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Supreme Court backs self-insured plans in ERISA case

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The U.S. Supreme Court has ruled that the Employee Retirement Income Security Act (ERISA) protects self-insured benefit plans against new state reporting requirements.

In a 6-2 decision on Gobeille v. Liberty Mutual Insurance Company (Supreme Court Case Number 14-181), the majority held that the ERISA preemption provision, which puts the U.S. Labor secretary in charge of ERISA plan regulation, blocks Vermont from requiring ERISA health plans to feed claims data into a statewide health claims database.

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

When Congress passed ERISA in 1974, one of its goals was to reduce employers’ benefits plan costs by making benefit plan regulation more uniform by putting ERISA benefit plans under the jurisdiction of the Labor secretary. Federal courts usually classify large self-insured health plans and other types of large self-insured plans as ERISA plans.

In an opinion for the Gobeille majority, Justice Anthony Kennedy writes that benefit plan recordkeeping and reporting are “fundamental components of ERISA’s regulation of plan administration,” and that state efforts to impose new reporting requirements on self-insured plans “could create wasteful administrative costs and threaten to subject plans to wide-ranging liability.”

“Pre-emption is necessary to prevent the states from imposing novel, inconsistent, and burdensome reporting requirements on plans,” Kennedy writes.

Kennedy says states could get the data they want within the ERISA framework by asking the Labor secretary to add health plan reporting requirements.

Chief Justice John Roberts and justices Samuel Alito Jr., Stephen Breyer, Elena Kagan and Clarence Thomas all sided with Kennedy.

Justices Ruth Bader Ginsburg and Sonia Sotomayor were the dissenters.

In a concurring opinion, Thomas says that the new decision fits with past Supreme Court ERISA rulings, but he questions whether Congress has the authority under the U.S. Constitution to keep states from applying civil laws to ERISA plans.

“Just because Congress can regulate some aspects of ERISA plans pursuant to the Commerce Clause [of the Constitution] does not mean that Congress can exempt ERISA plans from state regulations that have nothing to do with interstate commerce,” Thomas writes.

Breyer writes in another concurring opinion that ruling against employers in the Gobeille case could have subjected employers to 50 or more potentially conflicting information reporting requirements. “Doing so is likely to create serious administrative problems,” Breyer says. 

In a dissenting opinion, Ginsburg objects to the idea of requiring states to go through the Labor secretary to get health plan information. “It is unsettling to leave the states dependent on a federal agency’s grace,” Ginsburg writes.

Alfred Gobeille, the petitioner in the case, is the chair of the Vermont Green Mountain Care Board, a state health care regulatory agency. The board hoped to get a complete picture of Vermont’s health coverage market by collecting experience data from self-insured plans as well as from the carriers that provide fully insured group health plans.

See also: Most states flunk health care price-transparency test

Liberty Mutual, other insurers and plan administrators, and insurance and employer groups argued that letting the Green Mountain Care Board win would drive up health plan administration costs.

See also:

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

Feds: ERISA plans must share their decision support tools


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