Volume 78, Number 2

May 2003

The Inadequacy of State Legislative Responses to ERISA Preemption of Managed Care Liability

Wendy Silver

Since 1997, several states have enacted legislation to increase patients’ ability to sue their Managed Care Organizations (MCOs) for negligent acts. These statutes address the obstacle imposed by the Employee Retirement Income Security Act (ERISA) preemption clause, which severely limits the exposure of MCOs to tort liability. In this Note, Wendy Silver acknowledges the usefulness of these statutes, but posits that they inadequately address the ERISA preemption problem. Under these statutes, patients may bring suit only if their MCOs negligently denied, delayed, or modified their physicians’ recommended course of treatment. Patients whose MCOs unduly and negligently influenced their physicians’ recommendations, however, cannot seek recourse against their MCOs. Silver argues that this loophole permits MCOs to skirt the liability these statutes provide by altering the way in which MCOs influence doctors. Silver concludes by proposing a statutory scheme that would increase MCOs’ exposure to liability, providing MCOs with sufficient financial incentives to maintain the proper quality of patient care.