U.S. Supreme Court Rulings - Harder to Sue HMO's. Easier to Sue for Discrimination

Author Subject: U.S. Supreme Court Rulings - Harder to Sue HMO's. Easier to Sue for Discrimination
Del Posted At 18:01:15 06/19/2000

The Supreme Court today made it easier to sue for
discrimination but harder for patients to sue their HMOs.

In the first case, the Court unanimously held that if an
employer lies about the reason for a firing, the jury can
simply infer that the real reason was discrimination - the
plaintiff doesn't have to show direct evidence of
discriminatory intent.

The Court said that "a plaintiff's prima facie case,
combined with sufficient evidence to find that the
employer's asserted justification is false, may permit the
trier of fact to conclude that the employer unlawfully

"Proof that the defendant's explanation is unworthy of
credence is simply one form of circumstantial evidence that
is probative of intentional discrimination, and it may be
quite persuasive."

The case is Reeves v. Sanderson Plumbing Products, Inc.,
No. 99-536. It is available at:

In the second case, the Court unanimously held that an HMO
can't be sued under ERISA for breach of fiduciary duty
where it delayed sending a patient for treatment.

The HMO in this case maintained a secret incentive plan
that based doctors' bonuses on how much money they saved
the HMO by limiting available treatment and tests. The
plaintiff's appendix ruptured because the HMO delayed
sending her to the hospital for an ultrasound.

The patient argued that this constituted a breach of
fiduciary duty under ERISA.

But the Court said that "[t]he kinds of decisions...claimed
to be fiduciary in nature are...mixed eligibility and
treatment decisions...[W]e think Congress did not intend...
any...HMO to be treated as a fiduciary to the extent that
it makes mixed eligibility decisions acting through its

The case is Pegram v. Herdrich, No. 98-1949. It is
available at:

Be sure to read the next issue of Lawyers Weekly USA for
in-depth analysis of what these decisions mean for
practicing lawyers!

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