Aetna Health Inc. v. Davila
Headline: Health-plan coverage lawsuits against HMOs are preempted by ERISA, the Court allows removal to federal court and limits patients’ ability to pursue state-law ordinary-care tort claims against insurers.
Holding: The Court held that state-law suits accusing HMOs of failing to exercise ordinary care in coverage decisions are completely pre-empted by ERISA §502(a)(1)(B) and therefore removable to federal court.
- Pushes many coverage-denial suits from state courts into federal ERISA litigation.
- Reduces patients’ ability to recover state-law damages for coverage decisions.
- Requires claimants to pursue ERISA remedies in federal court instead of state court.
Summary
Background
Two people sued their HMOs in Texas state court after coverage denials. One man’s insurer refused to pay for a prescribed drug, and he later suffered a harmful reaction to an alternative. A woman’s insurer denied coverage for an extended hospital stay and she later had complications. Both relied on a Texas law that creates a duty of "ordinary care" for managed-care decisions. The HMOs removed the suits to federal court; after the District Courts dismissed the complaints, the Fifth Circuit sided with the plaintiffs and this Court took the appeals.
Reasoning
The central question was whether these state-law claims are displaced by the federal ERISA enforcement scheme. The Court held they are. It explained that each claim complains only about denial of benefits under ERISA-regulated plans and that the Texas duty turns on the plan’s terms. Because the plaintiffs’ injuries flow from coverage decisions tied to ERISA plans, the claims fall within ERISA §502(a)(1)(B) and are completely pre-empted, so they belong in federal court. The Court reversed the Court of Appeals and sent the cases back for proceedings consistent with that ruling.
Real world impact
The decision pushes many disputes about coverage denials out of state courts and into federal ERISA litigation. Patients seeking state-law tort damages for coverage decisions will often be blocked or forced to pursue federal ERISA remedies instead. The opinion decides where claims can be brought and what remedies are available, not whether the underlying medical decisions were right.
Dissents or concurrances
Justice Ginsburg, joined by Justice Breyer, agreed with the judgment but warned that broad pre-emption plus narrow federal remedies creates a gap and urged that Congress or the Court revisit ERISA’s remedial rules.
Opinions in this case:
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