Score one for accountability on managed care front

A U.S. Supreme Court ruling that last year shielded managed care organizations from federal lawsuits is now being used to make them accountable in a setting health plans fear far more -- state courts.

Editorial. May 14, 2001.

Conventional wisdom held that a ruling last year by the U.S. Supreme Court was a big victory for managed care. This year, that same ruling is playing a key supporting role in a case that seriously challenges one of managed care's most prized perks -- the virtual immunity of health plans to be held accountable in court for their meddling in medical decisions.

The common thread that runs through both cases is the complex Employee Retirement Income Security Act of 1974. The ruling last year concerned Pegram v. Herdrich, in which the high court held that patients cannot file federal ERISA lawsuits over health plan financial incentives to doctors to deny care. Pegram was roundly accepted, although somewhat less so by knowledgeable observers, to be a high-level validation of the way managed care works.

Just a week after that ruling, the U.S. Supreme Court sent the other ERISA case, Pappas v. Asbel, back to the Pennsylvania Supreme Court. The state court was told to review its earlier ruling in Pappas in light of the Pegram decision.

Last month the Pennsylvania court ruled again. For the second time it upheld the right to sue a health plan -- in this case it's U.S. Healthcare, now part of Aetna Inc. -- in state court over the plan's medical decisions. In its ruling, the Pennsylvania court came to essentially the same conclusion that the AMA and Pennsylvania Medical Society strongly argued for in a friend-of-the-court brief analyzing Pegram and other cases. [...]