From the Arkansas News Bureau, "Any willing provider law upheld, but won't apply to self-insured, court rules ." The article discusses the Eighth Circuit opinion in the case of Prudential Insurance Company of America, et al. v. HMO Partners, et al. which held last week that Arkansas' any willing provider law was not preempted by ERISA, except with respect to self-insured plans.
Background of the case:
(1) An Arkansas any willing provider law ("AWP law") called the "Arkansas Patient Protection Act" was passed in 1995, but had been barred from being enforced in Arkansas after a federal district court issued an injunction, holding that the AWP law was subject to preemption under ERISA. The injunction was affirmed by the Eighth Circuit, in the case of Prudential Insurance Company of America, et al. v.National Park Medical Center, Inc.
(2) The U.S. Supreme Court in the case of Kentucky Association of Health Plans v. Miller decided in April of 2003 that an AWP law in Kentucky was not preempted by ERISA (discussed in previous posts which you can access here.)
(3) After the Miller case was decided, a case was filed in federal district court in Arkansas asking for "a judicial determination" on how the Miller case impacted the old Arkansas AWP law.
(4) The injunction issued in 1998 was lifted on February 12, 2004 by a federal district court in Arkansas, based on the Miller case, but the decision lifting the injunction was appealed to the Eight Circuit.
(5) The Eighth Circuit issued its opinion in the case last week upholding the lifting of the injunction as to insured plans and non-ERISA plans.
The Eigth Circuit's holding, which was more involved than just upholding the district court's lifting of the injunction, is as follows:
Pursuant to our analysis below, we hold that Miller mandates that we affirm the district court’s dissolution of the Prudential I injunction with regard to insured ERISA plans and non-ERISA plans. Miller, however, did not involve the issue of whether the Kentucky AWP statutes were preempted with regard to self-funded ERISA plans such as the Tyson plan. With regard to self-funded ERISA plans, we reverse the district court’s dissolution of the Prudential I injunction and remand to the district court to enter judgment consistent with this opinion. Finally, our holding that the Arkansas PPA can be enforced against insured ERISA plans compels us to consider, as a matter of first impression, whether ERISA’s civil enforcement provision completely preempts the civil penalties provision of the Arkansas PPA, Ark. Code Ann. § 23-99-207. Following the Supreme Court’s recent decision in Aetna Health Inc. v. Davila, 124 S. Ct. 2488 (2004), we hold that ERISA completely preempts the civil penalties provision of the Arkansas PPA as applied to suits that could have been brought under ERISA § 502, and we remand to the district court to enter judgment consistent with this opinion.
Please note that the Court, in holding that the AWP law was preempted by ERISA with respect to self-insured plans under the "deemer" clause analysis, rejected an argument that because the third party administrator for the self-funded plan contracts with insurance companies for access to their provider networks, "the Arkansas PPA can indirectly regulate the [self-funded] plan through those third-party insurance companies." As support for this argument, the movants referenced the Supreme Court’s statement in Miller that non-insuring entities administering self-insured plans are engaged in the activity of insurance for the purpose of the savings clause (Miller, 538 U.S. at 336 n.1):
“[N]oninsuring HMOs would be administering self-insured plans, which we think suffices to bring them within the activity of insurance for purposes of [the savings clause].”The Court, however, held that the movants had taken the Supreme Court's statement about third-party administrators "out of context":
The movants, however, take this statement out of context. The Miller Court’s discussion of third-party administrators came as a response to an argument against the application of the savings clause to the Kentucky AWP laws – namely that the application of those laws to non-insuring HMOs prevents the laws from being specifically directed toward entities engaged in insurance. Id. In Miller, the Supreme Court focused solely on the application of the savings clause. The movants’ argument here fails because it ignores the application of the deemer clause to self-funded ERISA plans, a non-issue in Miller, but the controlling issue in this case with regard to the [self-funded] plan.The Supreme Court has noted repeatedly that because of the deemer clause, statutes that indirectly regulate self-funded ERISA plans are not saved from preemption to the extent such statutes apply to self-funded plans . . Thus, we hold that not only does the Arkansas PPA exempt the [self-funded] plan and other self-funded ERISA plans from direct regulation but also that ERISA preempts any indirect state regulation of those plans because of the deemer clause.
The Eighth Circuit then went on to discuss the civil penalties provision of the Arkansas AWP law which stated that “[a]ny person adversely affected by a violation of this subchapter may sue in a court of competent jurisdiction for injunctive relief against the health care insurer and, upon prevailing, shall, in addition to such relief, recover damages of not less than one thousand dollars ($1,000), attorney’s fees, and costs.” The Kentucky AWP law considered by the Supreme Court in Miller apparently did not contain such a provision. The Eighth Circuit, in holding that ERISA § 502 "completely preempts the civil penalties provision of the Arkansas PPA, Ark. Code Ann. § 99-23-207, with respect to any cause of action that could have been brought under ERISA" relied on the Supreme Court's recent holding in Aetna Health Inc. v. Davila, 124 S. Ct. 2488 (2004). However, the Court offered no opinion as to the "exact scope of this preemption because the Arkansas PPA’s civil penalties provision extends to '[a]ny person adversely affected by a violation' of the Arkansas PPA and invites a number of possible suits that would require speculation beyond the scope of this appeal."
(You can access additional posts on the Arkansas AWP law here.)
An article here from NWAnews.com is reporting that a "bill filed with the Arkansas Legislature on Tuesday would prohibit managed care networks from practices that "discriminate" against doctors and hospitals, a move the bill’s sponsor says will put an "any willing provider" law into effect." According to the article:
Senate Bill 43 is intended to open closed insurance networks such as those of Arkansas Blue Cross and Blue Shield, allowing health-care providers who are willing to meet an insurer’s terms to see patients at in-network rate . . .A second bill filed by Faris, SB44, says individuals can sue over violations of SB43 and receive a court order requiring compliance with the law and an award of at least $1,000. . .
SB43 says insurers cannot "discriminate against any provider" who is willing to meet the "terms and conditions for participation." The bill is the latest in Arkansas’ decade-long fight over "any willing provider," a term used to describe laws that force insurance companies to extend network membership to any doctor or hospital willing and able to meet the network’s terms.
Here are the events leading up to the introduction of this legislation:
(1) An Arkansas any willing provider law ("AWP law") called the "Arkansas Patient Protection Act" was passed in 1995, but had been barred from being enforced in Arkansas after a federal district court issued an injunction, holding that the AWP law was subject to preemption under ERISA. The injunction was was affirmed by the 8th Circuit, in the case of of Prudential Insurance Company of America, et al. v.National Park Medical Center, Inc.
(2) The U.S. Supreme Court in the case of Kentucky Association of Health Plans v. Miller decided in April of 2003 that an AWP law in Kentucky was not preempted by ERISA (discussed in previous posts which you can access here.)
(3) After the Miller case was decided, a case was filed in federal district court in Arkansas asking for "a judicial determination" on how the Miller case impacted the old Arkansas AWP law.
(4) The injunction issued in 1998 was lifted on February 12, 2004 by a federal district court in Arkansas, based on the Miller case, but the decision lifting the injunction was appealed to the 8th Circuit. According to the Gazette article, oral arguments in the case--Prudential Ins. Co. v. HMO Partners--were heard in November of last year. You can read about the oral arguments in this article here, or even listen to the oral arguments as well as read the briefs filed in the case here.
According to the article, supporters of the proposed legislation don't want to wait for the 8th Circuit to rule, and have introduced the legislation, modeling it after the Kentucky AWP law (which was upheld by the Supreme Court), in hopes that it will be enacted, thus bypassing the legal battle that has ensued in the courts.
Read about the legal issues pertaining to AWP laws in this article: "Kentucky's “Any Willing Provider” Law and ERISA: Implications of the Supreme Court's Decision for State Health Insurance Regulation" by Patricia A. Butler, JD, DrPH.
An article here from NWAnews.com is reporting that a "bill filed with the Arkansas Legislature on Tuesday would prohibit managed care networks from practices that "discriminate" against doctors and hospitals, a move the bill’s sponsor says will put an "any willing provider" law into effect." According to the article:
Senate Bill 43 is intended to open closed insurance networks such as those of Arkansas Blue Cross and Blue Shield, allowing health-care providers who are willing to meet an insurer’s terms to see patients at in-network rate . . .A second bill filed by Faris, SB44, says individuals can sue over violations of SB43 and receive a court order requiring compliance with the law and an award of at least $1,000. . .
SB43 says insurers cannot "discriminate against any provider" who is willing to meet the "terms and conditions for participation." The bill is the latest in Arkansas’ decade-long fight over "any willing provider," a term used to describe laws that force insurance companies to extend network membership to any doctor or hospital willing and able to meet the network’s terms.
Here are the events leading up to the introduction of this legislation:
(1) An Arkansas any willing provider law ("AWP law") called the "Arkansas Patient Protection Act" was passed in 1995, but had been barred from being enforced in Arkansas after a federal district court issued an injunction, holding that the AWP law was subject to preemption under ERISA. The injunction was was affirmed by the 8th Circuit, in the case of of Prudential Insurance Company of America, et al. v.National Park Medical Center, Inc.
(2) The U.S. Supreme Court in the case of Kentucky Association of Health Plans v. Miller decided in April of 2003 that an AWP law in Kentucky was not preempted by ERISA (discussed in previous posts which you can access here.)
(3) After the Miller case was decided, a case was filed in federal district court in Arkansas asking for "a judicial determination" on how the Miller case impacted the old Arkansas AWP law.
(4) The injunction issued in 1998 was lifted on February 12, 2004 by a federal district court in Arkansas, based on the Miller case, but the decision lifting the injunction was appealed to the 8th Circuit. According to the Gazette article, oral arguments in the case--Prudential Ins. Co. v. HMO Partners--were heard in November of last year. You can read about the oral arguments in this article here, or even listen to the oral arguments as well as read the briefs filed in the case here.
According to the article, supporters of the proposed legislation don't want to wait for the 8th Circuit to rule, and have introduced the legislation, modeling it after the Kentucky AWP law (which was upheld by the Supreme Court), in hopes that it will be enacted, thus bypassing the legal battle that has ensued in the courts.
Read about the legal issues pertaining to AWP laws in this article: "Kentucky's “Any Willing Provider” Law and ERISA: Implications of the Supreme Court's Decision for State Health Insurance Regulation" by Patricia A. Butler, JD, DrPH.
Thanks to a reader who left a comment yesterday in this previous post and alerted me to this development: "Federal court dissolves 'any will provider' injunction." In the previous post, I noted how an Arkansas any willing provider law ("AWP law") had been barred from being enforced after a federal appeals court in 1998 issued an injunction, concluding that the law ran contrary to ERISA. However, as many of you know, the U.S. Supreme Court case of Kentucky Association of Health Plans v. Miller, decided back in April of last year, held that Kentucky's AWP law was not preempted by ERISA (discussed in previous posts which you can access here.) After the Miller case, Arkansas Blue Cross and Blue Shield filed suit in federal court back in August asking for "a judicial determination" on how the Miller case impacted the Arkansas AWP law. Certain providers had been writing Blue Cross, demanding access to the plans’ network and citing the Supreme Court case as authority for the proposition that the Arkansas law should be enforced.
According to this recent article, the injunction has now been lifted by a federal district court in Arkansas and "Blue Cross and Blue Shield of Arkansas may soon have to open up its massive statewide managed care network to "any willing provider," or any provider willing to abide by its network rules."
Jake Bleed for the Arkansas Democrat-Gazett writes a very interesting article on some developments in Arkansas on a state "any willing provider" ("AWP") law: "Blue Cross hopes suit preempts new ruling." According to the article, Arkansas Blue Cross and Blue Shield filed suit in federal court Tuesday asking for "a judicial determination" on how a U.S. Supreme Court decision in April might affect the state’s "any willing provider" law. The case referred to is the U.S. Supreme Court case of Kentucky Association of Health Plans v. Miller (discussed previously in posts which you can access here) which held that Kentucky's AWP law was not preempted by ERISA. According to the article, the Arkansas AWP law had been barred from being enforced by a federal appeals court in 1998, which concluded that it ran contrary to ERISA. However, with the recent Supreme Court case holding that a Kentucky law was not preempted by ERISA, certain providers have written to Blue Cross, demanding access to the plans’ network and citing the Supreme Court case as authority for the proposition that the Arkansas law should be enforced. The case being filed is an attempt by Blue Cross to resolve the dispute.