By Jeff Belfiglio
In two unanimous decisions issued on the same day, the United States Supreme Court cut off ERISA fiduciary duty claims against HMOs when their physicians are making mixed eligibility and medical treatment decisions, but opened up possible ERISA claims against non-fiduciaries who engage in prohibited transactions.
Pegram v. Herdrich
The more closely watched case was Pegram v. Herdrich, (120 S. Ct. 2143 [June 12, 2000], http://supct.law.cornell.edu/supct/html/98- 1949.ZS.html), because of its implications for the debate over a proposed federal "Patients' Bill of Rights" law. There, an HMO patient's treatment was delayed, allegedly so that the HMO physicians would receive a larger year-end bonus, resulting in a burst appendix. Besides suing the doctor for malpractice, Ms. Herdrich sued the HMO, claiming that its incentive system created an inherent breach of ERISA's fiduciary duty to act "solely" in the interest of plan participants. The United States Supreme Court
