ERISA: Teaching an Old Law New Tricks to Expand Health Care Access

• In Event: Navigating Healthcare Services and Resources

Abstract

How does the statutory design of the Employment Retirement and Income Security Act (ERISA) influence the range of options available to employed patients when facing health insurance disputes, and what opportunities are there for Congress to amend the legislation to better empower patients?
Though initially aimed at employees' pensions, ERISA has since been adapted to encompass most employer-sponsored health plans in the US. In fact, as of 2020, 67% of workers are in self-insured health plans regulated through ERISA. However, with enforcement capacity by the overextended Department of Labor, its implementation leaves something to be desired. What's more, with enforcement capacity housed in an agency not directly aligned with health care, there are concerns about the knowledge and prioritization of enforcement within this complex area of health law.
Particularly challenging to ERISA's statutory design is that it does not allow patients to recover damages when they have been aggrieved by their employer-provided health insurer (e.g., because they have declined to cover a prescribed treatment, a dynamic that I explore in-depth in my forthcoming book). That is, should a private health insurer (e.g., Cigna, Anthem) decline to cover a particular prescribed radiation treatment for cancer, should the patient legally challenge this determination, the most that they could recover is the benefit itself. The implications of this are far and wide: not only are patients unable to obtain more substantial relief (e.g., compensatory damages) even when they have been injured by a coverage denial, but lawyers are disinclined to take up such cases in the first place because of the limited rewards that they reap. Thus, with too few willing plaintiffs and too few lawyers willing to take on such cases, this facilitates a system wherein insurers may operate with impunity given the well-known constraints within this realm of the American legal system. This contributes to my observation in my forthcoming book that 36% of American adults experience at least one denial (and often, multiple denials), with a higher rate (40%) among those receiving their health coverage from their employer. It is this practice that Bennett (2020) characterizes as practicing medicine without a license. Not only do such coverage denials occur with great frequency, but they disproportionately disadvantage vulnerable populations (women, people of color, LGBTQ individuals, lower socioeconomic status), and these already vulnerable patients are left with few places to turn when in the face of obstructed medical care.
This project builds on my book to examine the rationale for ERISA's statutory design, the implications with respect to the litigation that does manage to emerge, and the opportunities for Congress to implement meaningful reforms so as to promote patients' rights and insurers' accountability. While legal analyses to date have discussed ERISA pre-emption, extant work has not emphasized the link between damages recovery and institutional accountability, which is important both in itself and in ensuring access to health care.
This research speaks to Farhang's (2010) work on litigation incentives, according to which the expected value of a lawsuit (EV), is EB(p)-c, or the expected benefit gained from the lawsuit, times the probability of prevailing in the lawsuit, minus the costs associated with the lawsuit. According to Farhang (2009, 2010), legislators can incentivize plaintiffs or would-be plaintiffs to bring lawsuits by increasing the potential recovery of damages (EB), increasing the likelihood of winning (p), and/or by reducing the costs of suing (that is, by providing attorney's fees, which are not currently guaranteed under ERISA) (c). This highlights how ERISA damages reform can not only reshape litigation incentives but open up new avenues to enforce the guarantees of private health plans and hold those plans to account.
Though focused just on ERISA, the legal and health policy implications of this project are far and wide, affecting over half of the American workforce receiving employer-provided health benefits, and shedding light on how significant legislation is in many cases written to disadvantage American workers. Through a mixed-methods research approach, it seeks to understand how we arrived at the status quo, and to imagine the appropriate avenues for policy reform and the ways in which this can improve access to care for workers across the nation. Should employer-provided health plans fear legal recourse due to damages enhancements and the removal of pre-emption, will they be more judicious in making determinations as to whether prescribed care is worthy of health coverage? Will this greater care in coverage decisions provide new safeguards for the insurance of vulnerable populations within the American workforce? These are the health policy, legal, and inequality questions I explore through legislative history, case analyses, and semi-structured interviews.

Author

• Miranda Elyse Yaver, University of Pittsburgh