Justice Ginsburg's Fiduciary Loophole: A Viable Achilles' Heel to HMOs' Impenetrable ERISA Shield

I. INTRODUCTION Although at first Juan Davila only felt weak, he was later rushed to the emergency room to find severe internal bleeding that nearly took his life. With seven units of blood, five days in critical care, and a subsequent hospital stay, he barely cheated death, but not unscathed.1 Previously, his health maintenance organization (HMO), Aetna, had refused to cover Vioxx-the medication recommended by his physician to treat his rheumatoid arthritis-and instead only consented to cover Naproxen, a less expensive pain killer.2 With neither the time nor the means to appeal Aetna's decision, Davila opted to accept the covered treatment.3 As a result of his HMO's coverage decision of what it considered a "medical necessity," Davila barely escaped impending death and was left in a state in which he could no longer take any oral medication, including Vioxx.4 Sadly enough, Juan Davila is just one tragic example of many Americans who have suffered from poor HMO decisions or delays.5 What is almost equally tragic is that legally the courts' hands are tied from providing compensatory relief to patients injured from HMOs' decisions, such as denying coverage of doctor-prescribed treatments. Under the federal Employee Retirement Income Security Act (ERISA), courts cannot provide compensatory relief for victims like Juan Davila-or so courts have interpreted ERISA historically.6 In reality, the U.S. Supreme Court has inadvertently painted itself into a corner by restrictively interpreting ERISA to preclude compensatory relief to victims of HMO patient treatment decisions, which is duly incompatible with issues like HMO liability for employer-based HMO plans. Congress intended ERISA to provide national uniformity in administration of employee benefit plans.7 To this end, ERISA expressly provides that any claims related to an employer plan under state laws are preempted by ERISA.8 But at the time of ERISA's creation, employer-based HMOs were not prevalent in the health care system. And because ERISA was created before the rise of HMOs, Congress could not anticipate the extent to which ERISA would affect HMO liability. The Supreme Court has interpreted the statutory language of ERISA to indicate that Congress intended to only provide traditional equitable relief, such as injunction or restitution, for claims brought against ERISA plans.9 What this means, in part, is that persons injured due to delay or denial of benefit coverage cannot receive compensatory relief from their HMO. In effect, the law initially enacted to protect plan participants is thus turned against them in the HMO context. Consequently, injured participants are left with few options. With no compensatory damages available under ERISA, a natural reaction for plaintiffs would be to make claims under different state laws. However, ERISA also preempts any claim related to ERISA plans.10 Hence, plaintiffs still receive no compensation. Crafty lawyers have attempted-with limited success-to circumvent the ERISA barrier in other ways. For instance, ERISA itself contains a safe harbor called the Savings Clause, which allows state law claims to avoid ERISA preemption if the claims relate to the "business of insurance."11 However, the Supreme Court has narrowly interpreted the Savings Clause to only allow exemption from preemption if the state law claimed does not replace, or in other words, conflict with what is covered by ERISA's remedial scheme as contained in § 502.12 In a few situations, other state claims against HMOs have circumvented ERISA preemption, such as corporate negligence,13 bad faith,14 vicarious liability,15 and even federal RICO claims.16 Recently, however, in a concurring opinion of the Aetna Health Inc. v. Davila decision, Justice Ginsburg referred to an argument in the Government's amicus brief mentioning a specific uncharted area of the law that may potentially provide monetary relief to ERISA plan members.17 She pointed out that the Supreme Court had not yet precluded make-whole relief under a breach of fiduciary duty claim. …