Skip to content

Mr. President. I rise today to offer a follow-up rebuttal to the McCain-Kennedy Fact Sheet on "Protecting Employers." The sponsors of the bill distributed a white paper to the Democrat caucus and I can't let that go un-rebutted. Here's the assertion: "Employers are Explicitly protected from liability in almost every case." But that's not what the bill says.

And, for the record, let me just say that you need a bushel of bread crumbs to weave your way through this bill without getting lost. No wonder the average person is not entirely clear on how this bill fails to meet the assertion that employer sponsored health care is protected. I'm not a lawyer, so my explanation may go a little more slowly than the compelling presentation made by my colleagues, Sen. Gregg and Sen. Gramm, on Tuesday. What I can assure you is that I will lead you through the language of the McCain-Kennedy bill and show you that it CLEARLY sues employers and, therefore, threatens Americans' access to employer sponsored health care.

Now, here's what the bill language in S. 1052 actually says. On page 144, Line 7, there is a sub-paragraph entitled, "Cause of Action Against Employers and Plan Sponsors Precluded." This is sub-paragraph (A). It literally begins with, "Subject to sub-paragraph (B)! In other words, the provision whose title implies that employers are protected from lawsuits begins with an exception to that protection. As you can probably already guess, sub-paragraph (B) is entitled, "Certain Causes of Action Permitted," which started out with, "Notwithstanding sub-paragraph (A). Which means, despite the protection from lawsuits they just said they were giving employers in the preceding paragraph, here's how, and I quote, "a cause of action may arise against an employer." We're still on page 144, still under sub-paragraph (B), on line 22, there is a reference back to page 139, where you're sent to Paragraph(1), sub-paragraph(A), which is all captured under a NEW subsection of ERISA, entitled "Cause of Action Relating to Provision of Health Benefits."

This sub-paragraph first identifies who would be subject to liability, saying "In any case in which a person who is a fiduciary of a group health plan (meaning an employer under ERISA), a health insurance issuer offering health insurance coverage in connection with the plan, or an agent of the plan, issuer or plan sponsor." Then, the paragraph goes onto page 140 and lists what actions would make that category of employers and health plans liable, saying, "upon consideration of a claim for benefits of a participant or beneficiary under section 102 of the Act, or upon review of a denial of such claim, fails to exercise "ordinary care" in making a decision." Section 102 captures any consideration of a claim for benefits -- whether its written or oral, and section 103 is the entire internal appeals process.

Then page 140 goes on to list the following actions with respect to making a decision. It reads, "regarding whether an item or service is covered under the terms and conditions of the plan or coverage; regarding whether an individual is a participant or beneficiary who is enrolled under the terms and conditions of the plan or coverage; as to the application of cost sharing requirements or the application of a specific exclusion or express limitation on the amount, duration, or scope of coverage of items or services under the terms and condition of the plan or coverage; or, otherwise fails to exercise ordinary care in the performance of a duty under the terms and conditions of the plan with respect to a participant or beneficiary." Then, the employer must prove that none of those actions were the "proximate cause" of the patient's personal injury. If they can't, then the employer is liable for economic and non-economic damages, and punitive damages of $5 million will be awarded (see page 153, line 1) for "bad faith and flagrant disregard for the rights of participants." I understand that is a fairly high legal standard to meet. But then I remind myself that there is a band of trial lawyers right now trying to sue health plans under the federal racketeering laws -- that's what we used to prosecute mobsters. If I were an employer, that kind of zeal by lawyers sure wouldn't make me feel any better.

I'm running a little low on bread crumbs, but let me skip back for a minute to the "liable actions" listed on page 140. In particular, the last one I mentioned which refers to "fails to exercise ordinary care in the performance of a duty under the terms and conditions of the plan." This phrase, "terms and conditions of the plan," is defined in the bill on page 122, line 6, as, "to include, with respect to a group health plan or health insurance coverage, requirements imposed under this title with respect to the plan or coverage." Well, page 122 falls in Title I of the bill. Title I of the bill includes a plan's utilization review activities, which cover everything from disease management to quality of care decisions to cost-benefit analysis; all claims related activity, including internal and external review; all of the patient protections, from allowing patients direct access to the nearest emergency room to paying the cost of an employee's participation in a clinical trial, and on, including nine more separate patient protections; five additional rights for health care providers, including a whistleblower protection provision, which I'll take issue with later; and, a series of broad new definitions of provider categories and plan functions, coverage of limited scope plans, which are dental and eye care plans, AND, a blanket inclusion of any and all new regulations that the Secretary is completely at will to draft in relation to the Act. I would like to note that also included in Title I is the over-riding of existing state laws that deal with the standards in this bill. I guess that is now also part of your health plan contract.

Now, after saying all of that, we need to tie all of these duties, obligations, named functions of the employer who, again, is voluntarily providing health coverage, back to the original "trigger" into employer liability under this bill. If you remember, that's back on page 144. There's a subpart of the sub-paragraph (B) I mentioned before, starting on line 21, which says the employer is liable, "to the extent there was direct participation by the employer or other plan sponsor in the decision of the plan under Section 102 of the Act upon consideration of a claim for benefits, or under Section 103 of such Act upon review of a denial of a claim for benefits or, to the extent there was direct participation by the employer or other plan sponsor in the failure described in clause (ii) of paragraph (1)(A)," – paragraph (1)(A), or course, being when a plan "fails to exercise ordinary care in the performance of a duty under the terms and conditions of the plan," which you heard me read the definition of a moment ago from page 122, line 6, as being essentially everything under the sun that employer plans do. Okay, we're almost there, so bear with me.

The employer liability provision of the bill goes on to further define direct participation, found on page 145, line 11, as meaning, "in connection with a decision described in clause (i) or a failure described in clause (ii) – these are the two things I just described to you, remember it was either the consideration of a claim for benefits or the failure to exercise ordinary care – direct participation means, "the actual making of such a decision, or the actual exercise of control in making such a decision, or in the conduct constituting the failure." It sounds to me like every activity this bill legally requires employers to do or which they are already legally bound to do under the fiduciary obligations of ERISA, would constitute direct participation and, therefore, exposure to unlimited new liability.

Now, the sponsors of the bill have tried to define what direct participation is not. There are a whopping four things, all of which – and this is important – are conditioned by the clause, found on page 146, line 1 and line 5, that reads, "conduct that is merely collateral or precedent to the decision or failure." In other words, this so-called employer protection only applies if any "actual" action by the employer occurred long before or away from the decision. I read that to mean that, if an attorney links any employer activity covered in the four exceptions to the lawsuit against the employer, then the "exceptions" don't apply.

But let me tell you what they are anyway. Starting on page 146 and going onto page 147, they include: an employers selection of a health plan or third party administrator; an employer engaging in cost-benefit analysis when choosing or maintaining a plan; the employer creation, modification or termination of the plan; and, employer participation in benefit design,.copayments or limits on benefits. That sounds like a lot of the up front paper work and that's about it. All other plan administration by an employer is subject to liability. But then so are these functions if we are to apply the "collateral or precedent" limitation on the employer protection I just referenced.

Mr. President. This is seriously complicated. It appears that around every corner there's an exception swallowing the rule. And the exceptions purported to protect employers are swallowed too. There is no way anybody is going to convince the American people this bill doesn't sue employers, and for just about anything! Again, I'm not a lawyer, but I am an accountant. I can tell you this adds up to employers scaling back, even dropping the coverage they now provide. This is how we propose to protect patients?

The problem here is that, at the end of the day, this is no fairy tale for hard working Americans who currently receive health care through their employer. Instead, they'll be left with the nightmare of either more expensive care, reduced benefits, or, in the worst case, they'll lose their access to care altogether. This is unacceptable for insured Americans. The logical next question is, how in creation does this address the problem of our un-insured working Americans? I leave my colleagues to mull that over.

I yield the floor.