In the case of Aetna Health Inc. v. Davila, the U.S. Supreme Court issued a 9-0 decision that will prevent states from allowing patients to sue managed care companies when their refusal to fund treatment results in injury or death to the patient. The question at the heart of the case was whether the Employment Retirement Security Act (ERISA) prevents individuals from filing state lawsuits against their health maintenance organization (HMO) when it refuses to pay for recommended treatment.

The court believes the federal statute prohibits state laws that allow such actions. The decision will immediately impact Texas and nine other states where individuals can sue health plans. It is estimated that 72 million people nationwide are involved in these plans.

The insurance industry clearly was determined the winner in this case. In briefs filed with the Court, the Bush administration supported the insurer position of allowing that state lawsuits would weaken ERISA; specifically, that costs to managed care companies would be passed on to employers, deterring employer interest in providing health benefits. The administration does support a federal patients' bill of rights that includes a "right to sue" provision with award limitations. Insurers and employer groups have sought to limit patient rights legislation for some time. This legislation is gridlocked in Congress but will certainly be debated in the upcoming presidential election.

Collision repairers should note the continued judiciary and legislative interest in the relationships between insurers and consumers. Justice Clarence Thomas drafted the opinion for the Court:

Congress enacted ERISA to "protect...the interests of participants in employee benefit plans and their beneficiaries" by setting out substantive regulatory requirements for employee benefit plans and to "provide for appropriate remedies, sanctions, and ready access to the federal courts." 29 U.S.C. 1001(b). The purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans.

Justice Thomas continued:

"Therefore, any state-law cause of action that duplicates, supplements or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore preempted."

The Court was not swayed by Texas state law protections. Justice Thomas provided: "Allowing respondents to proceed with their state-law suits would pose an obstacle to the purposes and objectives of Congress." Of particular note is the statement by the Court, "even a state law that can arguably be characterized as regulating insurance will be pre-empted if it provides a separate vehicle to assert a claim for benefits outside of, or in addition to, ERISA's remedial scheme."

Consumer organizations reacted negatively, as expected, to the decision. U.S. Representative Charles Norwood, R-Ga., called the decision "a blow to patients' rights." Norwood, a dentist, has been a strong advocate of health care reform.

This case will feed several public policy issues important to collision repairers. First, the issue of controlling costs for small businesses. With the continued federal interest in assisting small businesses as they provide health care, including Association Health Plan legislation, this case highlights the thinking of many in Congress as to providing some health care relief to employers. Specifically, more flexibility and controlling costs through limiting litigation are at the top of Congress' list.

Second, the U.S. House of Representatives Financial Services Committee continues its interest in the federal regulation of the life insurance industry. In the Automotive Service Association's discussions with some members of the committee, there is interest in taking a look at the federal regulation of property and casualty insurance. The committee has already reviewed the property and casualty component in the hearing process to some degree.

Finally, legislation to control litigation continues to be a top priority for the business community. Despite class action legislation being stalled in the U.S. Senate, it is anticipated the bill will come up again prior to Congress' adjourning for the year.

Collision repairers have found multiple roadblocks in defending the vehicle owner's rights in a collision repair experience. Some of these concerns - depending on the state - are as follows:

• Are there state protections for the consumer involved in a collision repair; i.e. choice of repair facility, types of parts to be used in the repair?
• If there are protections, is the consumer educated as to his or her rights?
• If there are protections, does the state regulator have the resources to - and interest in - pursuing these cases?

It is unlikely Congress will make significant progress in health care reform or the federal regulation of the insurance industry in the remaining days of this Congress. Collision repairers should continue to debate internally over the next months the issues of:

• Health care reform
• Limitations on class action lawsuits
• Federal regulation of the insurance industry.

To track legislation relevant to this article, please monitor ASA's new legislative Web site: www.TakingTheHill.com.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.

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