November 4, 2009
For additional information:
Jason Hammersla

Efforts to promote litigation push health care system in the wrong direction

WASHINGTON, D.C. — "Congressional proposals to limit or eliminate long-standing federal standards for employer-sponsored health care plans, would destabilize employer-sponsored health coverage, cause employers to drop plans, and force workers to obtain coverage — often without financial assistance from employers — and increase costs for the federal government. It is hard to imagine a more negative list of consequences from any aspect of health reform legislation. What an irony that not only does current health reform legislation lack any meaningful medical malpractice reform, but some in Congress are actually seeking to expand rather than curtail litigation related to health coverage," American Benefits Council President James A. Klein said today.

The Affordable Health Care for America Act, to be considered in the House of Representatives later this week, includes a provision that would apply state law rights and remedies to employer-sponsored health coverage when obtained through a health insurance exchange. Today, Representative John Shadegg (R-AZ) announced his intention to pursue an amendment that would extend these state remedies to all plans and the employers that sponsor them — including coverage provided outside the insurance exchanges. "Rather than focusing on quick resolution of disputes when a plan coverage decision is challenged, these provisions would impose after-the-fact punitive damages for benefit decisions. That would drive up the cost of coverage and drive employers away from sponsoring a plan," said Klein.

"Remedy provisions under the Employee Retirement Income Security Act (ERISA) provide explicit appeal rights to all plan participants after an initial coverage decision is made. Participants may seek immediate relief so that a court may order that a claim be paid if it determines that a plan has not made a correct decision," added Klein.

"As ill-advised as it would be to expose employers to unlimited liability in our current health care system, Rep. Shadegg's proposal is especially inappropriate in a new system that requires employers to either sponsor a health plan or pay a penalty. This proposal will compel many employers to drop their plans, pay the penalty and require workers to obtain coverage through the new insurance exchanges. Some of those workers would be eligible for a federal subsidy — driving up costs for taxpayers — but many employees will have to buy coverage without any government or employer premium contribution. So workers, families, employers and the federal government all lose. Only plaintiffs attorneys come out ahead," said Klein.

"We urge Congress to reject all these proposals that would drive up health costs and do nothing to help individuals who want a fast and fair review of a claims dispute," Klein concluded.

For more information, or to arrange an interview with Council staff, please contact Jason Hammersla, Council director of communications, at or by phone at 202-289-6700 (office) or (202) 253-5458 (cell).

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.