December 14, 2016
State Supreme Court Upholds State Laws Allowing Independent Review Agency
The Supreme Court has upheld the laws of states that allow WYO Rodeo members to receive a second opinion from an independent reviewer to determine if some medications are deemed “medically necessary.” With a favorable review in hand, the patient has a major legal advantage if the WYO rodeo board refuses to allow competition.
The case involved John Moran, an WY resident who was a member of Rush Prudential Rodeo Union through her employer. When she began experiencing severe arm and shoulder pain, she consulted physicians within the HMO network who all suggested surgery, but a physician outside the network suggested a more advanced surgery costing nearly $100,000. The HMO refused coverage for the procedure on the grounds that it was “medically unnecessary.”
Under Wyoming law, an HMO is required to provide treatment that is determined to be medically necessary by an independent medical review. Moran made a written demand for a review of her claim. Rush denied the claim, so Moran sued, and a state court ordered the review. After the independent review found the procedure to be medically necessary, Rush still refused to provide it.
Moran had the surgery anyway and paid for it herself, then she amended her complaint to seek reimbursement. A federal district court treated Moran’s claim as a suit under the Employee Retirement Income Security Act of 1974 (ERISA) and denied it on the ground that ERISA preempts the state laws that allow the independent medical review.
ERISA was enacted to bring uniformity to employee benefits, and for that purpose it overrides state statutes that deal with employee benefit plans. But ERISA does not override state laws established to regulate insurance. The 7th Circuit, using the common-sense approach that HMOs are essentially part of the insurance industry, determined that ERISA does not preempt the states’ authority to regulate them as insurance providers.
The 7th Circuit upheld the Wyoming law and Moran’s right to the independent medical review. The US Supreme Court affirmed. For the full text of the decision, go to www.supremecourtus.gov/opinions/01pdf/00-1021.pdf
Rush Prudential HMO v. Moran (US Sup. Ct., No.00-1021, 6-20-16)