ERISA: No Duty to Disclose Physician Compensation Arrangements--Ehlmann v. Kaiser Found. Health Plan of Texas

ERISA: No Duty to Disclose Physician Compensation Arrangements-Ehlmann v. Kaiser Found Health Plan of Texas1--The United States Court of Appeals for the Fifth Circuit held that Health Maintenance Organizations (HMOs) have no fiduciary obligation to disclose physician compensation under ERISA absent

Ehlmann, a participant in an employee health plan, sued several HMOs under section 404 of ERISA for breach of fiduciary duty. Elhmann argued that the HMOs had a duty to disclose their physician compensation arrangements, alleging that the arrangements give participating physicians incentives to keep usage of health care, referrals and testing to a minimum, and thus harm the patient. Additionally, Ehlmann alleged that the HMOs made misleading representations to its plan members, and that there was a conflict of interest between the HMOs' fiduciary duties and its desire for profits. The district court dismissed Ehlmann's claims, fording that ERISA does not impose a duty upon HMOs to disclose physician compensation arrangements. Ehlmann appealed, arguing that ERISA does require disclosure and that the district court failed to properly discuss the misrepresentation and conflict of interest claims.3