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Employer Sponsored Health Benefit Plans Under Erisa After Pegram V. Herdrich: The Fiduciary Duty Argument And Mixed Eligibility Versus Treatment Decisions, Jack E. Karns

Journal of Law and Health

Accordingly, this Article is a rebuttal to the Supreme Court's opinion in Pegram v. Herdrich on the strength of two primary arguments. First, the Seventh Circuit's rationale was on-point and extremely sound in concluding that HMOs do stand as trustees as envisioned by the ESBP and cannot offer kickback payments to physicians simply to increase shareholder wealth at the expense of patient health and welfare. This was a textbook example of breach of fiduciary duty given the medical trust relationship between physician and patient. Had the HMO offered a hedge fund option using securities from firms other than itself, there …