell bill for medical injuries caused by substandard treatment decisions. Likewise, a patient injured by an HMO’s violation of ERISA or its ERISA administrative duties could not try to take the case to state court, because Ganske-Dingell restricts these types of claims to a federal cause of action.

In fact, right now consumers are the victims of HMO forum shopping, because HMOs will always try to have every case, whether or not it involves a violation of ERISA, removed to federal court where the patient is left with no remedy for an injury.

Today, HMOs that provide benefits to ERISA plans operate in both the individual and group market and must comply with (and can be held liable for violations of) state insurance and medical practice laws, which can vary significantly across states. Ever since Metropolitan Life Insurance v. Massachusetts was decided in 1985 it has been clear that insurance issuers offering coverage to group health plans must comply with state insurance laws including benefit mandates and other provisions. HMOs are also completely accountable under state law for medical care that is of substandard quality. Thus, the Ganske-Dingell bill merely clarifies the status of this federal/state allocation of managed care oversight responsibilities, with non-medical plan administration decisions covered by ERISA and medical quality claims covered by state law.

Employers too, are not immune from state laws. If a customer slips on the floor in a WalMart in Texas, the customer can hold WalMart liable for its negligence according to Texas law. The Ganske-Dingell bill would not open up a vast, new, and unknown world of state courts for these employers; they are already subject to state law and state courts today.

The Ganske-Dingell bill actually codifies the United States Supreme Court’s decision in Pegram v. Herdrich, which clarified that claims that involve the medical negligence of HMO physicians are not and never have been ERISA claims. The Pegram decision was very clear regarding ERISA’s continued application to claims relating to the administration of ERISA plans. These types of claims would include coverage claims that do not involve medical judgment and thus do not raise issues of medical liability. For example, a claim challenging the refusal to pay for acupuncture on the ground that it is not a plan benefit is not one that raises questions of medical judgement. This type of claim would be a federal claim.

ERISA was intended only to ensure uniformity of law in those areas related to plan administration. As the Supreme Court ruled in the Travelers’ Insurance case in 1995, ERISA was never intended to displace those areas of state law that traditionally have been committed to state authority, such as laws that regulate insurance (in the case of insured ERISA plans) and state laws that provide for the safety, health and welfare of residents. ERISA was never designed to provide a total shield against any liability for wrongdoing. Indeed, opponents of the Ganske-Dingell bill are engaged in an effort to broaden the reach of ERISA and eliminate current avenues to redress in the wake of a growing line of decisions by the Supreme Court and the lower courts narrowing the reach of ERISA’s preemption.

Because ERISA is a federal law that is designed to replace state law only in certain circumstances, it makes little sense to "build on" ERISA by beginning to add rights and remedies that traditionally have been left to state law. Remedies for medical (personal) injuries are one of the prime areas left to state law, and the Ganske-Dingell bill restores that right to patients injured as a result of a medical decision. State courts have been the traditional forum for medical injury cases for more than 200 years and have vast experience in dealing with these matters. It is not an appropriate role for federal courts to play. In fact, the American Bar Association, the National Judicial Conference, the state attorneys’ general, and numerous federal judges take the position that medical injury cases belong in state, not federal, court. This is consistent with cases involving doctors and hospitals which are also heard in state court.

Moreover, today, ERISA provides no compensatory relief for patients who have been injured by the medical negligence of HMOs and their physicians. Patients can recover only the value of their benefits under ERISA. For patients who have been injured or who have died as a result of the HMO’s medical negligence, the benefit is of no help.

The Ganske-Dingell bill does build on ERISA to provide remedies for individuals who suffer injury as a result of plan administration. This is appropriate, because ERISA was intended to provide uniformity for these types of plan decisions.

Criticism: The Ganske-Dingell bill is unconstitutional because it sets federal standards for state causes of action, taking away state courts’ traditional jurisdiction.

By this logic, ERISA is unconstitutional too, since ERISA already entirely displaces state law. If displacing state law is not unconstitutional, federal limits on otherwise available remedies under state law should not be unconstitutional either.

Response: The Ganske-Dingell bill properly codifies the Pegram decision’s distinction between medical negligence and wrongful plan administration.

The Supreme Court in Pegram drew a road map for lower courts trying to understand ERISA preemption. In Pegram, the court distinguished between medical decisions and ERISA fiduciary decisions: state law should govern in any case in which medical injury is alleged to have flowed from flawed medical judgment regardless of the context in which that judgment is exercised. However, where medical judgment, medical fact, or medical treatment are not on the line, ERISA remedies should apply.

Ganske-Dingell tracks Pegram’s distinction between medical negligence and wrongful plan administration. Opponents of the Ganske-Dingell bill have attempted to imply that the Supreme Court decision only applied to individual treating physicians, not to plan medical personnel. This reading is clearly wrong, as the Pennsylvania Supreme Court’s recent decision in Pappas v Asbel clarifies. In Pappas, which was sent back to the Pennsylviania court by the Supreme Court following Pegram, the judges concluded that the Supreme Court’s opinion draws no distinction between the individual treating physician and the HMO medical staff. If the injury arises from medical negligence, according to the Pappas court, the case is to be treating as involving state medical negligence law.

Far from "preserving ERISA", opponents of Ganske-Dingell are attempting to create a liability shield for managed care companies under ERISA that does not exist today. They want to overturn Pegram and place medical liability cases under ERISA by calling them "coverage" cases, even though managed care does away with the distinction between "coverage" and "treatment", as the Pegram decision tells us.

The Ganske-Dingell bill allows existing state liability laws to apply, leaving the decision regarding medical liability among HMOs to the states, just as the states decide professional liability policy in the case of doctors and hospitals. The Texas statute represents that state’s own decision regarding how far medical liability concepts should extend in the case of the managed care industry.

Criticism: The Ganske-Dingell bill would not affect existing class actions or bar such future claims.

The Ganske-Dingell bill is not a class action bill. The purpose of the bill is to provide meaningful protections for individual patients and provide a way to hold health plans accountable when they act negligently and violate those protections. This bill does not take away remedies currently allowed under the law. However, to the extent class actions under ERISA are possible, it does limit class actions for the new individual rights created under the bill.

Criticism: The Ganske-Dingell bill does not require complete exhaustion of external review.

In instances where the patient has suffered an injury which can not be remedied by a decision by the external review panel, the Ganske-Dingell bill would allow a patient to elect not to complete external review prior to going to court, since completion of the process could not provide a meaningful remedy. This is the same standard used in the Texas statute, and is consistent with established principles of administrative law and the way courts have interpreted both ERISA and Medicare.

However, under Ganske-Dingell, either the plan or the patient could require that the external review process be completed, and the expert judgment of the external reviewers could be used as evidence in the case.

The Ganske-Dingell bill does not create new causes of action under state law. The bill merely clarifies that ERISA does not prevent injured patients from holding their health plan accountable under existing state laws. Thus, any state caps, limits or other restrictions would apply. In this regard the bill is identical to the Emergency Medical Treatment and Labor Act (EMTALA), relating to hospital duties in medical emergencies. Like Ganske-Dingell, EMTALA does not preempt state medical negligence claims but merely creates a new federal claim for failure to provide federally required screening or stabilization services. Furthermore, EMTALA preserves all underlying state medical negligence law, including caps on damages.

Criticism: The Ganske-Dingell bill would allow lawsuits even when the external review upheld the plan’s decision.

Under Ganske-Dingell, punitive damages would not be allowed if an external review upheld the plan decision, but compensatory damages would be allowed, if permitted by state law. Conversely, a patient would not automatically win a lawsuit simply because an external reviewer reversed the plan decision, even if an injury had occurred. External review is a good mechanism for making quick decisions to assure appropriate medical treatment, but it is not an appropriate forum to assess liability. If it were to become such a forum, the greater complexity and significance of assessing liability rather than determining medical treatment would slow the process.

The Ganske-Dingell bill specifically states that the external review can not override benefit exclusions or limits in a plan’s contract. If a plan’s contract specifically states that a particular benefit is not covered, the external reviewer can not compel the plan to provide it, no matter how medically necessary or appropriate the benefit may be for that patient.

In essence, managed care companies are making this allegation because they want to be able to make arbitrary and unreviewable decisions regarding when medical conditions fall within the terms of a contract. Very often this type of decision involves the exercise of medical judgment, and makes access to an external reviewer crucial. For example, in the case of a plan that excludes cosmetic surgery, a plan reviewer might erroneously classify a child’s cleft palate as merely a cosmetic problem and thus deny coverage. A parent should have access at this point to an impartial expert medical review of whether the cosmetic classification was medically justifiable.

The Ganske-Dingell bill, in this instance, would substitute independent medical judgment of the medical reviewers for the biased judgment of the health plan.