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HR and Tax Newsletter - August 2004

HMO's Escape Liability under Some State Malpractice Laws

In a victory for HMO's, the Supreme Court decided the Employee Retirement Income Security Act (ERISA) invalidated a Texas statute that made HMO's liable for failures to use ordinary care in making treatment decisions. One plan participant's physician prescribed a specific drug, but the HMO refused to pay for it. The participant then used a substitute drug, which resulted in a severe allergic reaction. The second participant underwent surgery. Her physician recommended an extended hospital stay, which the HMO denied. The participant then experienced complications. Both participants then sued under the Texas statute for failure to provide ordinary care. The Supreme Court, in a nutshell, concluded that the plaintiffs' claims were claims for benefits under plans covered by ERISA and thus trumped by the ERISA benefits provisions. Had the HMO personnel who decided the benefits issue been treating physicians, the result might have been different.

Florida Minimum Wage Increase

The Florida Supreme Court has approved the text of a proposed minimum wage ballot initiative that if passed by the voters will increase the state minimum wage from $5.15 to $6.15.