AWP Decision Seen Aiding Cause Of State Regulation

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In the wake of the unanimous Supreme Court decision on Kentuckys any willing provider law that established a new test for determining whether state law regulates insurance, state officials say a review of state laws will need to begin. (See NU, April 7.)

Following the courts decision in Kentucky Association of Health Plans v. Miller, officials say the review could determine the extent to which the Employee Retirement Income Security Act could be used to preempt state laws in the future.

“States will have to review their laws on a case-by-case basis” because the decision is very “statutory specific,” says Elizabeth Johnson, counsel for the Kentucky insurance department, who argued the case before the high court.

Johnson told National Underwriter that Justice Ruth Bader Ginsburg sought more information about including a law in the insurance code. The point being, Johnson says, that entities governed by the law have to be in the insurance business.

Justice Antonin Scalia asked a question about McCarran-Ferguson factors used in the two-part test that proceeded the decision. Justice Scalia seemed to be “playing the devils advocate,” Johnson says. “He realized that the old test was unworkable.”

“Every term, they have heard another ERISA preemption case” and there is frustration with the amount of litigation, Johnson says. The decision offers a “broader and clearer test,” she adds.

“I can think of very few, if any laws, that have received as much attention as ERISA,” says Andrew Baida, solicitor general in Maryland Attorney Generals office, who adds that this decision will provide clarity and reduce the need for litigation.

The decision is “very significant for insurance regulators” because the new test could be used in cases such as a pending review by the Supreme Court over a state law that guarantees health care consumers a right to an independent review of claims, Baida says. The review arises out of a suit initiated by Connecticut General Life Insurance Company to prevent the Maryland Insurance Commissioner from enforcing the law. The insurer argued preemption under ERISA.

The decision could also be used when regulators make their case in Washington for state insurance regulation, says Mike Pickens, president of the National Association of Insurance Commissioners, Kansas City, Mo.

However, there will be little immediate impact on states such as Arkansas and Florida that do not have AWP laws on the books.


Reproduced from National Underwriter Edition, April 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.