Offshore Gambling: Medical OutsourcingVersus ERISA's Fiduciary Duty Requirement

"Medical care in America has become dangerously expensive."Dr. Arnold S. Relman1I. IntroductionThe unprecedented growth of science and technology in the twenty-first century has led to a world interconnected in a way that was once unimaginable. Borders become nonexistent as individuals, societies, and economies connect and melt together under the banner of globalization.2 For better or worse, outsourcing has always been part of the globalization trend.3 For decades, U.S. corporations have been reducing costs by outsourcing operations and capitalizing on the abundance of natural and human resources in Asia.4 Today, corporations are not the only ones seeking the cost savings of Asia. In 2005, over 55,000 Americans traveled to Bumrungrad International Hospital in India for surgeries, leaving the United States and trusting their bodies to foreign doctors and surgeons.5 At a time when approximately 42 million Americans do not carry health insurance,6 many uninsured Americans are enticed by the option of a surgical procedure that costs as little as one-tenth of the equivalent surgery in the United States.7 The tens of thousands of dollars uninsured Americans save via medical tourism have not gone unnoticed by the rest of the U.S. health care industry. Private companies, health medical organizations, and even states are exploring methods to utilize medical outsourcing to keep health care costs in check.8 Although medical outsourcing may appear on the surface to be an attractive alternative to the out of control costs in the United States health care system,9 the reality of endorsing medical outsourcing is much more complex. This Note examines the interplay between the fiduciary duty imposed under the Employee Retirement Income Security Act (ERISA) of 1974(10) and the cost savings available to private companies and health medical organizations, and argues that such entities cannot offer plan participants medical outsourcing without violating ERISA's fiduciary duty requirement.Part II provides an overview of ERISA's scope and goals, focusing on the fiduciary duty ERISA imposes upon plan administrators and which entities within the health care system are subject to the fiduciary duty.11 The Part concludes with an examination of the corollary duty of disclosure and the legal remedies for plan participants when fiduciaries violate their duties under ERISA.12Part III examines the rise of medical tourism and the benefits and risks associated with the practice. The Part discusses the legal risks associated with medical tourism and the motivating factors that drive patients abroad for medical services.13 Finally, Part III discusses attempts by companies, health medical organizations, and states to utilize medical tourism via medical outsourcing in their coverage plans.14Part IV discusses whether medical outsourcing violates the fiduciary duty imposed under ERISA in light of recent Supreme Court jurisprudence. The Part explores arguments both for and against ERISA liability and concludes that although medical outsourcing does not result in a de jure violation of ERISA's fiduciary duty, the financial incentives to both plan participants and plan administrators create a situation resulting in a de facto violation of ERISA's fiduciary duty. In conclusion, this Note suggests appropriate steps Congress should take in order to ensure that the vision and purpose of ERISA remain protected as health care evolves in a globalized society.II. ERISA: An OverviewA. ERISA's Scope and PurposeThe Employee Retirement Income Security Act of 1974(15) reflects the government's belief that employee benefit and welfare plans play such an important role in interstate commerce that these plans represent a national public interest.16 Therefore, ERISA seeks to ensure the sound management and application of employee benefit and welfare plans17 via the establishment of "minimum standards . . . assuring the equitable character of such plans and their financial soundness. …