WASHINGTON, April 2 (UPI) -- The Supreme Court ruled unanimously Wednesday that Kentucky laws forcing insurance companies to accept "any willing (health care) provider" are not pre-empted by federal law.
The ruling is a major blow for some health maintenance organizations or other insurers who try to maintain exclusive networks with health care providers.
Twelve states supported Kentucky in the case, saying it was vital not to extend the effect of federal law beyond the intent of Congress.
The Bush administration also supported the state.
The dispute began when a group of health maintenance organizations, or HMOs, filed suit in federal court.
The HMOs, led by the Kentucky Association of Health Plans, operated exclusive "provider networks" with selected doctors, hospitals and other health-care providers.
However, Kentucky has two "any willing provider" statutes. The laws prohibit a health care insurer from "discriminating against any (health care) provider" who is "willing to meet the terms and conditions for participation" required by the insurer.
The HMOs contended the state laws were pre-empted by the federal the 1974 federal Employee Retirement Income Security Act, better known to human resources departments everywhere as ERISA.
ERISA pre-empts all state laws involving "any employee benefit plan," and the Supreme Court has upheld the pre-emption in a stream of cases.
However, state laws which "regulate insurance" are exempt from ERISA.
A federal judge ruled that although both of Kentucky's statutes involve employee benefit plans, each also "regulates insurance" and was not pre-empted by ERISA. A federal appeals court agreed.
Wednesday, the Supreme Court upheld the lower courts.
The HMOs "claim that Kentucky's statutes are not 'specifically directed toward' insurers because they regulate not only the insurance industry, but also doctors who seek to form and maintain limited provider networks with HMOs," Justice Antonin Scalia wrote for the unanimous court.
"That is to say, the AWP (any willing provider) laws equally prevent providers from entering into limited network contracts with insurers," Scalia added, "just as they prevent insurers from creating exclusive networks in the first place. We do not think it follows that Kentucky has failed to specifically direct its AWP laws at the insurance industry.
"Neither of Kentucky's AWP statutes, by its terms, imposes any prohibitions or requirements on health-care providers."
A number of national organizations supported Kentucky in the case, including the Council of State Governments, the Conference of State Legislatures, the National Governors Association, the National League of Cities and the U.S. Conference of Mayors.
The American Medical Association and other professional medical groups also filed a brief supporting the state.
The American Association of Health Plans, the Health Insurance Association of America, the National Association of Manufacturers and Blue Cross Blue Shield were among those filing briefs in support of the HMOs.
(No. 00-1471, Ky. Association of Health Plans et al vs. Commissioner Janie Miller)
