Aetna Health Inc. v. Davila

In the consolidated cases of Aetna Health Inc. v. Davila and CIGNA Corporation v. Calad (hereinafter, "Davila"), 542 U.S. ___, 2004 WL 1373230 (June 21, 2004), a unanimous Supreme Court ruled that ERISA's remedies completely preempt state law claims against HMOs for injuries allegedly suffered due to preauthorization request denials, even where the claims decisions involved an element of medical judgment. In so holding, the Court resolved a split in circuits following its decision in Pegram v. Herdrich, 530 U.S. 211 (2000), which some courts had interpreted to mean that plan participants could bring state law medical malpractice or similar tort suits against plans where claims decisions involve medical judgment.

Davila is obviously a positive development for health care plans. Following Davila, a plan should not be subject to a state tort (or other) claims for a benefit denial, unless the plan actually employs the treating physician. Thus, plaintiffs' ability to recover damages will be limited to those provided under ERISA section 502(a)(1)(B) – the cost of the benefit, and, possibly, attorneys' fees. By confirming that the state law remedies are completely preempted, Davila routinely will allow for the removal of benefit litigation to federal court.

We note, however, that a concurring opinion in Davila suggests that some form of "make whole" relief (e.g., damages) might be "appropriate equitable relief" under ERISA section 502(a)(3). This discussion was prompted by a U.S. Department of Labor amicus brief and likely will prompt the next wave of litigation as plaintiffs continue to seek damages in excess of the limited relief available under ERISA section 502(a)(1)(B).