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U.S. Court In Pennsylvania Holds ERISA Does Not Impose Duty To Disclose Physician Incentives

 
 

HLD, v. 30, n. 5 (May 2002)

U.S. Court In Pennsylvania Holds ERISA Does Not Impose Duty To Disclose Physician Incentives

Plaintiff Donna Horvath was enrolled in a health plan operated by Keystone Health Plan East, Inc. (Keystone), which was a benefit from her employer. Horvath alleged that Keystone violated its fiduciary duty under Employee Retirement Income Security Act of 1974 (ERISA) by failing to disclose its physician compensation scheme, which included the use of physician incentives. Horvath alleged that the use of physician incentives negatively impacted the independent medical judgment of the primary care physicians.

The U.S. District Court for the Eastern District of Pennsylvania granted summary judgment in favor of Keystone. First, the court held that, regardless of whether Keystone is a fiduciary under ERISA, "the circumstances complained of fall outside the scope of any fiduciary relationship that may have existed between Keystone and Ms. Horvath. Thus, any fiduciary obligation that may have existed does not encompass a duty to inform Ms. Horvath of Keystone's physician compensation scheme." The court determined that Horvath failed to meet any of the various tests set forth by the Third Circuit regarding the duty of an ERISA fiduciary to disclose information to a beneficiary. First, the court held that Horvath made no inquiry that would trigger Keystone's obligation to disclose information about physician incentives. Second, the court held that Keystone had no notice that the physician incentives "exposed Ms. Horvath to making a decision to pay higher rates for health insurance coverage," and noted that Horvath never claimed that she was exposed to incompetent medical treatment. Finally, the court held that the information on physician incentives was not material to Horvath because she did not allege that she would have chosen not to subscribe to the health plan or paid for another plan at her own expense had she known of the incentives. The court noted that Peterson v. Connecticut Gen. Life Ins. Co., No. 00-cv-605, 2000 WL 1708787 (E.D. Pa. Nov. 14, 2000), held that ERISA "does not impose a broad fiduciary duty to disclose financial incentives in health insurance plans," and cited to other jurisdictions that have made similar rulings.

Horvath v. Keystone Health Plan, No. CIV-A-00-0416, 2002 WL 265023 (E.D. Pa. Feb. 22, 2002) (6 pages).

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