ERISA: Employment Retirement Income Security Act. A US law enacted in 1974 which set up the ground rules for pension and retirement plans and, in so doing, prohibited states from regulating these plans. Most health plans in the US are covered by ERISA, and therefore these health plans are exempt from certain regulatory practices, including the ability to be sued outside of federal court.

The US Supreme Court in 2004 unanimously rejected efforts by states to give patients the right to sue managed-care companies for damages for refusing to cover treatment that a doctor deemed medically necessary. The court ruled that state laws are pre-empted by ERISA. ERISA permits patients to sue for reimbursement of denied benefits, but not for damages stemming from the denial. (Aetna Health Inc. v. Davila.)

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