The Federalism Project

American Enterprise Institute

Supreme Court

Are State Patient Protection HMO Laws Preempted by Federal Statute?
Rush Prudential HMO v. Moran

No. 00-1021

In Illinois, if an HMO insurer disagrees with a primary care physician's recommendation that a treatment is "medically necessary," an independent review needs to be conducted before the insurer can say "no" to the procedure.  The Supreme Court considered this second opinion patient-protection requirement and decided it is not preempted by the federal Employee Retirement Income Security Act (ERISA).  Like the 7th Circuit, it found that Illinois' HMO Act falls within the saving clause of ERISA.  

Thomas, joined by his core federalist brethren in dissent, demonstrates that even friends of states can be tough as nails when it comes to preemption. An exclusivity of remedies is provided for under ERISA, he writes, and this exclusivity is necessary "to further Congress’ interest in establishing a uniform federal law of employee benefits so that employers are encouraged to provide benefits to their employees." Common law, step aside: Congress has clearly spoken.

The Court's decision will go a long way in determining how much leeway states have to regulate managed care--no small matter at a time when the states are considering a flurry of patient bill of rights-type proposals. It may also indicate how the Justices will divide next Term over a host of preemption-and-tort law cases.

Click here for the decision

Click here for the 7th Circuit's decision


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