Case Study

The Supreme Court Limits Lawsuits Against Managed Care Organizations

by Timothy Stoltzfus Jost, Washington and Lee University School of Law

In Aetna Health Inc. v. Davila, the United States Supreme Court revisited the question of whether the Employee Retirement Income Security Act (ERISA) precludes state lawsuits against ERISA plans. The Court held that ERISA preempts damage actions brought against managed care organizations under the Texas Health Care Liability Act because ERISA itself provides the exclusive remedy for challenging ERISA plans' coverage decisions. The Court suggested, however, that health plans might be liable for treatment decisions made by employed physicians. It also volleyed back to Congress the question of whether ERISA beneficiaries should have any remedy for damages caused by coverage decisions.
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