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Gobeille v. Liberty Mutual: Supreme Court justices question Vermont's self-insured plan data call

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The lawyer for Vermont’s health coverage data collection program had a rough day today in oral arguments at the U.S. Supreme Court.

Justices often viewed as moderate or liberal, including Elena Kagan and Stephen Breyer, took the lead in questioning whether states have the right, under the Employee Retirement Income Security Act of 1974 (ERISA), to require self-insured employer health plans to report information about health coverage premiums and claims.

Alfred Gobeille, the petitioner in the case, Gobeille v. Liberty Mutual Insurance Company (Supreme Court Case Number 14-181), is the chair of the Vermont Green Mountain Care Board, a state health care regulatory agency. He is defending the agency’s right to get a complete picture of health coverage in Vermont by calling for experience data from the self-insured plans governed by ERISA as well as from carriers that provide fully insured group health plans.

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Bridget Asay, the Vermont solicitor general, told the court that ERISA preemption of state benefits laws does let states collect data related to matters in fields still in the hands of state regulators, such as insurance and health care.

“The database statute does not affect ERISA plans in any way that undermines ERISA’s core objectives, does not require plans to offer benefits, affect the financing or fiduciary standards for plans, or change the way the plans administer benefits to their members,” Asay said, according a transcript of the oral arguments provided by the court.

Liberty Mutual, other insurers, and insurance and employer groups are arguing that letting the Green Mountain Care Board win would drive up health plan administration costs and conflict with the goals of ERISA.

See also: Feds: Self-Funded Plans Not Much Different From Other Plans

“The very fact that there could be 50 different state regulations is the burden that the preemption provision is designed to address,” said Seth Waxman, the lawyer who represented Liberty Mutual.

Drafters of ERISA tried to cut the cost of running multi-state benefit plans by preempting state benefits laws.

ERISA, and Supreme Court interpretations of ERISA, do let states continue to oversee matters traditionally in the sphere of state regulators, such as insurance, but they don’t normally let states regulate activities viewed as being in the core field of ERISA, such as filing Form 5500 plan data reports.

The Patient Protection and Affordable Care Act of 2010 (PPACA) includes a provision stating that it does not generally affect ERISA or ERISA preemption, and it also includes provisions stating that it does not preempt existing state regulatory authority.

Officials at the Green Mountain Care Board have argued that they need to collect health coverage experience data from self-insured plans governed by ERISA, as well as from state-regulated fully insured plans, because self-insured plans cover many of the state’s residents who have private health coverage.

Waxman said Vermont is asking for many types of information, items that a self-insured plan might not have readily available, including the plan’s actuarial assumptions, its provider levels, and its medical procedure claim denials.

An ERISA plan does and should have to obey ordinary state business rules, such as minimum wage rules and workplace safety rules, but letting each state impose its own data collection system on a multi-state self-insured plan administrator, or multi-state self-insured plan sponsor, could expose administrators and self-insured plans to substantial new burdens, Waxman said.

Asay said she was unfamiliar with the details when Justice Sonia Sotomayor asked her how the health claim data collection process would work and why, from Vermont’s perspective, letting each state have its own data collection process would not impose a substantial new burden.

The Blue Cross Blue Shield Association and other employer and benefits organizations sent the court a brief showing how weakening of ERISA preemption could affect the administrators of self-insured plans covering 93 million people, but Justice Elena Kagan said she wanted more information from Liberty Mutual.

“Mr. Waxman, why was it that you introduced absolutely no evidence of burden in the lower courts here?” Kagan asked.

Waxman said he thought the Blue Cross Blue Shield brief showed that the burden would be substantial, even though the brief did not provide a cost estimate.

Kagan later said “there’s something very intuitive about the argument” that having 50 different data call requirements could add up to costing a lot of money.

Breyer asked John Bash, an assistant to the solicitor general who appeared on behalf of the Obama administration, which is supporting Gobeille, why the administration is supporting Gobeille.

“I was fine with you until I read a few of these amicus briefs, and then, suddenly, I saw 93 million people,” Breyer said. “Conflict among states in requirements means money. A lot of money. That’s what they say, and that’s plausible.”

If states want data from self-insured plans, they can get it from the U.S. Department of Labor, which already has the authority to put out a national data call, Breyer said.

Bash suggested, when talking to Justice Antonin Scalia, that the outcome of the case could have broader implications.

Kennedy mentioned the divide between conflict preemption and field preemption early on, and the issue came up several times later.

U.S. Circuit appeals courts have had differing views on how to reconcile the principle that ERISA was supposed to take over the entire field of benefits regulation and the principle that courts should resolve conflicts between ERISA and state rules on a conflict-by-conflict basis.

“I think if the court were to say what we’ve been doing all along is field preemption, and it makes more sense doctrinally to classify it that way, from the Department of Labor’s perspective, that would be fine,” Bash said. “I think we would be a little bit concerned if the court signaled to lower courts in its opinion that it was marking a big shift in its jurisprudence that could destabilize the law.”

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