WASHINGTON, June 21 (UPI) -- The Supreme Court of the United States ruled Monday that federal law pre-empts suits in state court against employer-plan health maintenance organizations for allegedly failing to provide needed medical services.
The unanimous decision is a huge victory for HMOs, which would have faced greater peril in the state courts than federal courts over claims that the failure to provide needed medical services injured their clients.
Consumer advocates would argue that the ruling is a catastrophe for the estimated 72 million HMO clients nationwide, most of whom get the coverage through their employers.
Syracuse University law professor Peter Bell said the decision slams shut "courthouse doors" for those injured.
"The U.S. Supreme Court today dramatically changed course and effectively slammed shut courthouse doors to the thousands of Americans each year who suffer serious harm because their health insurers wrongfully and unreasonably blocked the patients' access to much-needed medical care," Bell said.
In contrast, the Pharmaceutical Care Management Association issued a statement saying the decision "preserves employers' ability to custom-design prescription drug plans, helps puts the brakes on unnecessary litigation and further validates the tools pharmacy benefit managers rely upon to keep prescription drugs affordable and accessible for working families, retirees and plan sponsors."
Writing for the full Supreme Court, Justice Clarence Thomas said a federal law, the Employee Retirement Income Security Act, pre-empts such claims in state court.
The purpose of ERISA is to provide "a uniform regulatory regime over employee benefit plans," Thomas said. "To this end, ERISA includes expansive pre-emption provisions ... which are intended to ensure that employee benefit-plan regulation would be exclusively a federal concern."
Two Texas cases were combined in the Supreme Court to produce Monday's ruling.
Juan Davila participated in an employee health-benefit plan insured by Aetna Health Inc. His physician prescribed Vioxx for his arthritis pain, but the HMO insisted Davila try at least two less expensive medications first. Several weeks after taking another medication, Davila developed bleeding ulcers, his suit said.
Davila cannot sue under the federal Employment Retirement Income Security Act, since his bleeding ulcers no longer make it possible for him to take Vioxx.
Ruby Calad was a member of CIGNA Healthcare of Texas Inc. through her husband's employer. After she had a hysterectomy, her doctor recommended she spend several days in the hospital to recuperate. But CIGNA's hospital discharge nurse decided a one-day stay would be appropriate.
Calad cannot sue under ERISA either, because even though she had complications she has now recovered.
Both sued in state court, but the HMOs successfully moved to have the suits in federal court in Texas, where a U.S. judge dismissed the state claims litigation as pre-empted by ERISA -- federal law usually trumps state law.
However, a federal appeals court said Supreme Court precedent left open the possibility of state suits against HMOs, despite ERISA, if the health organizations committed something more than simple breach of a contract.
Monday, the Supreme Court reversed the appeals court. The cases are No. 02-1845, Aetna Health Inc. etc. vs. Davila; and No. 03-83, Cigna Health etc. vs. Calad.
Also Monday, the Supreme Court ruled 7-1 that U.S. courts are allowed, but no compelled, to order the production of evidence in the United States for use in foreign tribunals, even if that foreign process is in its early stages.
Justice Sandra Day O'Connor did not take part in the case. She offered no explanation, but she owns a broad range of stocks and normally withdraws if there is a potential conflict of interest.
A section of the U.S. Code, "Assistance to foreign and international tribunals and to litigants before such tribunals," says that a federal judge may order someone "to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal investigation."
However, in a dispute involving the production of microprocessors, giant Intel Corp. argued that the European Commission itself denies "discovery" rights -- the right to compel the production of evidence -- to mere complainants. Intel said most U.S. appeals courts have ruled that litigation "must be imminent" before a federal judge can order such production.
Intel and Advanced Micro Devices compete in the development and sale of microprocessors all over the world, including Europe.
AMD filed a complaint with the Directorate General-Competition of the Commission of European Communities -- the European Commission -- contending that Intel was abusing its dominant market position in violation of an EC treaty.
The European Commission is the executive branch of the European Communities. The Directorate General-Competition has the authority to conduct antitrust investigations and to impose fines and penalties.
Though the directorate refused to subpoena the evidence itself, AMD went before a federal judge in California and asked that Intel be compelled to produce documents and transcripts of testimony from proceedings in a separate federal court in an earlier Alabama case.
Intel objected, saying that the matter before the Directorate-Competition was not yet a "proceeding in a foreign or international tribunal" within the meaning of the relevant U.S. Code.
A federal judge agreed with Intel, but a panel of the U.S. Circuit Court of Appeals for the 9th Circuit reversed.
Intel then asked the Supreme Court to review the case.
The Justice Department filed its own brief asking for review, saying that the appeals court "did not adequately acknowledge the district court's discretion to determine whether judicial assistance may be authorized but inappropriate in a particular case."
Speaking for the majority Monday, Justice Ruth Bader Ginsburg said from the bench the EC qualified as a foreign court under U.S. law and proceedings did not have to be "imminent" for discovery in this country.
She said the Supreme Court was not making a judgment on the merits of AMD's case and that a U.S. court "is not required to grant an application for discovery aid simply because it has the authority to do so."
The case is No. 02-572, Intel Corp. vs. AMD Inc.
The justices also indicated Monday they would hear argument next term on whether the commission of an overt act is necessary for a money-laundering conspiracy.
David Whitfield and Haywood Hall were convicted in federal court in Florida of conspiracy to commit mail fraud, wire fraud, interstate transportation of property taken by fraud and money laundering.
Whitfield, who was convicted of additional counts, was sentenced to nearly 20 years in prison. Hall was sentenced to a little more than 15 years.
Both were on the executive board and held other offices in the Greater Ministries International Church; Hall was pastor.
During trial, the men's attorneys asked a judge to instruct the jury that it had to find an overt act was committed as part of the conspiracy -- even though the indictment listed such overt acts. The judge refused.
When a federal appeals court agreed with the judge, the men asked the Supreme Court for review, which was granted Monday. The Whitfield and Hall cases were combined for argument.
They are No. 03-1293 and 1294, Whitfield and Hall respectively vs. United States.
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