9th Circuit says federal law preempts ‘little HIPAA’ claims [Lawyers USA]

Federal law preempts claims brought under a state "little HIPAA" law prohibiting health insurers from charging different premiums to similarlysituated individuals, the 9th Circuit has ruled.

The federal Health Insurance Portability and Accountability Act (HIPAA) prohibits certain health insurers from charging different premiums to "similarly situated" participants on account of a participant's "health status-related factor." Montana has enacted a "little HIPAA" law with a similar provision.

In this case, the plaintiffs are three brothers who purchased health insurance through their businesses from Blue Cross. They sued under the Montana HIPAA law when Blue Cross raised their premiums by 40 percent.

Blue Cross argued that the federal HIPAA statute preempted the plaintiffs' Montana HIPAA claims.

The court agreed, explaining that "federal HIPAA preempts the Montana law, both jurisdictionally and on the merits, because Montana's HIPAA provision is identical to, and expressly relies upon, federal law."

However, the court concluded that there was no preemption of the plaintiffs' related claim that Blue Cross, by allegedly charging different policy premiums to similarly situated individuals, engaged in "unfair discrimination" in violation of Montana's unfair insurance practices statute.

"[W]e disagree with Blue Cross's argument that the unfair insurance practices claim is 'inextricably intertwined' with the state HIPAA claim and accordingly fails as a matter of law. Fairly read, the [plaintiffs'] complaint seeks to remedy distinct violations of both state HIPAA and state unfair insurance practices statutes. These separate statutes require separate legal analyses," the court said.

U.S. Court of Appeals, 9th Circuit. Fossen v. Blue Cross and Blue Shield of Montana, No. 10-36001. Oct. 18, 2011. Lawyers USA No. 993- 3287.