After seeing the injustices suffered by tort plaintiffs in other jurisdictions, the state of Texas passed a law designed to compensate people who had been injured by healthcare decisions made by their insurance companies. The Texas law sought to hold HMOs liable when their decisions to deny coverage caused further damage to their customers. So when two Texans were denied coverage after their HMO failed to use ordinary care in making coverage decisions, they sued under the new law.

The lower court allowed the case to proceed. But the Supreme Court Opinions of the United States held that state consumer protection laws were completely overturned by the Federal law of ERISA (Employee Retirement Income Security Act). According to the Supreme Court, since the only remedy allowed under ERISA for a wrong-coverage decision was to force the insurance company to pay the benefit it should have paid to the insured in the first place, states could not allow a plaintiff to sue for a worsening of his condition or for pain, suffering, or death caused by the insurance company’s decision.

In her concurring opinion, Justice Ruth Bader Ginsburg joined “the rising judicial chorus urging Congress and the Supreme Court to revisit what is an unjust and increasingly tangled ERISA regime.” Justice Ginsburg said the problem was that the Court, through a series of decisions, had made it that virtually all state-law remedies would be preempted. She then noted that a “series of the Court’s decisions has yielded a host of situations in which persons adversely affected by ERISA-proscribed wrongdoing cannot gain…relief,” and called for the current situation to be quickly remedied.

Unfortunately, for long-term disability claimants this decision is just more bad news. The insurance companies that make decisions for employer-sponsored, long-term disability plans are immune from suit for anything other than the benefits they already owe to the insured. Then, when disability benefits are denied, there is a cascading effect of financial disaster when the claimant’s pension, health and life insurance benefits are decreased or lost altogether. Even worse, workers who have been wrongfully denied long-term disability benefits often suffer enormous emotional harm in their fight to have their benefits reinstated. However, HMO case law has given the insurance companies the “green light” to keep denying benefits, all the while knowing that even in their worst loss, all the HMO has to do is pay what was owed in the first place.

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