Pegram’s Regress: A Missed Chance for Sensible Judicial Review of Managed Care Decisions

Michael T. Cahill, Brooklyn Law School
Peter D. Jacobson, University of Michigan School of Public Health

Abstract

This article argues that a proper interpretation of ERISA places fiduciary duties at the heart of its framework for judicial review, and that Pegram v. Herdrich, 539 U.S. 211 (2000), was therefore wrongly decided. The article also discusses the negative implications of Pegram. Essentially, the Supreme Court missed an opportunity to enable the use of ERISA to resolve managed care's serious allocative tradeoffs using the fiduciary-duty model of the kind the article proposes. Finally the article considers what, if anything, can be done after Pegram to maintain a balanced and significant role for the government, specifically the courts, in overseeing MCOs' decisions.