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Akron Univ. School of Law

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Friday, June 3, 2011

Guest Blogger Vickie J. Williams: Recent Non-Health-Care SCOTUS Decisions That Will Impact Health Care Litigation in a Big Way

Williams_31 This is my last post for the month.  I want to thank Prof. Van Tassel and the other editors of the Health Law Profs Blog for allowing me to be the May guest blogger.  I have enjoyed it so much that I am planning to return with a few posts in December to help break up everybody’s grading tedium again. 

On May 16, the SCOTUS decided two non-health-care cases that will have major impacts on health care litigation.  The first is Cigna Corp. v. Amara, a unanimous decision (Justice Sotomayor did not participate) in an ERISA case.  In Amara, beneficiaries of Cigna’s pension plan challenged Cigna’s adoption of a new pension plan as violating ERISA’s notice and disclosure obligations.  The SCOTUS made two significant rulings in the case:  (1) the “summary plan description,” which is usually all that beneficiaries of an ERISA plan bother to read, does not set forth the terms of the benefit plan for purposes of ERISA, and is not part of the elusive ERISA “plan.” Therefore, an incomplete or misleading summary plan description cannot give rise to a claim for benefits due under the terms of an ERISA plan; and (2) ERISA §502(a)(3), which authorizes “appropriate equitable relief” against fiduciaries for violations of ERISA, can be used to support a monetary award against a plan trustee for breach of duty, as long as such award is deemed “compensatory” and is part of “make-whole” relief.  Justices Scalia and Thomas did not join in the second part of the holding, by the way.

Let’s put aside the irony that a major national insurance company, which presumably administers ERISA health benefit plans for other employers, apparently doesn’t know how to comply with ERISA in its own benefit plans.  More significantly, the holding regarding the nature of the summary plan description is likely to increase confusion (if that is possible) about what state-law tort claims are preempted by ERISA.  If the summary plan description is not itself part of the plan, but is merely information about the plan, can a misleading or incomplete summary plan description give rise to an independent state-law tort claim for negligent misrepresentation or fraud, or is such a claim preempted? Because this would be a remedy that supplements remedies available against a plan fiduciary under ERISA, I would think preemption applies, but when it comes to ERISA preemption litigation, it is hard to predict outcomes.  Certainly, this decision should allow plan administrators who write summary benefit plans to breathe a sigh of relief if the summary benefit plans are not quite as accurate or complete as they should be. 

But what was given to plan administrators by one hand may be taken away by the six justices who joined in the second part of the holding.  In that holding, the SCOTUS took the bait that was dangled by Justice Ginsburg in her concurrence in Aetna v. Davila to interpret the types of “equitable relief” available under ERISA §502(a)(3) to persons injured by plan fiduciaries to include some types of monetary compensation.  Although the Court goes to great pains to explain that it is not expanding the relief currently available under Section 502(a)(3), the Court is clearly trying to alleviate Justice Ginsburg’s dismay, as expressed in her Davila concurrence, about the “cramped construction” of equitable relief previously given to the statute by the Court.   This potentially opens the door for increased availability of monetary damages under ERISA for plan beneficiaries injured by decisions by a plan fiduciary.  For example, if a plan beneficiary does not receive medical care in a timely manner due to the action of, or inaction by, a plan fiduciary (failure to authorize care promptly, for example) and can show injury due to the action, for the first time, she may be able to sue the plan fiduciary for compensatory damages under ERISA.  Nevertheless, the SCOTUS has opened the ERISA door a crack in the past, as it did in Pegram v. Herdrich, and then slammed it shut, as it did in Davila.  We will see how wide this opening is as lower courts try to apply this decision to requests for money damages in future ERISA cases, in both health care and other types of benefit plans. 

And now I will close with the“f” word (fraud).  Also on May 16, in a 5-3 opinion (Justice Kagan not participating) the SCOTUS decided Schindler Elevator Corp. v. U.S. ex rel. Kirk, a government contracting case interpreting the civil False Claims Act’s (FCA) public disclosure bar.  In that case, the SCOTUS resolved a split in the circuits and determined that written responses to Freedom of Information Act (FOIA) requests, and documents attached to such responses, are “reports” for purposes of applying the FCA’s public disclosure bar.  Therefore, a qui tam relator who obtains information about fraud against the United States from government responses to FOIA requests will be unable to maintain an FCA suit, unless he can prove that he is the original source of the information.  This seems unlikely, since a person who was the original source of the information would presumably have no need to make a FOIA request to get the very same information he presumably already had.  For a person who is an original source and did not make the FOIA request, this merely puts another arrow in the quiver of defendants who will do everything in their power to show that the information was disclosed to somebody in a FOIA request (including perhaps making the FOIA request themselves), and that the case is therefore jurisdictionally barred.  As Justice Thomas noted, there is a split among the circuits regarding whether such a disclosure would bar a suit by somebody who was not a party to the disclosure.  Therefore, this decision is most likely a prelude to another case in which the split will be resolved.  Stay tuned. 

More immediately, this ruling may be a major impediment to the efforts of data-mining companies to use publicly reported Medicare and Medicaid data to support FCA cases against health care providers, such as occurred in the Pneumonia DRG upcoding case filed by Health Outcomes Technology in the 1990s.  That case, which was based on publicly available data, resulted in a government investigation of over 100 hospitals and a recoupment of millions of dollars in alleged overpayments.  I would anticipate that health care providers will be very pleased with this ruling, as it severely curtails the ability of whistleblowers to pursue cases against them when the government has declined to intervene (as is true in a majority of cases).  As the dissent notes, this decision leaves whistleblowers caught between the rock of Federal Rule of Civil Procedure 9(b), which requires knowledge of detail for fraud to be plead with particularity, and the hard place of this decision, which limits their ability to substantiate their allegations and fill in detail through information received in response to a FOIA request before commencing suit.  Perhaps Congress will accept the dissent’s invitation to amend the FCA in response to this decision, but right now it appears that Congress has bigger fish to fry. 

That’s all for now.  I will now have to turn my full attention to preparing for my summer class.  Happy summer, everybody.

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