Cigna Healthcare of Texas, Inc. v. Calad

CIGNA v. Calad was a Supreme Court of the United States appeal and ruling, where CIGNA Healthcare, Inc. challenged a United States Court of Appeals for the Fifth Circuit ruling in favor of Mrs. Ruby Calad, who was insured under her husband's employer's self-funded medical insurance plan in the State of Texas. This was a Landmark Supreme Court Case.

The facts that had been established and were in the record for purposes of the Supreme Court decision were that Mrs. Calad had had a hysterectomy in a CIGNA-approved Hospital, and as Administrator of Mr. Calad's employer's health plan, a CIGNA nurse had preapproved 1 night's hospital stay for the procedure. Mrs. Calad was discharged home the day following the surgery, despite the fact the surgeon who performed the surgery felt that Mrs. Calad needed more time in the hospital to convalesce from the surgery. Mrs. Calad, following discharge, experienced post-surgery complications, for which she had to be emergently readmitted to the hospital. Ms Calad had sued CIGNA for damages. The District Court Judge (where ERISA cases must be tried) had ruled against Calad based on the Judge-made-law of ERISA, being beholden to Higher Court Decisions, awarding no monetary damages, as monetary damages are not one of the 3 so-called "Equitable Remedies" allowed by ERISA for redress for loss resulting from medical-related negligence when the insurance is underwritten in some way by a private employer, as was the plan of Mr. Calad.

Mr. Calad's company medical plan was funded by his private employer but "Administered" by CIGNA, in an "HMO"-type option, which was on its face one of the most advantageous of several plans offered by Mr. Calad's employer, with the lowest monthly premiums and the lowest co-pays for medical services.

Mrs. Calad appealed the US District Court ruling to the United States Court of Appeals for the Fifth Circuit, who heard the case and overturned the lower court's ruling and remanded the case back to the Texas State Court for trial, where it could be tried in light of the US Appellate Court ruling and interpretation, and a judge or jury would be allowed to determine "collateral damages," i.e. monetary award, relief that may be sought in a Court of Law but not in a Court of Equity.

The decision to remand had been informed by the fact that Texas had just enacted a law allowing 3rd-party review of Managed Care decisions to determine whether the decision had been negligent, and also an analysis by the 5th Circuit Court of recent Supreme Court ERISA-related rulings that had dated back to a Landmark Supreme Court ERISA ruling in the case of "Pilot Life Ins. Co. v. Dedeaux."

Argued at the same time was an appeal in the case of "Aetna Health Inc. v. Davila".

Aetna Health Inc. v. Davila was a case where Mr. Davila's physician had given him a prescription for pain in light of the fact he could not take other oral medications due to stomach problems. The pharmacy would not fill the prescription because it was not on Aetna's "formulary," and the pharmacy offered the replacement that was in Aetna's formulary. Mr. Davila's doctor appealed the decision to Aetna in writing, who turned down the appeal. Mr. Davila took the substitute offered by the pharmacy and had severe gastrointestinal side effects. He had to have part of his stomach removed and now could not take any medications by mouth. The 5th Circuit Court had ruled for Mr. Davila, remanding the case to a Lower Texas Court, again in light of the new Texas law of review of managed care decisions. Aetna appealed the 5th Circuit Court decision to the United States Supreme Court.

Because of their similarity, both the CIGNA appeal and the Aetna appeal were argued before the Supreme Court together, determining the reach that "Pilot v. Life" might have on HMOs, with the 5th Circuit Court possibly having reversed prior ERISA-related US Supreme Court decisions.

Making arguments before the Court included lawyers for CIGNA and Aetna, a lawyer arguing on behalf of the State of Texas, and some "Friend of the Court" arguments.

The Supreme Court ruling struck down the two 5th Circuit Court of Appeals rulings.

The case was well-celebrated by the HMO-like managed healthcare entities such as CIGNA and Aetna and other employer-sponsored HMO plans, and by major private employers, who gained a fiscal advantage with this decision; as medical negligence complaints against HMO's who managed private company plans would fall under ERISA and could not be tried in state court where other medical negligence complaints may be tried.

The State of Texas lost its right to ensure the safety of its residents in healthcare settings when the sponsor of one's insurance is a private employer. The authority to protect the life, health and welfare of its citizens in healthcare environments is retained in all states when the health insurance is government-sponsored (federal, state, and local), Church-sponsored, or individually purchased insurance policies or self-pay. The Courts had long before determined that such legal complaints were not of Federal jurisdiction, as ERISA saves such complaints by preemption (presumably due to separation of church and state and because the basis of ERISA had been on the "interstate commerce" authority to the federal government, which applied to "Companies," and ERISA stated the need for private employers that conducted business across state lines to not have to deal with the laws of each state for their employees who worked in multiple states.

Other than this, per the United States Constitution, regulation of health care and insurance, among other industries such as banking, is reserved to the States.

External links

• "United States Court of Appeals, Fifth Circuit, Opinion for Calad v. CIGNA et al". Google Scholar. 
• "Supreme Court Opinion, Pilot Life Ins. Co. v. Dedeaux". Google Scholar. 
• "IN THE Supreme Court of the United States CIGNA HEALTHCARE OF TEXAS, INC., Petitioner, v. RUBY R. CALAD, et al., Respondents." (PDF).  (287 KB)
• "CIGNA v. Calad Summary of Oral Arguments" (PDF).  (37.7 KB)