Lynam v. Health Plan of Nevada (Nev. March 21, 2012)
The plaintiff, Donald Lynam, received managed health care services from a health plan. As part of his “managed care,” he was referred by the health plan to a medical services provider for treatment. During the course of his treatment, allegedly through the unsafe practices of the provider, he contracted hepatitis C. He sued the health plan asserting that the plan “knew or should have known” about the unsafe conditions and failed to have a quality assurance program as required by Nevada law.
The health care plan asserted ERISA preemption as a defense and the trial court accepted the defense. Noting that while ERISA is broad, the Supreme Court also noted it is not presumed to preempt a state’s police powers. If the health plan had leased out its own providers (rather than facilitating selection of providers), the ERISA would not preempt state law. Likewise, if it had purchased a policy from a HMO, ERISA would also not preempt the application of state law.
Since the allegations in the complaint and moving papers did not present sufficient information to determine whether ERISA would preempt the claims, the case was remanded to the trial court to give the plaintiff the opportunity to prove Nevada law applied.
A copy of the decision can be found here