Herdrich Case Before U.S. Supreme Court Could Decide Balance Between Federal HMO Regulation & Patients’ Access To State Remedies

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State Remedies Preferable to Federal Definition Sought In Case, Group Says

The patients’ rights case to be heard before the United States Supreme Court today will likely signal the Court’s preference for federal or state enforcement of managed care regulation, the Foundation for Taxpayer and Consumer Rights noted today.

The case of Cynthia Herdrich, Pegram v. Herdrich, questions whether the federal Employee Retirement Income Security Act or ERISA prohibits HMOs from using financial incentive systems that encourage doctors to deny care. The Herdrichs argue that HMOs have a “fiduciary” duty under federal law not to impose such incentives.

FTCR commented that the Court could be making a significant decision about whether federal or state law applies to managed care abuses. In a choice between the two, FTCR believes state law remedies are more valuable for injured patients than the broader federal definition of “fiduciary” sought by the Herdrichs.

“The Court’s rejection of the Herdrich’s family claim to a broader scope of federal law could well signal a new preference by the Court for greater patient access to state common law protections,” said Jamie Court, FTCR’s advocacy director and co-author of Making A Killing: HMOs and the Threat To Your Health (Common Courage Press, 1999). “The patient’s right to hold an HMO accountable under state common law is more valuable to the injured patient seeking compensation than a broader federal definition of ‘fiduciary.’ State courts are easier to navigate, have fewer hurdles, and are generally more accessible for the average patient seeking justice from an HMO.”

Democratic patients’ rights legislation takes the same tact — ending ERISA’s preemption of state common law remedies.

The Foundation for Taxpayer and Consumer Rights is a national, non-profit, non-partisan consumer advocacy organization based in Santa Monica, CA.


Consumer Watchdog
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