On the heels of its pro-patient decision in Rush Prudential HMO Inc. vs. Moran,1 which was reviewed in last month’s column,2 the U.S. Supreme Court has agreed to consider the question of whether Kentucky’s "any-willing-provider" law is pre-empted by the federal Employee Retirement Income Security Act, or ERISA.
Under a Kentucky statute, a health insurer may not refuse to accept as a participating provider any provider in its geographic area who is willing to meet its conditions of participation.
During its next term, the Supreme Court will review a decision from the U.S. Court of Appeals for the 6th Circuit, which held that Kentucky’s any-willing-provider law was not pre-empted by ERISA and could remain in effect.3
Under the Kentucky statute, a health insurer may not refuse to accept as a participating provider any provider in its geographic area who is willing to meet its conditions of participation. The definition of "insurer" includes insurance companies; health maintenance organizations, or HMOs; self-insurers who are not exempted from state regulation by ERISA; dental service corporations; and other entities.
Although the 6th Circuit concluded that Kentucky’s any-willing-provider law was not preempted by ERISA, the U.S. courts of appeals, which have reviewed other any-willing-provider statutes, have reached varied conclusions, as noted in a previous column.4 Although ERISA pre-empts state laws related to employee benefit plans, a state law is saved from pre-emption if it regulates insurance. The key issue before courts reviewing any-willing-provider laws has been whether the statutes regulated insurance, and thus were saved from pre-emption.
The plaintiffs who sued to challenge the Kentucky any-willing-provider statute were the Kentucky Association of Health Plans Inc. and several HMOs. The federal trial court rejected the plaintiffs’ argument that ERISA preempted the state law, concluding instead that the statute was not pre-empted because it regulated insurance. The court then granted summary judgment for the defendant, the Commissioner of the Kentucky Department of Insurance.
Next, the plaintiffs appealed to the 6th Circuit, which has jurisdiction over federal courts in Michigan, Ohio, Kentucky and Tennessee. That court also found that Kentucky’s any-willing-provider law was saved from preemption because it regulated insurance.
The 6th Circuit’s ruling was similar to a decision issued in 1993 by the U.S. Court of Appeals for the 4th Circuit, which has jurisdiction over federal courts in Maryland, Virginia, West Virginia, North Carolina and South Carolina. The 4th Circuit concluded that a Virginia any-willing-provider law, which applied to preferred provider organizations, was not pre-empted by ERISA.
However, these decisions conflicted with 1996 and 1997 decisions from the U.S. Court of Appeals for the 5th Circuit, which covers Texas, Louisiana and Mississippi, and a 1998 holding from the U.S. Court of Appeals for the 8th Circuit, which has jurisdiction over federal courts in Arkansas, Missouri, Iowa, Nebraska, South Dakota, North Dakota and Minnesota.
The 5th Circuit, reviewing any-willing-provider laws from Louisiana and Texas, and the 8th Circuit, considering a statute from Arkansas, concluded that these laws did not regulate insurance and were not saved from ERISA pre-emption.
In their petition asking the U.S. Supreme Court to take the case, the plaintiffs argued that the court should resolve the conflicting rulings from the U.S. courts of appeals as to whether ERISA pre-empts any-willing-provider laws. The plaintiffs maintained that such laws limit HMOs’ ability to control costs and monitor quality of care provided to their members.
In addition, they asserted that the 6th Circuit decision conflicted with a prior Supreme Court opinion that contracts between insurers and providers were not the "business of insurance." The conclusion suggested by the plaintiffs was that a law that affects contracts between HMOs and health care providers does not regulate insurance and, consequently, could not be saved from pre-emption.
Before deciding whether to take the case, the Supreme Court asked the Bush administration to present its views on the issue. Last fall, the acting U.S. Solicitor General filed a brief with the Supreme Court, concurring with the Kentucky insurance commissioner’s position that the 6th Circuit’s decision was correct.
However, although the acting U.S. Solicitor General agreed with the Kentucky insurance commissioner on the 6th Circuit’s ruling, he also agreed with the plaintiffs that there was a conflict among the U.S. courts of appeals regarding whether ERISA pre-empts any-willing-provider laws.
In his brief, the acting U.S. Solicitor General noted that the Supreme Court already was considering in the Rush Prudential case whether an Illinois law requiring independent review of certain HMO medical necessity decisions was pre-empted by ERISA, or whether it was saved from pre-emption because it regulated insurance. He recommended that the Supreme Court wait until it ruled in the Rush Prudential case and then return the any-willing-provider case to the 6th Circuit, with instructions for the lower court to review its earlier opinion in light of the Supreme Court’s holding in Rush Prudential.
As noted in last month’s column, the Supreme Court has ruled in the Rush Prudential case. The high court found that ERISA did not pre-empt the Illinois law mandating independent review of some HMO medical necessity decisions. In so doing, the court gave a fairly broad interpretation to state laws regulating insurance to conclude that the Illinois law regulated insurance, saving it from ERISA pre-emption.
However, the Supreme Court did not follow the acting U.S. Solicitor General’s advice to send the any-willing-provider case back to the 6th Circuit, with directions to review its holding in light of the Rush Prudential decision. Rather, the Supreme Court elected to consider the any-willing-provider case on its own merits.
The court’s ruling on this issue, which likely will come sometime in 2003, may resolve a debate over the legality of any-willing-provider laws that has lasted for more than a decade. If the high court holds that the any-willing-provider laws do regulate insurance—and thus are not pre-empted by ERISA—the court will be doing the work of Congress by codifying more of what is treated within the reform of health care.
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