Special Section -- Supreme Court Review

HealthPathfinder, a new online service of the Health Law & Policy Institute, provides a pathway on the World Wide Web to more than 50 health and health policy subjects, with more than 500 annotated links. HealthPathfinder, located at http://www.law.uh.edu/healthpathfinder, provides an online index for access to topical Web sites ranging from heart disease to health associations, medical malpractice to mental health, state law to statistics. Click on "Mental Health" and Web sites devoted to professional associations, research institutes, advocacy organizations, and state and federal mental health agencies will appear.

HealthPathfinder will enable consumers and researchers, lawyers and non-lawyers to gain easy access to the wealth of valuable health information available on the Internet. If you research health issues on the Internet, HealthPathfinder is well worth a visit.

In addition, parts of the Institute's Web site have moved to provide easier Web addresses. The Institute's homepage is at http://www.law.uh.edu/healthlaw. The homepage for Health Law Perspectives: Analyses of Recent Developments in Health Law is now located at http://www.law.uh.edu/healthlawperspectives. The Health Law News homepage can now be found at http://www.law.uh.edu/healthlawnews.

Epps Joins Research Faculty

Phyllis Griffin Epps joined the Health Law & Policy Institute's research faculty on September 1, 1999. From 1996 to 1999, Ms. Epps worked for Baker & Botts, L.L.P. in the Trial Department. From 1994 to 1996, she was a law clerk for United States District Court Judge Vanessa D. Gilmore.

She received her J.D. from Yale Law School in 1994 and her B.A. in Economics with Departmental High Honors from Howard University in 1991. At Yale, she served as Chairperson of the Moot Court of Appeals Board of Directors and as Senior Articles Editor of the Yale Law and Policy Review.

Ms. Epps will be working on a variety of research projects concentrating on genetics and minority health.

Institute Sponsors Training on Representing Students with Disabilities in Special Education Cases

The Health Law & Policy Institute will co-sponsor training sessions for lawyers in representing special education students. The introductory training sessions will address legal issues related to provision of special education services under both federal and state law. Training includes an analysis of students with disabilities' rights under the federal Individuals with Disabilities Education Act (IDEA), Americans with Disabilities Act (ADA), and section 504 of the Rehabilitation Act.

Since a significant number of children with disabilities are involved in child protective services and juvenile delinquency cases and frequently encounter problems obtaining appropriate special education services, this training will be ideal for attorneys ad litem and criminal defense attorneys, as well as attorneys interested in children's justice issues.

In addition to the Institute, sponsors of the training session include Advocacy, Inc., Texas Tech School of Law, the College of the State Bar of Texas, and the State Bar of Texas Disability Issues Committee.

Presenters will include Laura Rothstein, Richard LaVallo, Maureen O'Connell, Maryann Overath, and Nina Saha. Laura Rothstein is a Professor of Law at the University of Houston Law Center. She has taught and written extensively on disabilities and the law. Richard LaVallo has been a Senior Attorney at Advocacy, Inc. for the past 8 years and has practiced law for 15 years. Maureen O'Connell, a Senior Attorney at Advocacy, Inc. for the past 5 years, has specialized in disability rights for 18 years. Maryann Overath, a Senior Attorney with Advocacy, Inc. since 1995, is responsible for children's issues, including special education. Nina Saha, Ph.D., has 15 years of experience in conducting functional assessments of children with disabilities.

The training will be held on Friday, October 15, 1999 in Houston, Texas at the Crowne Plaza Hotel, 2222 West Loop South. Also, on September 24, 1999, training will take place at the Texas Tech School of Law in Lubbock, Texas and at long-distance learning sites in El Paso, San Angelo, and Amarillo. The training begins at 8:00 a.m. with registration and adjourns at 5:00 p.m. The cost is $50.00 per person. Space is limited. The training has been approved for 7 hours of MCLE credit including 1 ethics credit hour.

For more information, call Beverly Roland at Advocacy, Inc. at 512-454-4816.

Health Law & Policy Institute Welcomes New Master's Students

Six new students have joined the masters program in Health Law this fall:

Amy J. Dilcher received a B.S. in Nursing from the University of Pittsburgh in1995 and a J.D. from Howard University in 1999. Ms. Dilcher most recently worked in the Office of the Vice President and General Counsel at George Washington University.

James Downes received a B.A. from Boston University in 1973; a J.D. in 1980 from the New England School of Law; and a Master of Public Health from Boston University in 1992. He is the Deputy Chief of the Disability and Elder Law Division with the Harris County Attorney's Office in Houston and is an Adjunct Assistant Professor of Health Law at The University of Texas School of Public Health.

Loni Eustace-McMillan received a B.A. in Legal Administration from the University of West Florida in 1987 and a J.D. in 1990 from the University of Mississippi. She is currently a Special Assistant Attorney General in the Office of the Mississippi Attorney General.

Darrell C. Landry received a B.S. in Management in 1992 and a J.D. in 1997 from Tulane University. He currently is an associate with Calvert and Associates in Houston.

Robert Milton Lewis, Jr. received a B.A. from Emory University in 1989 and a J.D. from Mercer University in 1996. He is an Associate with Meadows & Futch, P.C. in McDonough, Georgia.

Claudia Parks-Miller received a B.S. in Nursing in 1983, a Masters in Nursing Science in 1989, and a J.D. in 1999 from the University of Arkansas. Since 1993, she has been the Trauma Coordinator for the UAMS Medical Center in Arkansas.

BOOK REVIEW

By Mary R. Anderlik, J.D., Ph.D.
Research Professor
Health Law & Policy Institute

Medicare HMOs: Making Them Work for the Chronically Ill
Edited by Richard Kronick and Joy de Beyer
Health Administration Press, 1999, 238 pages, $40

No one interested in making managed care work for people with disabilities or chronic illness can afford to ignore the issues surrounding payment. In particular, the need for an adequate method of adjusting capitation payments to account for differences in risk becomes ever more obvious. Large payors that allow beneficiaries to choose between fee-for-service and capitated health plans have another reason for caring about risk-adjustment: if they set their capitation rates based on average cost under fee-for-service, and the sick people stay in fee-for-service while the healthy migrate to managed care, total payments go up and the capitated plans get a windfall. A new book edited by Richard Kronick and Joy de Beyer addresses this set of quality and financial concerns.

The book grew out of a 1997 conference on the problem of risk selection, with a focus on the Medicare program. The goal the editors set for their effort is the description and evaluation of strategies for increasing the likelihood that plans will do a good job of providing health care to the people who need it most. Managed care is a late arrival to the Medicare program, but it is expanding rapidly. Between 1987 and 1998, Medicare managed care enrollment grew from about one million to 5.5 million. During that period, Medicare set capitation payments for HMOs at approximately 95 percent of the projected average fee-for-service payment for the relevant county, adjusted only for age, gender, welfare status, and institutional status. Unfortunately, absent more sophisticated risk adjustment, HMOs face perverse incentives. As the editors note in the introduction: "[I]n the current environment, an HMO that seeks to excel in providing care to beneficiaries with cancer, heart disease or diabetes, or that seeks aggressively to recruit the most respected subspecialists in the community, would likely cause its own demise." (p. 4)

Chapter 2 of the book, written by Kronick and de Beyer, reviews published estimates of the magnitude of risk selection, concluding that there is strong evidence of substantial favorable selection. ("Favorable selection" means those enrolled in HMOs have fewer expected health care needs than those remaining in fee-for-service.) The authors then consider how and why favorable selection is occurring, a step they consider necessary to inform the evaluation of possible solutions. A laundry list of possible factors are considered under the headings of beneficiary preferences and actions by plans, and the authors point out that with providers increasingly at risk, physicians have incentives to steer "high users" to fee-for-service and healthier patients to HMOs. Unfortunately, there is little empirical evidence to suggest which factors are most prominent.

In Chapter 3, Kronick and Tony Dreyfus assess various risk-adjustment methods—or methods of "health-based" payment—with respect to goals of cost-effectiveness, fairness, and quality. A key task is to get rid of the misconception that highly accurate predictions of expenditures on individuals are possible or needed: "The goal of health-based payment is not to compensate plans for the unpredictable, insured risk but to pay for the predictable risk, so that plans will gladly serve individuals with predictably higher needs." (p. 32) In other words, the aim of health-based payment is to reorient plans by scattering "money-losing" and "profitable" members across all levels of need. After surveying the range of possible approaches, Kronick and Dreyfus settle on adjustment based on diagnosis. This is the method selected by the Health Care Financing Administration (HCFA). However, HCFA proposes to work only with readily available hospital data. This will introduce another perverse incentive, by penalizing plans that have made a special effort to substitute home-based care for institutional care. Kronick and Dreyfus strongly urge collection of diagnostic data from all encounters, both to address the incentive problem and to support more comprehensive quality monitoring.

The remainder of the book follows from the editors’ recognition that payment adjustment is a fix for some problems but no guarantee of a well-functioning system. Chapters by different authors address the informational needs of Medicare beneficiaries, the enrollment system, trade-offs involved in choosing between standardization and diversity in benefit package design, changes to oversight and regulation that might buttress payment reforms, and the handling of disenrollment. (Disenrollment is significant because even with health-based payment HMOs have an incentive to rid themselves of members with a track record of costs that exceed the average for their group.) The book concludes with a summary chapter that establishes priorities among the recommendations advanced throughout the main body of the text. It includes a helpful table that offers an assessment of the feasibility of each key proposal, plus an assessment of its potential to reduce risk selection.

This book should have great appeal to policy wonks, but may test the patience of those with only a tepid interest in program design. It assumes a fair degree of knowledge concerning Medicare and the changes introduced by the Balanced Budget Act. The audience may be further limited by the focus on Medicare—although considering the millions of people and billions of dollars involved, that focus can scarcely be termed narrow. However, portions of the discussion, especially concerning risk adjustment methodologies, may be highly relevant to other payors and programs. (The chapters on information for beneficiaries and enrollment are the least generalizable, since much of the analysis is shaped by the substantial limits on coverage under fee-for-service Medicare and hence the importance of supplemental or Medigap policies.) As with most collections, the reader should expect some unevenness in quality and some repetition of material.

Papers from the 1997 conference were updated for inclusion in the book, but the rapid pace of changed in this area may doom the book to obsolescence in a matter of months. The topic of the moment is the HMO exodus from Medicare+Choice, a development not addressed in the book. For those who would benefit from a clear and comprehensive treatment of risk adjustment and related issues, this final point translates into "read it now!"

 
Books Received

Healthcare Law and Ethics: Issues for the Age of Managed Care by Dean M. Harris (Health Administration Press 1999)

Health Policymaking in the United States (2d ed.) by Beaufort B. Longest, Jr. (Health Administration Press 1998)

Managing Healthcare Compliance by Scott C. Withrow (Health Administration Press 1999)

Measuring the Prices of Medical Treatments by Jack E. Triplett (Brookings Institution Press 1999)

Southwick's The Law of Healthcare Administration 3d ed. by J. Stuart Showalter (Health Administration Press 1999)

State Medical Boards and the Politics of Public Protection by Carl F. Ameringer (Johns Hopkins Univ. Press 1999)

The Future U.S. Healthcare System: Who Will Care for the Poor and Uninsured? Edited by Stuart H. Altman, Uwe E. Reinhardt, Alexandra E. Shields (Health Administration Press 1998)

The Law and the Public's Health 5^th ed. by Kenneth R. Wing (Health Administration Press 1999)

FOCUS ON AN ADJUNCT PROFESSOR

Donna Schmerin Clark

Donna Schmerin Clark has taught Fraud and Abuse as an Adjunct Professor of Law at University of Houston Law Center since 1997. Ms. Clark, Of Counsel to Vinson & Elkins, LLP, is a member of the firm's Health Industries Practice Group.

Her primary practice orientation is the representation of health care providers in federal and state regulatory matters, with a focus on Medicare and Medicaid reimbursement and compliance with referral laws. She has particular expertise in Medicare and Medicaid reimbursement for the services of physicians practicing in both private and academic settings, and has assisted physician groups in matters ranging from the interpretation of Medicare law to handling reimbursement controversies and health care fraud and abuse investigations. She also structures joint ventures and contractual and other relationships between health care providers, and evaluates these ventures and relationships for compliance with applicable federal and state laws.

She has published a number of health law related articles, lectured before many physician groups and at various health law conferences sponsored by the State Bar of Texas on a range of topics, including reimbursement issues and fraud and abuse. With the American Academy of Medical Colleges, she has presented a program to University of Arkansas faculty physicians on teaching physician regulations.

Ms. Clark graduated from the University of Florida, with a B.S. in nursing with high honors in 1974. She received her M.S. in maternal child health nursing in 1980 from

Texas Woman's University and graduated from the University of Houston Law Center, receiving a J.D. with honors in 1983.

FROM THE WEB

Parts of the Institute's Web site have moved to provide easier Web addresses. The Institute's homepage is at www.law.uh.edu/healthlaw. The homepage for Health Law Perspectives: Analyses of Recent Developments in Health Law is now located at www.law.uh.edu/healthlawperspectives. The Health Law News homepage can now be found at www.law.uh.edu/healthlawnews. The Web site's new HealthPathfinder links page, discussed in detail on page 1, can be accessed at www.law.uh.edu/healthpathfinder.

The following articles were posted in Health Law Perspectives on the Institute's web site at www.law.uh.edu/healthlawperspectives between May 15, 1999 and August 1, 1999:
 

As August Deadline Approaches, Privacy Debate Heats Up  Extensive Texas Physician Profiles Will Soon Be Available to Public Fertility Clinics Should Bear the Extraordinary Medical Costs of Multiple Births  New Statutory Rules for Witnessing Advance Directives in Texas  Employer Won't Test for Violence Gene  Ombuds Programs for Managed Care  Checking Out Your Doctor’s Credentials on the Internet  Supreme Court Rules on Olmstead Case  Advances in Fetal Surgery Raise Many Issues  Changes in Enforcement at the Office for Protection from Research Risks  TMA- and AMA-Supported State Legislative Proposal May Allow Some Physicians to Collectively Negotiate with Managed Care Insurers in Texas

Treating Instead of Punishing Drug Addiction  The New "Natural Death Act:" Will It Afford a More Just Result?  Mandated Mammography Benefits--Do Exceptions Swallow the Rule?  Food-borne Illness from Raw Shellfish  Market Making Inroads in Organ Transplantation, Assisted Reproduction  Insurance Coverage for Medical Foods  Texas Legislature Passes Medical School Exception to the Corporate Practice of Medicine Doctrine  State Legislatures Address Issues of Protecting Health Care Workers From Sharp Medical Instruments  Change the Way We License Texas' Teen Drivers  States Refine Laws Targeting Genetic Discrimination  State Legislatures Consider What to Do about HMO Insolvencies

First Neibel Scholarship Awarded

Amber Orr, a third-year student at the University of Houston Law Center, is the first recipient of the John Neibel Health Law Scholarship Fund. She has demonstrated a strong commitment to public interest work. She has been a leader and active member of the Association of Women in Law, the Public Interest Law Organization, and the Health Law Organization. She has also been involved in research projects for the Health Law & Policy Institute.

Ms. Orr was awarded $500 from the John Neibel Health Law Scholarship Fund. The Fund was established by alumni donors in 1998 in honor of the former Law Center dean and current professor who inspired the creation of the Health Law & Policy Institute in the 1970s.

PRESENTATIONS

Mary R. Anderlik

"Access to Healthcare," Disability Awareness Day/Americans with Disabilities Act 9th Anniversary Celebration, Houston, Texas, July 24, 1999

Mary Anne Bobinski

"HIV Issues for the General Practitioner," (DELAA) Disability & Elder Law Attorney Association, Houston, Texas, July 19, 1999

"Health Law Topics," University of Houston Health Center Staff In-service Training Session, July 21, 1999

"HIV/AIDS and the Older Adult," jointly sponsored by the Seniors Law Committee, Medicine in Law Committee, and the Young Lawyers Division of the Torts and Insurance Law Section, ABA Annual Meeting, Atlanta, Georgia, August 9, 1999

"HIV Issues in the Workplace," Harris County Attorneys Continuing Legal Education program, August 18, 1999

Laura F. Rothstein

"Current Issues in Health Law & Policy," National Youth Leadership Forum, Houston, Texas, July 21, 1999

"How Are the Courts Shaping the ADA?," The Americans with Disabilities Act for Employers -- cosponsored by Equal Employment Opportunity Commission and The Institute for Rehabilitation and Research, Houston, Texas, July 26, 1999

Mark A. Rothstein

"Federal Policy on Genetic Information and Medical Surveillance," Milbank Fund/Ramazzini Institute, Austin, Texas, July 23, 1999

"Developments in Genetics and Their Implications for the Federal Courts," Federal Judicial Center, Baltimore, Maryland, August 9, 1999

"The Confidentiality of Health Information in the Workplace," Washington Department of Health, Seattle, Washington, August 20, 1999

"Hepatitis and the Law," American Liver Foundation, Houston, Texas, September 19, 1999

Ronald L. Scott

"There Ought to be a Law: Mandated Health Benefits," National Youth Leadership Forum, Houston, Texas, July 7, 1999

"Introduction to U.S. Legal System," Library of Congress Russian Leadership Program, Houston, Texas, August 9, 1999

William J. Winslade

"Traumatic Brain Injury: New Directions in Treatment, Public Policy, and

Prevention," Keynote Speaker, Brain Injury Association of New Hampshire's

16th Annual Conference, Concord, New Hampshire, May 26, 1999

"Privacy and Confidentiality in Health Care," Medical Ethics Lecture, Valley

Regional Medical Center, Brownsville, Texas, June 24, 1999

PUBLICATIONS

Mark A. Rothstein

Employment Law Treatise (2 vols.)(West Group, 2d ed. 1999)(with Charles B. Craver, Elinor P. Schroeder, and Elaine W. Shoben)

Employment Law Hornbook (West Group, 2d ed. 1999)(with Charles B. Craver, Elinor P. Schroeder, and Elaine W. Shoben)

Cases and Materials on Employment Law (Foundation Press)(4th ed. 1998)(1999 Supp.)(with Lance Liebman)

"Secondary Uses of Cord Blood Information," 8 Cancer Research, Therapy & Control 351 (1999)

Ronald Turner

"Physicians and Unions," Communique Newsletter (August 1999), a publication distributed nationwide to 31,000 anesthesiologists

FACULTY NOTES

William J. Winslade has been named spokesperson for a national campaign launched by Jiffy Lube International on July 28,1999 to educate the public about the benefits of wearing protective headgear while cycling and inline skating to reduce traumatic head injuries. Jiffy Lube is selling helmets through participating lube service centers at 35% below the suggested retail price. According to Winslade, author of Confronting Traumatic Brain Injury, head injuries are the primary cause of 80% of bicycle fatalities, and helmets can reduce that risk by 85%.

OUR GRADUATES

Cynthia Gorman (J.D. '98) recently began working for the Children's Justice Act Project, which is part of the Texas Department of Protective and Regulatory Services.

Thomas George (LL.M. '95) taught Health Law Policies at the University of Texas School of Law.

Raed Gonzalez (LL.M. '99) has become an associate at Brennan & Associates in Houston. His practice focuses on health law, Social Security disability, family law, personal injury, and medical malpractice.

Back to Top of Health Law News
Special Section -- Supreme Court Review
Back to Health Law News Home Page
Back to Health Law & Policy Institute

Introduction

During its 1998-1999 term, the United States Supreme Court considered a number of health law cases. Some of the issues covered in these cases include disabilities, insurance fraud, and patient dumping. The major health law cases of the 1998-1999 term of the Supreme Court will be examined in this special section.

The Supreme Court decided a number of disabilities cases. In the workplace context, the coverage of the Americans with Disabilities Act (ADA) was narrowed by some cases. In Murphy v. United Parcel Service, 119 S. Ct. 2133 (1999), the Court held that the ADA did not protect a truck driver with hypertension. In Sutton v. United Airlines, 119 S. Ct. (1999), the Court ruled that twin sisters who applied to be airplane pilots were not covered by the ADA because their myopia was corrected with eyeglasses. In Albertsons Inc. v. Kirkingburg, 119 S. Ct. 2162 (1999), the Court ruled thatan employer that requires an employee to meet an otherwise applicable federal safety regulation does not have to justify enforcing the regulation solely because the standard may be waived experimentally in an individual case. In Cleveland v. Policy Management Systems Corp., 119 S. Ct. 1597 (1999), the Court held that a disabled individual's claim that she was totally disabled for SSDI purposes did not estop her from proving an essential element of her ADA claim, that she could perform the essential functions of her job, at least with reasonable accommodation. In Wright v. Universal Maritime Serv. Corp., 525 U.S. 70 (1998), the Court looked at whether a collective bargaining agreement's arbitration provision controlled an employee's disability discrimination claim and decided that in this case, it did not. In this Special Section, Ron Turner takes a close look at these employment cases.

On the other hand, the Court held in Olmstead v. L.C., 119 S.Ct. 2176 (1999), that under appropriate circumstances, the ADA and its regulations require states to move mentally retarded individuals out of institutions and into community settings. Also, in Cedar Rapids Community School District v. Garret F., the Court ruled that the Individuals with Disabilities Education Act (IDEA) required a school district to provide certain nursing services to a disabled student. Laura Rothstein examines these two cases.

The Court also considered the applicability of the Racketeer Influenced and Corrupt Organizations Act (RICO) in the context of health insurance fraud. In Humana Inc. v. Forsyth, 525 U.S. 299 (1999), the Court held that the McCarran-Ferguson Act, which grants the states authority to regulate the insurance industry and prohibits the application of federal law that would interfere with state regulation, does not block application of RICO to the insurance industry. The Supreme Court held that RICO can be applied in harmony with state insurance laws. In this Special Section, Seth Chandler considers Humana Inc. v. Forsyth.

The Supreme Court looked at the Emergency Medical Treatment and Active Labor Act (EMTALA), under which hospitals are required to screen and stabilize patients suffering from an emergency medical condition and are prohibited from transferring unstable patients. In Roberts v. Galen of Virginia, Inc., 525 U.S. 249 (1999), the Court held that EMTALA contains no express or implied improper motive requirement. Joan Krause discusses Roberts v. Galen of Virginia, Inc.

The Court also addressed a number of other health-related issues, including, for example, disability and welfare benefits issues, Medicare home health reimbursement issues, and regulation of advertising by a non-profit dental association. In American Manufacturers Mutual Insurance Co. v. Sullivan, 119 S. Ct. 977 (1999), the Court determined that, even though permitted by Pennsylvania's workers' compensation law, a private insurer's decision to withhold payment and seek utilization review of the reasonableness and necessity of particular medical treatments is not fairly attributable to the state so as to render the private entity a state actor subject to the Fourteenth Amendment's constraints.

In Unum Life Insurance Co. of America v. Ward, 119 S. Ct. 1380 (1999), the Court held that because California's notice-prejudice rule (under which an insurer cannot avoid liability because the proof of claim is untimely, unless the insurer shows it suffered actual prejudice from the delay) is a "law ... which regulates insurance," it is not preempted by ERISA, but the agency rule deeming the policyholder-employer the agent of the insurer "relate[s] to" ERISA plans, and therefore, does not occupy ground outside ERISA's preemption clause. In Your Home Visiting Nurse Services, Inc. v. Shalala, 525 U.S. 449 (1999), the Supreme Court held that the Provider Reimbursement Review Board does not have jurisdiction to review the refusal of a fiscal intermediary to reopen a reimbursement determination. In California Dental Association v. Federal Trade Commission, 119 S. Ct. 1604, the Court upheld FTC jurisdiction when a nonprofit professional association representing for-profit businesses contested FTC's regulatory authority over its advertising guidelines.

Roberts v. Galen of Virginia, Inc.

Joan H. Krause
Assistant Professor of Law
Institute for Health Law
Loyola University Chicago School of Law

This year marked the first time that the Supreme Court has addressed the Emergency Medical Treatment and Active Labor Act ("EMTALA"), 42 U.S.C. § 1395dd. In Roberts v. Galen of Virginia, Inc., 525 U.S. 249 (1999), the Court held that no improper motive need be shown in order for a plaintiff to establish a violation of EMTALA?s stabilization and transfer requirements. However, the Court's brief, per curiam opinion offered little guidance on other aspects of the law, and left open a number of significant questions.

EMTALA, also known as "COBRA" (for the Consolidated Omnibus Budget Reconciliation Act of 1986, of which EMTALA was a part), was established to prevent hospitals from "dumping" indigent patients. Under the law, hospitals that participate in the Medicare program and operate an emergency room must provide an "appropriate medical screening examination" to any individual who presents for treatment. 42 U.S.C. § 1395dd(a). If the hospital determines that the patient has an "emergency medical condition," the hospital may not transfer the patient until such condition is stabilized. Id. at § 1395dd(b).

In Roberts, petitioner Wanda Johnson was admitted to respondents' hospital in Louisville, Kentucky, after being run over by a truck. After six weeks of treatment, during which her condition remained "volatile," she was transferred to the Crestview Health Care Facility in Indiana. Her condition deteriorated significantly upon arrival at Crestview, and she was taken to the Midwest Medical Center, where she remained for several months and incurred substantial medical expenses. Her guardian, Jane Roberts, filed suit under EMTALA, alleging that respondents had failed to stabilize Ms. Johnson's emergency medical condition before transferring her. The District Court granted summary judgment for respondents. The Court of Appeals for the Sixth Circuit affirmed, holding that in order to state a claim under § 1395dd(b), the plaintiff had to show that the inappropriate stabilization resulted from an "improper motive," such as the patient's indigence, race, or sex.

The Supreme Court reversed, finding no improper motive requirement in the EMTALA stabilization and transfer provisions. The Court noted that the Sixth Circuit?s opinion extended its earlier holding in Cleland v. Bronson Health Care Group, Inc., 917 F.2d 266 (6th Cir. 1990), which held that an improper motive must be proven in order to establish a violation of EMTALA's screening requirements (§ 1395dd(a)). Without addressing the validity of Cleland, the Court explained that the stabilization and transfer provisions in § 13955dd(b) contain no such requirement of "appropriateness." Finding no express requirement that an improper motive be proven, nor one that the stabilization be "appropriate," the Court held that § 1395dd(b) contains "no express or implied 'improper motive' requirement." The immediate impact of Roberts is likely to be limited, since only the Sixth Circuit has interpreted the EMTALA stabilization and transfer provisions to require proof of an improper motive. The case may be more significant, however, if it is an accurate predictor of the Court's approach to future EMTALA cases. The Court's narrow opinion carefully parsed the statutory language, pointing out the lack of an "appropriateness" criterion in the stabilization and transfer provisions as compared to the screening provisions. Yet the significance of this distinction is difficult to discern, largely because the Court explicitly did not affirm Cleland's holding (i.e., that the use of the term "appropriate" in the screening provisions requires proof of an improper motive). On the contrary, the Court indicated in a footnote that the Sixth Circuit's interpretation is in conflict with the law of other circuits -- perhaps indicating a general reluctance to read improper motive requirements into the statute. Yet without an improper motive requirement, critics fear that EMTALA's provisions will come to be interpreted as coextensive with state malpractice laws.

The hospital industry has also expressed disappointment with the Court's narrow opinion, preferring that the Court had used the case to address a broader range of EMTALA issues -- such as whether the hospital's lack of knowledge that an emergency condition exists will preclude liability, or whether EMTALA ceases to apply once a patient's emergency condition initially has been stabilized. On one issue, however, Roberts may provide broader guidance: because Ms. Johnson had been admitted to respondent's hospital at the time of the allegedly improper transfer, the case suggests that EMTALA applies to transfers of inpatients as well as transfers from the hospital's emergency room. In fact, representatives from the Department of Health and Human Services Office of the Inspector General, which enforces EMTALA, have cited Roberts in support of their position that the law applies to patients anywhere on the hospital's grounds. Thus, despite its narrow holding, Roberts has provided a brief glimpse into the Court's approach to this confusing and controversial area of law, and sets the stage for future decisions.

Olmstead v. L.C.: A Compass or a Roadmap?

By Laura F. Rothstein
Law Foundation Professor of Law
University of Houston Law Center

University of Houston Law CenterPolicymakers have long been troubled by how to best respond to the needs of individuals who cannot carry out some or many basic life activities independently or safely. These individuals include those whose physical or mental impairments affect the ability to dress and eat, those whose mental retardation affects their ability to manage large amounts of money, and those whose mental illness requires that they take medication or be supervised so that their conduct does not disrupt or endanger their home or workplace.

Over the last century, public policy has evolved from a warehousing and/or hospitalizing everyone from individuals with epilepsy to those with severe mental retardation. In the past quarter century, policymakers have recognized that many, if not most, of these individuals could function in less restrictive settings if only supportive services in the community were available. Just how far social service agencies are required to go under various statutory requirements has yet to be fully resolved. The Supreme Court decision in Olmstead v. L.C., 119 S. Ct. 2176 (1999), has shed some light on this question, although the decision leaves many issues unresolved. At its core, the Court has endorsed the underlying philosophy that institutions covered by the Americans with Disabilities Act (ADA) that provide supportive services to individuals with disabilities must do so in community settings where it is appropriate to do so. This is required so long as the individual is not opposed and so long as the agency’s resources allow this reasonable accommodation. While the decision provides a compass to indicate the general direction that state social service agencies should go, it does not provide a detailed roadmap to clarify the details of how to get there. Federal policymakers recognize this and have already begun to work on guidance to help state agencies to develop those roadmaps.

Olmstead v. L.C. challenged the system of providing services to individuals with mental health needs by the state of Georgia. The complainants were two mentally retarded women who had been receiving treatment in institutional settings. Although the opinion of qualified experts was that both women could be provided treatment in community based settings, the state system was slow to place them in such settings. They remained in restrictive settings for many months after it had been determined that a community-based setting would be appropriate. The legal challenge to the program of less than immediate transfer was based on Title II of the ADA, which applies to state and local government provided programs. The plaintiffs claimed that the ADA has a mainstreaming principle that requires that a disabled individual should be placed in the most integrated setting appropriate to the person’s needs. The Supreme Court adopted the basic principle in holding that "Unjustified isolation...is properly regarded as discrimination based on disability." The Court went on to recognize, however, "the states’ need to maintain a range of facilities for the care and treatment of persons with diverse mental disabilities, and the States’ obligation to administer services with an even hand."

While the opinion provides a much better compass pointing the direction to what states must do with respect to providing mental health programming (and perhaps other health services) to individuals requiring supportive services, it is far from a detailed roadmap clarifying the details of how to ensure nondiscrimination under the ADA. A number of significant points should be emphasized. One is that the Court notes that "nothing in the ADA or its implementing regulations condones termination of institutional settings for persons unable to handle or benefit from community settings." This is an important signal, particularly in light of the backlash to the deinstitutionalization movement, which many believe went too far in its attempt to remove everyone, no matter how great their need for supervision and other supportive services, out of institutions and into community based settings. Another significant point that may be somewhat obvious is that community-based settings are not to be imposed on individuals who do not choose to accept them.

Of great importance to state policymakers and funding authorities, is the Court’s discussion of the limits of its holding. A key aspect of the decision is the Court’s discussion of whether and when a cost-based defense could be used to avoid moving a qualified individual from an institution to a community-based setting. The Court holds that it is not enough to show that the cost of moving one or two individuals into a less restrictive setting is small compared to the entire state’s mental health budget. Rather, the state may raise the defense by showing that "in the allocation of available resources, immediate relief...would be inequitable, given the responsibility the State has undertaken for the care and treatment of a large and diverse population of persons with mental disabilities."

The Supreme Court and Disabilities Discrimination

In its 1998-99 term, the Supreme Court addressed seven different cases involving disability discrimination and related statutes. Six of these involved interpretations of the Americans with Disabilities Act and one addressed services required under the Individuals with Disabilities Education Act. Five of the six ADA cases were brought in the employment context and these are reviewed elsewhere in this issue by Ron Turner. The case involving community services under the ADA is discussed in a separate commentary. The following, however, is a review of the special education case and an overview of the direction the Supreme Court has taken generally with respect to disability discrimination issues.

The Supreme Court addressed the issue of whether intensive nursing services must be provided to a student as related services under the Individuals with Disabilities Education Act (IDEA) in Cedar Rapids Community School District v. Garret F., 119 S. Ct. 992 (1999). Garret F. was a high school student who had been paralyzed at age four, and who required a variety of services for his physical needs while in school. The services were intensive and costly. The Court held that the educational agency is required to pay for these services during school hours under IDEA, and that these would be considered to be related services, rather than "medical services" which are not required of the schools. For greater detail on the reasoning in the case, see "Supreme Court Issues Further Clarification about Required Health Services Under Special Education Mandates," Health Law Perspectives at Disabilities/990305Cedar.html.

The significance of the case for health policy is that it raises the question of how such expensive supportive services should be paid for. Although the individual and family will not be responsible for these expenses while the individual is a student, at least during school hours, there remains the question of who should pay for these expenses outside of school hours and after a student graduates from high school. Currently, policymakers at the federal and state levels have not really addressed this hard question. It is a question that will increasingly occur for individuals whose needs include intensive supervision, custodial care, and other costly and intensive supportive services.

The L.C. opinion only touches on the issue tangentially. In that case, the individuals needing the supportive services had qualified for support from the state agency. How should these needs be addressed for individuals who do not qualify for state support? Policymakers are only beginning to struggle for answers to these questions. As baby boomers age, and as managed care creates new challenges for accessing private support for these services, the momentum to address this as a policy matter will certainly increase.

Garret F. and L.C. should also be looked at in the overall context of how the Supreme Court has been interpreting disability rights cases. While many advocates for individuals with disabilities have lamented the decisions in Sutton v. United Airlines, Murphy v. United Parcel Service, and Albertson's, Inc. v. Kirkingburg, and criticized the Court for reading the definition of who is covered too narrowly, the record of Supreme Court decisions in this session has been quite positive. The individual with a disability has received a positive result in four of the seven cases, and historically this is similar to the overall record of Supreme Court decisions over the last quarter century. For the most part, the Court has recognized the important underlying principles of the various disability rights statutes (including the ADA, the IDEA, and the Fair Housing Act), and has reached favorable determinations in most cases. While the recent cases narrow significantly who is entitled to protection, once that element has been met, those who have gotten as far as the Supreme Court have fared well. Congress has often reacted to restrictive decisions by amending existing laws or enacting new statutes. In sum, it would seem that the political and legal forces are in place to ensure continued attention to protecting individuals with disabilities.

The ADA and the Workplace:

Recent Supreme Court Decisions

By Ronald Turner
Associate Professor of Law
University of Houston Law Center

The Americans with Disabilities Act of 1990 (ADA) provides, among other things, that no covered employer "shall discriminate against a qualified individual with a disability because of the disability of such individual in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment." A "qualified individual with a disability" is defined by the statute as "an individual with a disability who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires." In addition, the ADA defines "disability" as (1) "a physical or mental impairment that substantially limits one or more of the major life activities of such individual," (2) "a record of such an impairment," or (3) "being regarded as having such an impairment."

Several recent decisions by the United States Supreme Court have addressed, interpreted, and applied the ADA's antidiscrimination provisions and mandate. These decisions are surveyed in this article.

Employee Impairments and Corrective Measures

On June 22, 1999, the Supreme Court issued three decisions dealing with the question of whether a "disability" under and within the meaning of the ADA is to be determined with or without reference to corrective measures taken by the plaintiff.

Sutton v. United Air Lines, Inc., 119 S. Ct. 2139 (1999), presented the corrective-measure question in an ADA case brought by plaintiffs Karen Sutton and Kimberly Hinton, twin sisters with severe myopia (uncorrected vision of 20/200 or worse in the right eye and 20/400 or worse in the left eye) who unsuccessfully applied for employment as commercial airline pilots with United Air Lines. Because the plaintiffs did not meet the airline's minimum vision requirement of uncorrected visual acuity of 20/100 or better, and notwithstanding the fact that their vision with corrective lenses was 20/20 or better, they were not offered positions. Filing suit against United, the plaintiffs alleged that they had been discriminated against in violation of the ADA because their severe myopia constituted a disability (i.e., substantially limited their major life activity of working) or, in the alternative, because the employer regarded them as having a disability.

By a vote of 7-2, the Supreme Court held (1) that "the determination of whether an individual is disabled should be made with reference to measures that mitigate the individual's impairment, including, in this instance, eyeglasses and contact lenses," and (2) that the sisters had failed to properly allege that the employer regarded them as having a disability within the meaning of the ADA. The Court agreed with the employer's argument that the Equal Employment Opportunity Commission's and the United States Department of Justice's regulations stating that the determination of disability is to be made without regard to mitigating measures conflicted with the plain meaning of the ADA. Concluding that the agencies' approach impermissibly interpreted the statute, Justice O'Connor's opinion for the Court stated: "Looking at the Act as a whole, it is apparent that if a person is taking measures to correct for, or mitigate, a physical or mental impairment, the effects of those measures--both positive and negative--must be taken into account when judging whether that person is 'substantially limited' in a major life activity and thus 'disabled' under the Act."

In support of the Court's conclusion that Congress did not intend to provide ADA protection for all persons with uncorrected conditions, Justice O'Connor pointed to the finding in the ADA that some 43,000,000 Americans have one or more physical or mental disabilities. "Had Congress intended to include all persons with corrected physical limitations among those covered by the Act, it undoubtedly would have cited a much higher number of disabled persons in the findings. That it did not is evidence that the ADA's coverage is restricted to only those whose impairments are not mitigated by corrective measures." Because the plaintiffs' vision with corrective lenses was 20/20, they were not "disabled" within the meaning of the ADA.

Turning to the plaintiffs' "regarded as" claim, Justice O'Connor wrote that the ADA permits employer preferences for certain physical characteristics and the establishment of physical criteria. What the statute does not permit is an employment decision based on a real or imagined physical or mental impairment that is regarded as substantially limiting a major life activity. Thus, "an employer is free to decide that physical characteristics or medical conditions that do not rise to the level of an impairment--such as one's height, build, or singing voice--are preferable to others, just as it is free to decide that some limiting, but not substantially limiting, impairments make individuals less than ideally suited for a job."

The Sutton analysis was applied by the Court in Murphy v. United Parcel Service, 119 S. Ct. 2133 (1999). Vaughn Murphy was employed by UPS as a mechanic, a job requiring Murphy to drive commercial motor vehicles. Murphy was fired from that job because the employer believed that his blood pressure exceeded the federal Department of Transportation's health requirements for drivers of commercial motor vehicles. With medication, Murphy could function normally; without medication, his blood pressure was approximately 250/160. Again writing for a 7-2 majority, Justice O'Connor concluded that the question whether the determination of Murphy's disability was to be made with reference to mitigating measures was answered in the affirmative by Sutton. Because Murphy was not substantially limited in any major life activity when medicated, he was not disabled under the ADA. (Because the question whether Murphy was disabled when taking his medication was not before the Court, Justice O'Connor concluded that the question whether Murphy was disabled despite or because of negative side effects of his medication could not be considered.) Nor was Murphy unlawfully regarded as disabled by the employer. At most, Justice O'Connor concluded, Murphy established that he was unable to perform the job of mechanic when that job required driving a commercial motor vehicle.

The third decision, Albertson's, Inc. v. Kirkingburg, 119 S. Ct. 2162 (1999), reiterated that mitigating measures must be taken into account in judging whether an individual is or is not disabled. Hallie Kirkingburg, a truck driver, had monocular vision and was fired by the employer for failing to meet the DOT's vision standards for commercial truck drivers. A seven-justice majority, in an opinion by Justice Souter, held that mitigating measures--in that case, Kirkingburg's development of subconscious mechanisms for coping with his visual impairment--"must be taken into account in judging whether an individual possesses a disability. We see no principled basis for distinguishing between measures undertaken with artificial aids, like medications or devices, and measures undertaken, whether consciously or not, with the body's own systems." In addition, and given the variables of the condition, the Court held that monocular vision is not a per se disability under the ADA. Consistent with the statutory obligation to determine the existence of disabilities on a case-by-case basis, the Court held "that the Act requires monocular individuals . . . to prove a disability by offering evidence that the extent of the limitation in terms of their own experience . . . is substantial."

The Court's June 1999 rulings that mitigating measures must be considered in disability determination pleased management representatives who feared what they considered to be an expansive application of the ADA to more than 100 million individuals with corrected or correctable impairments. Disability rights advocates, not surprisingly, have a different view of the Court's decisions. One of the drafters of the ADA, Professor Chai Feldblum, has suggested that after the Court's decisions "the only people who we know have a disability are those who are blind, deaf and in a wheelchair, and those who have HIV." David D. Savage, ADA Umbrella Starting to Close, ABA Journal (August 1999), at p. 44. In the aftermath of the Court's decisions, it can be anticipated that questions regarding the disability status of individuals with diabetes, epilepsy, and heart disease will arise. The lower courts' consideration and answers to these questions in the coming months will provide the best indicator of the impact of the Court's rulings on those seeking protection under the ADA.

Interaction of the ADA and the Social Security Act

In another case decided in the Court's just-completed Term, Cleveland v. Policy Management Systems Corporation, 119 S. Ct. 1597 (1999), the Court held that the pursuit and receipt of Social Security Disability Insurance benefits did not automatically estop the recipient from pursuing a claim under the ADA. A unanimous Court, in an opinion by Justice Breyer, concluded that claims under the Social Security Act (in which an individual claims disability and inability to work) and the ADA (in which a plaintiff asserts that he or she can perform the essential functions of the job with reasonable accommodation) are not in inherent conflict. An SSA determination of disability does not consider "reasonable accommodation" and a person seeking SSDI benefits does not have to refer to such accommodation when applying for benefits. "The result is that an ADA suit claiming that the plaintiff can perform her job with reasonable accommodation may well prove consistent with an SSDI claim that the plaintiff could not perform her own job (or other jobs) without it." Furthermore, the Court noted that the SSA authorizes a nine-month trial-work period during which SSDI recipients can receive benefits while they are actually working. "And the nature of an individual's disability may change over time, so that a statement about that disability at the time of an individual's application for SSDI benefits may not reflect an individual's capacities at the time of the relevant employment decision." In light of this aspect of the Court's decision, a plaintiff will not be judicially estopped and thrown out of court simply because he or she sought SSDI benefits prior to filing an ADA suit.

Union Waiver of Employees' Right to a Judicial Forum

An important issue relative to litigation under and enforcement of the ADA was considered by the Court in Wright v. Universal Maritime Service Corporation, 525 U.S. 70 (1998). In that case, an employee filed an ADA claim against several stevedore companies in federal district court. The companies argued that the suit could not be maintained because the employee failed to pursue arbitration of the disabilities claim under their collective bargaining agreement with the employee's union. The employee sought to present his claim to a federal judge and jury as provided by the ADA, while the companies sought to keep the claim out of court and to have it decided by a labor arbitrator.

A unanimous Supreme Court rejected the companies' position. According to Justice Scalia's opinion for the Court, the well-established presumption of arbitrability applicable to disputes arising over the application and interpretation of collective bargaining agreements does not extend to an employee's statutory employment discrimination claim. Moreover, any union-negotiated waiver of employees' statutory right to a judicial forum for resolution of employment discrimination claims must be explicit, clear, and unmistakable. The labor agreement before the Court in Wright did not meet this standard. The general arbitration clause providing for the arbitration of "matters under dispute" could be understood to apply to disputed contractual matters, and the contract contained no explicit incorporation of statutory antidiscrimination requirements. It is noteworthy that the Court did not reach the significant questions of whether a clear and unmistakable waiver and a collectively-bargained predispute agreement to arbitrate employment discrimination claims are enforceable.

By Seth J. Chandler
Associate Professor of Law
University of Houston Law Center

Since the Civil War period, two barriers have impeded federal regulation of the insurance industry. The first shield -- virtually impenetrable for more than 75 years -- was the 1869 Supreme Court case of Paul v. Virginia, 75 U.S. 168 (1869),in which the Supreme Court held that the business of insurance was not "commerce" within the meaning of the United States Constitution. Denied its most customary constitutional power source, the federal government could neither object to most forms of state regulation of the insurance industry nor attempt to supplement those regulatory regimes with its own statutes.

The impediment to federal regulation created by Paul collapsed temporarily in 1944 when the Supreme Court reversed course in States v. South-Eastern Underwriters Ass'n, 322 U.S. 533 (1944). In South-Eastern Underwriters, the court mustered a 4-3 majority to hold that Paul's cramped notion of commerce, if it had ever made any sense, was no longer tolerable in light of the Roosevelt-era expansion of the concept. The federal government was thus liberated to throw its commerce clause powers, including its antitrust arsenal, at the insurance industry and to invoke the mighty "dormant commerce clause" to threaten the panoply of protectionist state legislation that had grown up under the constitutional shield created by Paul v. Virginia.

Complete liberation -- subdued in any event by the need to fight a real war -- was short-lived, however. Heavy lobbying by much of a terrorized insurance industry led in 1945 to the McCarran-Ferguson Act, in which Congress renounced at least casual use of much of the power accorded it by the South-Eastern Underwriters case. A doctrine of clear statement and "inverse preemption" was instead substituted. "No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance," Congress announced, "unless such Act specifically relates to the business of insurance." Regulation of the insurance industry, including health insurance, was thus left largely to the states.

Since 1945, the conditions needed to trigger the McCarran-Ferguson renunciation have been a subject of controversy. And resolution of the controversy has grown more important along with the extent of powers that the federal government might possess to tame the powerful insurance industry if only the McCarran-Ferguson clear statement requirement would recede. The 1999 Supreme Court case of Humana, Inc. v. Forsyth, 525 U.S. 299 (1999), provides the federal government with at least one such weapon -- its racketeering statutes.

The Humana case involved allegations of a multi-year scheme by a large managed care organization to cheat Nevada beneficiaries of group health insurance. The managed care organizations had two prices for medical procedures: the low price used for computing Humana-controlled insurer liability and the high price used for computing insured responsibility. Surgery that the Humana hospital actually billed at $1550 would be represented to the policyholder as costing $5,000 and thus requiring coinsurance of 20% or $1,000. The Humana insurer (told the true price) would pay the remaining $550, which would have been its legal responsibility only if the medical services actually cost $687.50 ($550/80%). The 80/20 system represented to policyholders was thus cleverly perverted into a scheme in which the policyholder often paid more for medical services than did the insurer.

Caught by the Nevada Attorney General's office, Humana escaped crippling state law punishment for this fraud by paying the Nevada Insurance Commissioner $50,000. Unsatisfied, beneficiaries of the Humana policies sued Humana under federal racketeering statutes (RICO) for treble the actual damages -- an amount alleged to be in considerable excess of $50,000. They also sued under other federal and state laws offering less drastic remedies.

Humana's defense to the RICO counts -- supported by two federal circuits and rejected by others -- was the McCarran-Ferguson Act. Allowing federal law to tread where Nevada had already gone (however lightly) would interfere with state regulation of the insurance business. What, after all, was the point of negotiating with state authorities, if the federal government would lend its courts and its laws to those seeking additional vengeance?

By a 9-0 vote, the Supreme Court rejected Humana's broad notion of inverse preemption. Instead, it borrowed from the National Association of Insurance Commissioner's telling brief opposing inverse preemption, to read McCarran-Ferguson renunciation to require a more direct conflict between state and federal law. "When federal law does not directly conflict with state regulation, and when application of the federal law would not frustrate any declared state policy or interfere with a State's administrative regime," wrote Justice Ginsburg, "the McCarran-Ferguson Act does not preclude its application."

Here there was no such conflict -- at least not on paper. Nevada provided itself and its citizens serious statutory and common law remedies to prevent insurance fraud. Punitive damages beyond the treble damages of RICO were potentially available. The fact that these remedies had not been availed of in the particular case evidently did not mean that there was any conflict with the use of strong federal remedies, such as RICO. Federal and state policies were complementary rather than contradictory.

The impact of Humana is likely to be two-fold. In the short run, it will embolden lawyers to try to use RICO and other federal weapons to police an insurance industry that some maintain is able to overwhelm state regulators. While Humana does not guarantee the invariable success of such attacks -- the extent of inverse preemption will still need to be decided case by case and state by state -- it lowers the risk previously associated with such litigation. For a health insurance industry beset by allegations of fraud and misconduct, this is big news indeed.

In the long run, however, Humana may catalyze a process in which state legislatures more clearly delineate the extent to which they want the federal government "helping them" with their "complementary" regulatory regimes. Nothing in Humana suggests, for example, that a state could not, through its own clear statement of independence in the insurance arena, prevent federal courts or regulators from interfering with cozy yet salutary regulatory regimes in which perceived interests of solvency and stability trump desires to punish insurer excesses. Whether such clear state assertions of independence would affect ebb and flow of Congressional renunciation under the McCarran-Ferguson Act remains to be seen. In the mean time, however, Humana unleashes new weaponry to be used against perceived insurer misconduct.

Back to Top of Health Law News
Special Section -- Supreme Court Review