To Preempt or Not to Preempt: HMO Liability Pre and Post Pegram v. Herdrich

Should consumers have the right to sue their HMOs (health maintenance organizations) for the way they deliver medical care? In recent years, the federal courts have focused their attention upon, inter alia, the issue of whether HMOs have a duty to reveal financial incentive provisions contained in contracts between the HMO plan physicians to plan members and beneficiaries under a health plan. In fact, on June 12, 2000, the United States Supreme Court, in Pegram v. Herdrich, pondered whether HMO physicians and administrators are fiduciaries under the Employee Retirement Income Security Act (ERISA), and if so, must they exercise their authority solely to benefit the interests of the patient