WASHINGTON (Reuters) - A unanimous U.S. Supreme Court on Wednesday upheld state laws that require health maintenance organizations to open up their networks and give patients more choices of doctors or other medical providers.

The high court upheld two Kentucky laws that HMOs contract with any doctor or chiropractor in the region who agrees to abide by the plan's rules. About half of the nation's 50 states have such "any willing provider" laws.

The ruling represented a major defeat for the managed care industry, which warned the laws could increase health care costs substantially and restrict the ability of the plans to provide high-quality care.

The case against the state was brought by seven HMOs and a state HMO trade group, which had challenged the laws that were adopted in 1994 as part of the Kentucky Health Care Reform Act.

The laws were part of the state efforts in the 1990s to address limited patient choices in the absence of any action by Congress. The ruling could encourage more states to adopt the laws.

HMOs, which seek to contain costs by using only a select group of doctors and providers, said the laws force them to contract with providers even if the plan's network already includes a sufficient number to meet patient needs.

The high court ruled the Kentucky laws were not pre-empted by the Employee Retirement Income Security Act, a 1974 federal law intended to ensure uniform regulation of employee-benefit plans nationwide.

Dr. Donald Young, president of the Health Insurance Association of America, said his group was extremely disappointed by the ruling.

"These laws are one more instance of government unnecessarily interfering in private relationships between doctors and health plans," he said.

Karen Ignagni, president of the American Association of Health Plans, representing HMOs and other plans, said the Kentucky laws were adopted in 1994, when patient choice was a politically potent issue.

LAWS DON'T REFLECT 'TODAY'S REALITIES'

Since then, plans have expanded choices for patients, she said. "The decision changes little for our industry," Ignagni said, adding that the laws do not reflect "today's realities" and states are starting to question some of their regulations.

The U.S. Justice Department, the American Medical Association, representing doctors, and a number of states supported Kentucky.

The high court ruled last year that states may provide independent review by a doctor when an HMO refuses to pay for a patient's medical treatment.

Justice Antonin Scalia said the Kentucky laws regulated insurance, which the states are allowed to do, and the measures thus are not pre-empted by the federal law.

"By expanding the number of providers from whom an insured may receive health services, AWP (any willing provider) laws alter the scope of permissible bargains between insurers and insureds in a manner similar to the mandated-benefit laws we upheld" in a 1985 ruling, Scalia wrote.