Utilization Review: Suit Over Denial Of Psychiatric Benefits Pre-empted By ERISA
Legal Eagle Eye Newsletter for the Nursing Profession
August 1995
Quick Summary: The effect of Federal pre-emption under ERISA is that employer-managed employee-benefit plans can make utilization-review decisions without coming under the scrutiny of state-court lawsuits alleging negligence. The merits of a negligence suit are not even to be considered, as in this case.ERISA is the Federal Employee Retirement Income Security Act. It was passed by Congress to protect employees’ vested rights in retirement pensions. Since its original passage, ERISA has been broadened to "replace a patchwork scheme of state regulation of employee benefit plans with a uniform set of Federal regulations," according to the U.S. Circuit Court of Appeals, Sixth Circuit. ERISA applies to employer-managed health plans. Pre-emption is a legal rule which says that the field of employer-managed health plans is no longer subject to suits under state-law principles of negligence.
In this case, the U.S. Sixth Circuit Court of Appeals threw out a suit alleging that a patient’s suicide was brought about by the refusal of his employee-benefit plan to authorize inpatient admission for crack addiction, psychiatric problems and expressed suicidal ideation. The plan had a policy, based on utilization-review considerations, that no patient would be admitted for inpatient chemical dependency treatment until the patient had successfully met the "challenge" of trying to remain drug-free for five days without treatment. The implication was that patients who refuse to take the "challenge" represent substantial risks of unsuccessful treatment outcomes and are not an appropriate place to allocate scarce treatment resources.
Tolton vs. American Biodyne, Inc., 48 F. 3d 937 (6th Cir., 1995).