American Journal of Law & Medicine

The Patients' Bill of Rights: Women's Rights Under Managed Care and ERISA Preemption.


Public concern over the perceived failure of managed care has led many to call for the increased accountability of managed care organizations (MCOs).(1) In response, during his January 1998, State of the Union address, President Clinton outlined a Patients' Bill of Rights that would guarantee patients certain protections against abuses by their health plans.(2) Since January 1998, the Patients' Bill of Rights has been entrenched in partisan politics.(3) Consequently, the 105th Congress failed to enact a Patients' Bill of Rights and the 106th Congress has passed two opposing versions of the Bill.(4) At the time of publication, the two bills sat in a joint House-Senate conference committee awaiting reconciliation.(5)

Although both sides support legislation increasing patient protections, Democrats and Republicans are divided over the issue of remedies for patients who have had their rights violated.(6) Specifically, the controversy centers on the Employee Retirement Income Security Act of 1974 (ERISA),(7) which essentially bars patients from suing MCOs in state court via federal preemption.(8) The Democratic and Bipartisan versions of the Patients' Bill of Rights would amend ERISA to remove this bar, while the Republican versions would leave it intact.(9)

The debate over a Patients' Bill of Rights has quickly moved from the Congressional floor to the public arena. Proponents of Republican versions of a Patients' Bill of Rights claim that Democratic and Bipartisan versions would increase the costs of litigation and drive up the cost of health care to the point where many could not afford the premiums.(10) According to news reports, "MCOs have even aired television advertisements claiming that allowing patients to sue their MCOs would only serve to swamp the system, drive up costs and deny health care to millions.(11) On the opposite side of the spectrum, the American Medical Association (AMA) strongly supports the passage of a Democratic version of the Patients' Bill of Rights that would "(1) ... cover[] all 161 million privately insured Americans; (2) ... give[] patients a stronger, wider range of rights; and (3) ... allow[] patients to sue their health plans for damages in state courts if denial of care results in injuries...."(12)

Anticipating opposition, Clinton and other members of the Democratic leadership made early efforts to rally public support for the passage of a version of a Patients' Bill of Rights that would permit state tort suits.(13) One group that the Clinton administration has targeted for support of the Bill is women.(14) In November 1997, President Clinton addressed the Women's Leadership Forum about the importance of health care reform.(15) He initially spoke about health care legislation specifically affecting women.(16) He then broadened the discussion to the Patients' Bill of Rights, noting that women are affected "in a larger sense" by the failure of Congress to enact patient protections.(17) As President Clinton recognized, women play a key role in the battle over the Patients' Bill of Rights.(18)

This Note examines the reasons why women should support a version of the Patients' Bill of Rights which lifts the ERISA bar to state tort suits against MCOs. Specifically, Part II of this Note examines the reasons why managed care has created a need for heightened patient protections for women. Part III explores why ERISA renders current protections safeguarding women inadequate and ineffective. Moreover, it asserts that the state and federal laws already in place to protect women only serve as a partial solution to the ERISA problem. Consequently, although both men and women could benefit from the increased protections a strong Patients' Bill of Rights would provide, women are in particular need of such legislation because of the special issues they face vis-a-vis their MCOs. Part IV examines the 105th and 106th Congresses' proposals for a federal Patients' Bill of Rights and explores the implications of proposals expanding MCO liability. Finally, this Note concludes that in order for all women to effectively protect themselves against MCO abuses, a bill lifting the ERISA bar to state tort suits should be passed.



The shift towards managed care reversed many of the incentives associated with traditional indemnity-based health insurance.(19) Indemnity-based insurance, or fee-for-service insurance, gives the provider the incentive to overtreat patients since the more services the provider renders to the patient, the more compensation the provider receives.(20) In contrast, managed care uses a capitated payment system where the MCO "compensates a physician at a flat rate for each patient enrolled."(21) Capitation allows "providers to keep any savings generated by delivering health care more efficiently [which] prods physicians to focus on cost-effectiveness when recommending treatment."(22) Thus, managed care creates incentives to undertreat rather than to overtreat.(23) In addition, through utilization review, a medical professional, known as a gatekeeper, ensures that patients are to receive the costliest of services and treatments only when "medically necessary."(24) As a result, MCOs have been crediting with containing health care costs but they have also been criticized for it.(25)

In the context of women's health, this incentive structure could have proven beneficial. MCOs emphasize primary and preventive care as a means of lowering overall health care costs.(26) Unlike many traditional indemnity plans which may lack coverage for women's health services such as pap smears, mammograms and reproductive health care, under a managed care structure, women have the incentive to seek such services because they do not have to be paid for out of their own pockets.(27)

Despite the fact that managed care plans cover more of women's basic health care needs than traditional fee-for-service insurers, studies show a decline in the percentages of women using these services.(28) These studies report that significantly higher numbers of women felt they were not getting needed care and had difficulty reaching their physicians when they needed them(29) because MCOs tend to limit access to services that women disproportionately use.(30) Theoretically, the MCO finance structure encourages patients to request medical care.(31) In reality, however, patients often encounter the MCO's counter-incentive to place barriers between the patient and access to the system because providing services is costly for the MCO.(32)


Once women are able to access doctors, they often encounter gender bias in diagnosis and treatment.(33) The problem of bias in diagnosis and treatment occurs both at the individual practitioner level and at the systemic level.(34) At the individual practitioner level, the AMA has found that gender disparities exist in clinical decision making.(35) Studies have also shown that doctors are more likely to misdiagnose female patients because they attribute their health complaints to emotional rather than physical causes.(36) General cultural and societal bias also play a role in influencing the quality of care women receive.(37)

In an effort to address the issue of gender bias in the area of research, the National Institutes of Health created an Office of Research on Women's Health in 1990.(38) Despite such progress, many have argued that the effects of gender bias are still present.(39) For example, although coronary heart disease is the most frequent cause of death among women in the United States, women undergo evaluation and treatment for cardiac diseases less frequently than men with similar symptoms.(40) Such bias, coupled with the MCO incentive structure, often makes receiving adequate medical care more difficult for women.(41)



ERISA was originally enacted in 1974 to regulate employee benefit plans, but has been construed to include employer-provided health insurance plans as well.(42) Currently, ERISA limits state tort suits against MCOs by patients enrolled in employer-sponsored health plans.(43) In addition, ERISA makes it difficult for states to regulate MCOs.(44) ERISA's preemption clause has been described as "one of the broadest pre-emption [sic] clauses ever enacted by Congress."(45)

Section 1144 of ERISA states that it "supercede[s] any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...."(46) ERISA's "savings" clause(47) then carves out art exception to federal preemption for state regulation of insurance.(48) However, the "deemer" clause,(49) following the savings clause, exempts self-insured health insurance plans from the savings clause.(50) Thus, state insurance laws may not regulate self-insured, ERISA-qualifying plans.(51)

At the same time, MCOs have successfully argued that ERISA preempts state tort claims against them.(52) The consequence of such preemption is that the plaintiff can only pursue claims in federal court for ERISA-permitted remedies.(53) Section 502(a)(1) provides that a plan participant or beneficiary may only bring an action "to recover the benefits due him under the terms of his plan; to enforce his rights under the terms of his plan; or to clarify his right to future benefits under the terms of the plan."(54) In other words, a plaintiff who has been preempted is left solely with an action to recover the benefits wrongfully denied the plaintiff by the plan, but not for the harm resulting from such a denial.(55) This statutory structure creates a major loophole by effectively rendering both tort remedies and state insurance law null with respect to issues "relating to" ERISA-qualifying health insurance plans.(56)

The existence of the ERISA loophole has particular significance for women because of the higher likelihood that they will receive inadequate treatment.(57) For example, in Corcoran v. United Healthcare, Inc.,(58) the plaintiff was enrolled in her company's self-funded, ERISA-qualifying health plan when she became pregnant.(59) As the plaintiff neared her delivery date, her obstetrician, Dr. Collins ordered her hospitalization so that he could monitor the fetus around the clock.(60) Under the plaintiff's plan, however, subscribers had to obtain advance approval for overnight hospital admission through a pre-certification procedure and once admitted, had to obtain approval on a continuing basis or plan benefits were reduced.(61) In accordance with the plan, Dr. Collins sought pre-certification from the defendant.(62) Despite Dr. Collins' request, the defendant determined that hospitalization was not necessary, and instead authorized ten hours per day of home nursing care.(63) At home, during the time when no nurse was on duty, plaintiff's fetus went into distress and died.(64)

Soon after, the plaintiff brought a wrongful death suit in Louisiana state court against her insurance company and the independent medical review organization. …

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