The effective result of this decision was that the THCLA, which held Case Management and Utilization Review decisions by Managed Care entities like CIGNA and Aetna to a legal duty of care according to the laws of The State of Texas could not be enforced in the case of Health Benefit plans provided through private employers, because the Texas statute allowed compensatory or punitive damages to redress losses or deter future transgressions, which were not available under ERISA § 1132.
The history that allows these Private and Self-Pay Insurance to be saved dates to the "Interstate Commerce" power that was given the federal Government by the Supreme Court.
The Court ruled that Mr. Davila's and Ms. Calad's (the Respondents') state of Texas Causes of Action, both involving Utilization Review decisions by Managed Care entities (in this case CIGNA and Aetna) that were alleged to adversely affect patient care, where in both cases Utilization review decisions contradicted the advice of the Respondents' personal physicians), fell within ERISA § 1132(a)(1)(B).
Essentially, this Supreme Court decision placed the Respondents' complaints, in the status known as "Failure to state a claim upon which relief could be granted" and had to be dismissed on their faces.
As an example, if the Utilization review nurse had negligently applied the discharge protocol for hemorrhoidectomy rather than Total Abdominal Hysterectomy, and if Calad had died from complications resulting from the treatment decision to treat her on an outpatient basis with discharge instructions after only 1 day of hospitalization, the case would still have had to be dismissed; the law does not recognize monetary damages for negligent actions in Managed Care "administration" of Employer Medical Benefit Plans but does acknowledge that state malpractice laws do apply to treating physicians deciding or administrating the course of a patient's care.
CIGNA and Aetna both pointed out in oral arguments what has been referred to in ERISA's judicial history as the "Panoply" of remedies that Calad and Davila might have evoked under ERISA to prevent the damage suffered, to include appeals of the adverse decisions, judicial Injunction to compel Utilization Review to approve treatment, and a new Texas law that allowed for independent arbitration over Managed Care Utilization Review decisions based on Medical necessity.
The ERISA claims procedure laws detailed by the Secretary of Labor (29 CFR 2560.503-1) require written notice for any "Adverse Determination" such as a Utilization review decision not to extend an approved course of treatment, and must provide a reasonable opportunity for a claimant or a representative (in Calad's case, her treating physician) an opportunity to appeal the decision in a timeframe appropriate to the urgency of the situation—in Calad's case, prior to her discharge.
For example, requiring a patient to agree to pay for a potentially costly medical treatment up front out of pocket to preserve the right to challenge the adverse determination later in court, with no guarantee that the challenge would be successful, and with a high risk of incurring expensive legal costs as well, would be considered "hampering the initiation or processing of claims for benefits", for obvious reasons.
As lower Courts are bound by the Precedents of higher Courts, as is the Supreme Court bound in large part to its own precedents, there has been great frustrations by the Courts in lawsuits brought by Plaintiffs who under state common law would be entitled to monetary relief for damages or death suffered as a result of Utilization review nurses breaching a Duty of care or the laws of the practice of Medicine by prescribing the treatment plan for a Diagnosis, as in Calad's case, as complex as "status post total abdominal hysterectomy with vaginal, bladder, and bowel repair", presumptively, before the surgery is even performed, as 1 day of inpatient care with 8 weeks of outpatient care, on the basis of a discharge protocol to be followed that hinges not on the Clinical judgment of the physician who performed the surgery but the single question, "were there any Complications of the procedure?"
al in which Justice Breyer joined, expressed the sentiments held by many that either Congress or the Courts revisit the law as currently enforced by statute and precedent: The Court today holds that the claims respondents asserted under Texas law are totally preempted by §502(a) of the Employee Retirement Income Security Act of 1974 (ERISA or Act), 29 U. S. C. §1132(a).
Co. v. Knudson, 534 U. S. 204 (2002), I also join "the rising judicial chorus urging that Congress and this Court revisit what is an unjust and increasingly tangled ERISA regime."