When students sign up for a health law survey class, they want to debate the Schiavo case, or perhaps the allocation of organs for transplant. They are interested in medical malpractice and managed care reform. They recognize that learning Medicare and Medicaid is the price of admission. Little will have prepared them, however, for the behemoth federal statute known as ERISA.
It's not so easy to teach, either. Given the impact of ERISA on health plan regulation, however, law professors would be remiss to overlook the topic. While our students would no doubt readily forgive such an oversight, in fact there are lessons to be learned by tackling the application of an impenetrable law to circumstances that were unforeseen at the time of its enactment. If our students go on to engage in a healthcare regulatory practice, in fact, this very task will occupy much of their time. While there are many aspects to ERISA, the feature our students must learn about it is the feature that gives it a profound effect on healthcare delivery; that is, its preemptive force.
I generally require my students to memorize the full names of federal statutes, due to the unexpected information this can impart. (If they know what "H.I.P.A.A." stands for, they know that Business Associate Agreements are actually the spawn of "administrative simplification," which in turn was a small piece of a law that was drafted primarily for the purpose of making employment-based health coverage more available.) ERISA is the Employee Retirement Income Security Act of 1974. It's helpful for students to know that the main thrust of the statute was pension reform. No one was thinking about mandatory external medical necessity reviews in 1974. This helps explain why the law's application to state managed care laws is so challenging.
I prepare my students by noting that even Supreme Court justices have difficulty with ERISA. Justice Blackmun's baleful observation in the 1985 Pilot Life case that ERISA's preemption provisions are "not a model of legislative drafting" has been quoted in successive cases by each of Justices Brennan, O'Connor (twice!), Ginsburg, and Thomas. Do not waste too much time on introduction, however, as there is a lot of substance to be learned.
When it comes to substance, moreover, there is no point trying to hide the ball. ERISA's fiendish preemption / non-preemption / re-preemption scheme does not lend itself to the Socratic method, and professors are well advised to make the topic as clear as possible. I find that metaphors help. I tell my students to picture a self-insured plan as an igloo on an ice flat, within which the inhabitants can carry on in merry disregard of state law. The surrounding dangers of state regulation bounce off the igloo like so many snowballs off an armored tank. Even the polar bears who regulate insurance cannot penetrate the igloo's walls, and the arctic wolves bearing alternative remedies are left to prowl helplessly outside. This metaphor reveals a certain bias. Professors who view things differently might depict the enrollees in a self insured plan as tossing about the sea of managed care in the leaky lifeboat of federal ERISA protections, while state regulators helplessly toss ropes and life savers that will perpetually fall short of the gunwales. At any rate, make sure they understand the workings of self insured health plans, given their prevalence, and that they know what a TPA does.
Along with its express preemption section, ERISA also triumphs over state laws through field preemption. Remedial field preemption is a straightforward concept. Given the facts that no employer is required to provide health coverage on the one hand, and that unrestrained malfeasance on the part of a health plan can lead to illness, disability and death on the other, it makes sense to strike a balance by providing a federal array of reasonable remedies for those injured by health plan misconduct, and preempting all other remedies. Uniformity in standards and predictability of penalties should theoretically make the offering of health coverage a more palatable expense for employers.
A person covered by an ERISA-covered plan is thus entitled generally to fiduciary care on the part of the plan administrator, disclosure of the key features of the plan, and to sue for covered benefits when they are wrongfully withheld. Other remedies, such as compensation for pain and suffering, lost wages, and punitive damages are not available, regardless of the malice or indifference with which the plan has denied needed health benefits.
The underlying concept is reasonable. Its application is another matter entirely. First, does an enrollee really have an effective "remedy" when he or she is required to sue a health plan in federal court in order to obtain medical care? Secondly, what exactly is a "remedy"? Challenge your students to apply remedial field preemption to the issue of state laws that limit the ability of a health insurer to seek subrogation from the tort recovery of an injured health plan enrollee, for example. Can such laws be applied to ERISA-covered plans? Leaving aside the issue of express preemption and the "saving" of insurance regulation, is the entitlement to protect your tort recovery from pillage by your health plan an "additional remedy" preempted by ERISA?
Finally, ERISA preemption is often divided by explanatory materials into "express" and "implied" (remedial) preemption. In fact, however, ERISA plaintiffs are also regularly thwarted by the doctrine of "complete preemption." Under complete preemption, if a federal statute completely occupies a field of regulatory interest, any claim brought within that field may be removed to federal court and converted to a claim under that federal statute. The Supreme Court interprets the preemptive provisions of ERISA so as to render employee health plan regulation "exclusively a federal concern." Therefore any state lawsuit brought by an unhappy health plan member, if it falls within the scope of the enforcement and remedial provisions of ERISA, may be transferred by the defending health plan to federal court. This is technically a rule of jurisdiction, rather than preemption; however, once removed to federal court, the lawsuit will be governed by ERISA law and precedent. While this does not constitute an automatic death penalty for the plaintiff's claim, it has the effect of restricting it to the narrow forms of relief permitted under ERISA's remedial scheme. See, e.g., Arana v. Ochsner Health Plan, 338 F.3d 433 (5th Cir. 2003).
Lastly, it is time to confront them with a case. Although it is certainly our charge to challenge our students with intellectually rigorous cases that force them to think like lawyers, experience has taught that most students, no matter how brilliant, will be completely mystified by the hallmark ERISA cases (Shaw v. Delta Airlines, Pilot Life, Firestone Tire & Rubber, Travelers, Pegram, Rush Prudential, etc.). Until and unless the statute is reformed, the Supreme Court may be relied upon to issue a new and intricate ERISA preemption opinion every other year or so. Certainly teach whatever case is current, but explain it. Save the Socratic method for In Re Conroy or United States vs. Krizek.
We will do justice to our students if after graduation they remember that ERISA governs employer sponsored benefit plans; that it provides federal court jurisdiction for claims against most health plans; that it preempts most state laws that conflict with it and/or provide additional remedies (such as managed care reform); and that large employers often have self insured plans. Finally, we owe them the knowledge as well that benefits law is an area of growing specialization, and that a willingness to learn ERISA can only be an advantage to a new graduate in a tight legal market.