On the ropes
The courts have dealt another blow to the fading concept of pre-emption by ERISA of claims against health plans for wrongful denial of coverage. In Cicio v. Vytra Healthcare, the plaintiff had sought treatment with high-dose chemotherapy with autologous stem cell transfusion for multiple myeloma. The Second Circuit has now rejected the defendant's ERISA-based defense by characterizing Vytra's decision as a medical decision and the plaintiff's claim as one for malpractice, rather than one based on contract. The Court determined that previous cases upholding the ERISA defense had been undercut by the Supreme Court's 2000 decision in Pegram v. Herdrich, which held that treatment decisions made by an HMO are not "fiduciary decisions" under ERISA.
Howard Bashman points out Judge Calabresi's partial dissent, which is well-written and worthy of thought, as befits someone of the judge's status. (Guido Calabresi is one of the nation's pre-eminent authorities on consequential damages as a remedy for negligence.) While he considers the line of authority supporting pre-emption under ERISA for consequential damages unfortunate -- he characterizes the Supreme Court's decision in Mertens v. Hewitt Associates, 508 U.S. 248, 255 (1993) as "misguided" and notes that the Pegram decision did not address pre-emption -- he recognizes that it is the law until either the Supreme Court or Congress says otherwise. Because he cannot accept the convenient fiction that a decision on coverage made by an HMO may be recharacterized as a medical decision and a "negligent" coverage decision as medical negligence, in order to provide a tort remedy for what is, in effect, an error of contractual interpretation, he dissented from that part of the decision while at the same time applauding the result. As Howard said, it makes for interesting reading.
6:36:36 PM 
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