MARGARET WARNER: At issue before the Supreme Court today was whether a state, in this case Illinois, can force managed health care plans to abide by an independent review when there is a dispute with a patient.
We get more on the case and today's proceedings from the NewsHour's regular court- watcher, Jan Crawford Greenburg of The Chicago Tribune, and Susan Dentzer of our health unit, a partnership with the Henry J. Kaiser Family Foundation.
All right, Jan, tell us about this case. Tell us about this Ms. Moran.
JAN CRAWFORD GREENBURG: Debra Moran was diagnosed in 1996 with a rare and very painful nerve condition in her right shoulder.
At first she had trouble blow-drying her hair, but it progressed to the point where she couldn't even pick up a fork without her husband helping her.
She went to doctor after doctor, through her HMO plan, she saw orthopedists, rehab doctors, physical therapists, but nothing, she said, alleviated or helped the pain. It always would come back.
So she heard about this specialist in Virginia, and the specialist was doing a more aggressive newer kind of surgery. And she explored that option. The specialist thought that Ms. Moran would be an ideal candidate for this kind of surgery. But the specialist was not in her HMO's network.
So Ms. Moran went back to her primary care physician who agreed that this surgery was medically necessary, recommended that she go ahead and have it.
Her HMO, Rush Prudential, refused to pay for the cost and said no, you need to see our network surgeons, we'll pay for that, it's a less complicated and less expensive surgery, but we think that's good enough and that's medically necessary.
But the Rush affiliated surgeons were proposing a treatment that they said only carried with it about a one-third chance of success and also a one-third chance that something could go wrong, including possibly paralysis.
Debra Moran obviously didn't like those odds.
So she decided to go ahead and pay for the surgery herself. She said she - you know -- maxed out her credit cards, borrowed money from other sources and paid $95,000. Then she asked again --.
MARGARET WARNER: And was successful?
JAN CRAWFORD GREENBURG: Right. So she asked Rush again to pay for this, Rush declined. She went to state court to get a judge to order Rush to go through, which had been declining to do too, to go through this independent review process so that an outside physician could look at her case to see if she was right.
And the state court ordered Rush to do that.
The process began, the outside independent reviewing physician from Johns Hopkins Medical center agreed with Moran and the specialist that the surgery was necessary.
So Rush, the reviewer says, you paid for the claim. Then Rush changed its approach.
MARGARET WARNER: So this, I gather, went through, she's now suing to get her money back, and the first court ruled --
JAN CRAWFORD GREENBURG: Right. Rush then changed its approach a bit and raised a different argument in federal court.
Then it said, look, this state law is invalid, this independent reviewing process, that's just invalid, we don't have to pay for this procedure because a federal law, federal employee benefits law, supersedes or takes precedence over this state law. So we don't have to go through this process at all.
The federal district court agreed with Rush. But a federal court of appeals in Chicago disagreed and it sided with Ms. Moran and it said that the state law didn't conflict, the state law was valid, Rush took that appeal, took that case to the Supreme Court and that's how we got here today.
MARGARET WARNER: All right. Susan, tell us about this federal law, because we hear a lot about this, ERISA a very difficult acronym. What is this law?
SUSAN DENTZER: It's the Employee Retirement Income Security Act. It was passed in 1974.
And it was designed really because Congress wanted to encourage the provision primarily of pensions and other employee benefit plans. And it was worried that the states were nickeling and diming employers, who often operated in multiple states, with lots of independent state statutes that conflicted in many instances.
So Congress said we need one overriding federal statute on employee benefits, therefore passed ERISA in 1974. Over time it's come to also apply to other employee benefits other than pensions and retirement plans, like health insurance.
The critical issue, as Jan says, in this case is: Do the provisions of ERISA, which apply to employee benefits, override state statutes that pertain to insurance and the regulation of health care? Traditionally, the regulation of insurance and health care has been left to the states.
However, ERISA itself also carves out some exceptions. So now the parties are arguing over whether ERISA should apply in this case or whether the state law governing insurance, which HMO products are, in most states, or whether it is regulation of health care, and therefore that that is also under the purview of the State of Illinois in this case.
MARGARET WARNER: And some 40 states have passed some kind of patient protection that provides for some kind of independent preview process?
SUSAN DENTZER: Exactly, forty-one states now and the District of Columbia have provisions that allow for this independent review -- as does Medicare, the federal benefits program for the elderly.
MARGARET WARNER: All right. So Jan, tell us about court today. I gather the lawyer for the HMO went first - what did he argue --
JAN CRAWFORD GREENBURG: Right. John Roberts represented the HMO and he said the state law is invalid because it conflicted with ERISA. I mean -- obviously just the sound of it, I mean these cases - as Roberts said today -- can be extremely complicated, but this case, he see, was a straight forward one.
States cannot require HMO's to abide by whatever decision an independent reviewer may make because that's a different remedy for someone who may have a complaint about a denial of benefits.
If you've got a complaint about your benefits being denied, you've got to look at ERISA. The federal law, that's the only remedy; that is a different remedy, Roberts said, so therefore is out the door, it's out the window, we've got to rely on ERISA.
MARGARET WARNER: Did any of the Justices give him a hard time?
JAN CRAWFORD GREENBURG: Well, several of the Justices seemed inclined to do so - Justice Souter, Justice O'Connor even and Justice Stevens, but they didn't really give him much resistance.
They suggested, Justice O'Connor for example at one point said, well, what about insurance? I mean, as Susan said, is this really a law about HMO or employee benefits, or is it about insurance?
And of course that's the point that the lawyer for Debra Moran tried to make when he stood up next.
MARGARET WARNER: So what happened?
JAN CRAWFORD GREENBURG: Well, his main argument is that this isn't about employee benefits, we know that that's the purview of ERISA.
This is about insurance, this is a law regulating insurance, ERISA says, that's one of these exceptions, ERISA says insurance, that's the state's business.
There's another Supreme Court case that suggests there may be exceptions to that. But his bottom line was that this is about insurance, and he said all Debra Moran ever saw in this case is the benefits she was entitled to, which - you know - he said saved her right arm -- trying to make this to a very straight forward case like Roberts had done before.
But at that point Justice Scalia, Antonin Scalia, jumped right in and really framed the issues and in this case and said, look, the question is who gets to decide if she is entitled to those benefits, or who gets to decide what are the benefits that she gets.
So, you know, Moran says the states can decide. The states can set up these independent reviewing boards.
Rush Prudential says no, we've got this federal law and that's what's supposed to govern here. So that's really what it boiled down to. I think Justice Scalia offered some resistance to Ms. Moran's lawyer, as did Justice Kennedy and even the chief justice to some degree, they seemed to suggest they were not willing to embrace this Illinois law, or by extension maybe some of the other 39, 40 laws.
MARGARET WARNER: And there is a lot at stake here, Susan.
SUSAN DENTZER: Absolutely. In fact, for all of these states that have passed these provisions, they view that as a very important protection against decisions being made that are not based on medical necessity, not really based on the medical evidence.
Consumer advocates think that if the Court rules in favor of the plans on this, in effect it would void all of those, it could have the possibility depending on how expansive the ruling is that could void all of those state statutes and that's very problematic.
And even the health plan industry is conflicted on this, because it has embraced external review as a very important element that nudges people to looking truly at the issues of medical necessity, is a procedure really medically necessary -
MARGARET WARNER: Rather than going to court.
SUSAN DENTZER: -- rather than going to court -- but also understanding the true medical evidence that something works or doesn't work. So there's a lot at stake on all sides.
MARGARET WARNER: So if the Court rules in favor of Rush, then the only way to get in these independent reviews would be for Congress to have to do something?
SUSAN DENTZER: In effect probably, depending again on what the Court actually says. But in fact, that is a big issue at stake in the fight to pass a patients bill of rights. All of the provisions that have passed on the Hill have an external review provision in them with various differences.
The health plans as an industry want a national external review provision, they want that very much, again as a protection against excessive litigation and also nudging towards the scientific practice of medicine.
So whatever the Court says, in fact there could be at the end of this a legislative remedy that restores an external review process for all Americans, but at a federal level, and in fact getting at the very issue that ERISA was designed to attack, to have one overall national standard on that issue.
MARGARET WARNER: All right.
Well, thank you, Susan and Jan.
May 17, 2013
