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Letters to the 107th Congress

January 14, 2002

The Honorable Greg Ganske
U.S. House of Representatives
Washington, D.C. 20515

Dear Representative Ganske:

When conferees are appointed, the American Bar Association will send a letter to all conferees urging them to include the liability provisions of the Senate-passed bill, S. 1052, in the conference report on the "Patients' Bill of Rights" legislation. In the meantime, we are writing to share our views with you. The ABA strongly believes that patients need legislation that provides both rights and effective remedies for enforcing those rights.

As the courts have said, "the distinction between rights and remedies is fundamental. A right is a well founded or acknowledged claim; a remedy is the means employed to enforce a right or redress an injury" (See Lewis v. Lewis & Clark Marine, Inc, 121 S. Ct. 993, 999 (2001)). While the Senate-passed bill provides effective remedies to patients who have been harmed by their managed health care plans, the House-passed bill, H.R. 2563, does not provide an effective remedy when a plan fails to carry out its responsibilities. In the absence of adequate remedies in the legislation, patients covered by employer-sponsored health care plans often will have no effective means of redress when the plans improperly refuse to provide appropriate medical services.

Section 402 of H.R. 2563, as amended by the Norwood amendment, allows for disputes involving medically reviewable decisions made by one set of decision-makers -- health plans-- to be decided in state court, but under federal law. Typically, such disputes also involve a second set of decision-makers--doctors, hospitals, hospital personnel and/or other health care providers. If H.R. 2563, as passed the House, were to be enacted, as to cases involving this latter group of decision-makers, the dispute would be heard in a state court and decided by state law. Consequently, in any case involving both a health plan and one or more of those in this latter group, a state judge and jury would have to adjudicate the dispute in one courtroom involving two different sets of laws, rules and procedures. Such a system is unprecedented under our system of jurisprudence, and involves considerably more time and effort by all concerned, compared to a system that would allow only one body of law (i.e., state law) to apply to all decision-makers involved in the care and treatment of our nation's patients.

This system would lead to much confusion in the courtroom with, by way of example, judges having to issue and juries having to consider two entirely different sets of jury instructions. Since cases involving medical issues are already quite complicated, adding such confusion to the process would be unwise.

The liability provisions of H.R. 2563 are deficient in other ways as well. By injecting federalism into a state court proceeding, H.R. 2563 also would make obsolete over 145 state and federal decisions and ten state statutes which have established the principle that accountability of health plans involving medically reviewable decisions should remain in state court and be decided according to state law. H.R. 2563 would seriously compromise an entire body of state law on medical negligence that has developed for approximately two centuries. Moreover, as the United States Supreme Court in 2000 highlighted, in the Herdrich opinion, the area of health law (in which a plan's medically reviewable decisions are venued) is a subject of traditional state regulation. It is probable that its very constitutionality would be challenged if H.R. 2563 were to be enacted as it is currently drafted. This is a concern because H.R. 2563 provides that if any portion of the accountability provisions were declared unconstitutional, the entire section on accountability would become null and void.

H.R. 2563 provides plan enrollees with fewer remedies than those that are typically available in state court. For example, under H.R. 2563, a patient would need to exhaust an administrative review process prior to bringing a cause of action in court. If the medical reviewer in that administrative process upholds the decision of the plan, the court must then presume that the decision-maker was fair in making its decision. Under this federal standard, the presumption could only be rebutted by "clear and convincing" evidence. This would place an onerous burden of proof on the patient-- a burden that is almost impossible to overcome in many cases. In addition, H.R. 2563 would require that, in order to prevail against an employer-sponsored plan, a patient must prove that the plan's actions were "the" proximate cause of the injury, not "a" cause of the injury. The element of proof traditionally used in state jury instructions is "a" proximate cause. H.R. 2563 also would impose an ill-advised federal cap of $1,500,000 on pain and suffering awards and other non-economic damages.

S. 1052 would amend ERISA to permit injured patients in employer-sponsored plans to bring a cause of action against their health plans. Cases regarding the terms and conditions of plans would be brought in federal court, and cases regarding medically reviewable issues, including those based on delay or denial of treatment by a health plan, would be brought in state court under state law. Thus, as is appropriate, S. 1052 would hold employer-sponsored health plans to the same standards of accountability as doctors, nurses and hospitals.

Those who support imposing federal standards on health plans in state courts, rather than allowing them to be subject to state standards, argue that by doing so health care costs will be lower. To the contrary, applying two separate sets of laws and procedures (i.e., federal law for plans only and state law for all other medical decision-makers) will increase time and expense far more than if state law were applied to all defendants. Moreover, creating federal law that applies solely to health plans will not reduce the costs associated with the injuries or deaths of patients in health plans. The only way to truly eliminate or reduce these costs associated with decisions made by health plans is to reduce the number of errors made by health plans. H.R. 2563, regrettably, would shift to the patient the responsibility for some or all of the costs associated with inappropriate decisions made by the plan. It also would deny patients some or all of the compensation for their injuries that would be available under state law. Shifting responsibility for the costs of an injury from a plan to the person who is injured by an action of the plan is anathema to the generally held doctrine in our society that placement of responsibility should be in accordance with fault.

The ABA will respectfully suggest that the conferees not follow the approach of H.R. 2563, as passed the House, because of its limitations on the ability of patients to hold health plans accountable in court and because of the confusion that would result from forcing state courts to apply federal standards in state court actions against an HMO. Instead, we will suggest that the conferees accept the liability provisions found in Section 402 of S. 1052---provisions that simply eliminate the federal preemption of state health liability laws and allow injured patients to bring their actions based on medically reviewable decisions, in whole or in part, in state court under the carefully-developed and time-tested laws of the states.

Thank you for considering the views of the ABA on this important legislation.


Miles J. Zaremski
Chair, Special Committee
on Medical Professional Liability

cc: Robert D. Evans
Lillian B. Gaskin

Letter also sent to:
President George W. Bush
Rep. Charlie Norwood, House sponsor
Rep. Marion Berry, House sponsor
Rep. Dennis Hastert, Speaker of the House
Rep. Richard Gephardt, House Minority Leader
Rep. Billy Tauzin, Chairman, House Committee on Energy and Commerce
Rep. John Dingell, Ranking Member, House Committee on Energy and Commerce
Rep. John Boehner, Chairman, House Committee on Education and the Workforce
Rep. George Miller, Ranking Member, House Committee on Education and the Workforce
Sen. John Edwards, Senate Sponsor
Sen. Thomas Daschle, Senate Majority Leader
Sen. Trent Lott, Senate Minority Leader
Sen. Fritz Hollings, Chairman, Committee on Commerce, Science, and Transportation
Sen. John McCain, Ranking Member, Committee on Commerce, Science, and Transportation
Sen. Edward Kennedy, Chairman, Committee on Health, Education, Labor and Pensions
Sen. Judd Gregg, Ranking Member, Committee on Health, Education, Labor and Pensions

107th Congress Letters Home

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