Gobeille v. Liberty Mut. Ins. Co.
194 L. Ed. 2d 20, 2016 U.S. LEXIS 1612, 136 S. Ct. 936 (2016)
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Rule of Law:
ERISA pre-empts a state law that imposes reporting requirements on ERISA plans, even if the state law serves a public health purpose, because such requirements interfere with the uniform national administration of ERISA plans and regulate a central matter of plan administration reserved for federal authority.
Facts:
- Vermont enacted a statute requiring public and private entities providing and paying for health care services to report information to a state agency to maintain an all-inclusive health care database.
- Vermont's law defines 'health insurer' to include self-insured health care benefit plans and third-party administrators (TPAs), and mandates reporting of health care utilization, costs, prices, quality, and resources.
- Liberty Mutual Insurance Company maintains a self-insured and self-funded health plan (the Plan) providing benefits to over 80,000 individuals across all 50 States, qualifying as an 'employee welfare benefit plan' under ERISA.
- The Plan uses Blue Cross Blue Shield of Massachusetts as its third-party administrator (TPA), which manages claims processing for Liberty Mutual.
- Blue Cross serves several thousand Vermonters and is a mandated reporter under Vermont's regulation, meaning it must report information about the Plan's Vermont members.
- In August 2011, Vermont issued a subpoena to Blue Cross, ordering it to transmit all files on member eligibility, medical claims, and pharmacy claims for Vermont members, threatening fines and suspension for noncompliance.
- Liberty Mutual, concerned that disclosing confidential member information might violate its fiduciary duties under the Plan, instructed Blue Cross not to comply.
Procedural Posture:
- Liberty Mutual Insurance Company filed an action in the United States District Court for the District of Vermont against state officials, seeking a declaration that ERISA preempts application of Vermont's statute and regulation to its Plan and an injunction.
- The District Court granted summary judgment to Vermont, holding that the state's reporting scheme was not preempted, reasoning its effect was 'so peripheral' to ERISA plans.
- Liberty Mutual appealed the District Court's decision to the U.S. Court of Appeals for the Second Circuit.
- The Second Circuit reversed the District Court's judgment, with the majority concluding that Vermont's reporting regime was preempted by ERISA.
- The Supreme Court of the United States granted certiorari to address the important issue of ERISA pre-emption.
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Issue:
Does the Employee Retirement Income Security Act of 1974 (ERISA) preempt a state statute that requires ERISA-regulated health plans and their third-party administrators to report detailed health care claims data to a state agency for inclusion in an all-payer claims database?
Opinions:
Majority - Justice Kennedy
Yes, ERISA preempts the Vermont statute as it applies to ERISA plans. The Court's precedents establish two categories of state laws preempted by ERISA: those with a 'reference to' ERISA plans and those with an impermissible 'connection with' ERISA plans. Vermont's law falls into the latter category because it governs 'a central matter of plan administration' and 'interferes with nationally uniform plan administration.' ERISA's comprehensive reporting, disclosure, and recordkeeping requirements are central to its uniform design, aiming to minimize administrative and financial burdens on plan administrators. The state law imposes conflicting, novel, and burdensome reporting requirements that intrude upon these fundamental components of ERISA administration. The Secretary of Labor, not the States, is authorized to administer and determine reporting requirements for ERISA plans, emphasizing the federal nature of these decisions. Vermont's argument that its law serves different objectives (public health) does not save it from preemption, as the purpose of a state law is relevant only to the 'scope of the state law that Congress understood would survive,' not to validate a law that regulates a key facet of plan administration. The presumption against preemption, while strong in areas of traditional state power, cannot validate a state law that enters a fundamental area of ERISA regulation and counters the federal purpose. The Patient Protection and Affordable Care Act's reporting obligations do not alter the pre-existing pre-emptive force of ERISA's reporting, disclosure, and recordkeeping provisions.
Concurring - Justice Thomas
Justice Thomas concurs with the majority, finding that the opinion faithfully applies the Court's precedents interpreting ERISA's express preemption provision. However, he expresses doubt regarding the constitutional validity of Section 1144 as a broad exercise of congressional power. He notes the Court's prior abandonment of a literal reading of 'relate to' in Travelers to avoid limitless preemption, adopting atextual 'workable' standards. He argues that this approach to ERISA preemption is increasingly inconsistent with the Court's broader preemption jurisprudence, where statutory text is usually paramount. He suggests that the Court should address whether Article I authorizes Congress to preempt such a wide array of state laws, especially those concerning traditional state concerns unrelated to interstate commerce, to resolve the ongoing difficulties in applying Section 1144.
Concurring - Justice Breyer
Justice Breyer concurs to highlight the practical difficulties a failure to find preemption would create. He points out that self-insured ERISA health plans provide benefits to 93 million Americans across 50 states, and allowing each state to impose its own potentially conflicting reporting requirements would lead to unnecessary, duplicative, and costly administrative burdens and confusion. He suggests that states can still obtain needed information by seeking appropriate approval from federal agencies. The Secretary of Labor (and HHS) already has authority under ERISA to establish additional reporting and disclosure requirements and to collect, compile, and publish data. Federal agency involvement, even potentially through delegation to states, would ensure uniformity, draw on national expertise, and prevent costly conflicts, offering a more effective solution than allowing individual states free rein.
Dissenting - Justice Ginsburg
No, ERISA does not preempt Vermont's data-collection law. Justice Ginsburg argues that the presumption against preemption, especially in areas of traditional state regulation like public health, should apply with full force. She contends that Vermont's law and ERISA serve distinct purposes: ERISA aims to ensure plan management and solvency, while Vermont's law seeks to improve health care quality and cost for its residents by providing comprehensive data. Vermont's law requests no financial information on plans and does not regulate 'a central matter of plan administration' such as vesting, benefit levels, or beneficiary designations. She highlights that the burden of compliance falls on Blue Cross, the TPA, which already reports data for other self-funded plans. The dissent argues that the majority's conclusion that ERISA preempts 'any state-law reporting obligation that is more than 'slight'' departs from established precedent in cases like De Buono and Dillingham, which upheld generally applicable state laws requiring incidental reporting by ERISA plans. She emphasizes that state-law diversity is a hallmark of the federal system and that modern technology makes data submission efficient. The dissent concludes that the majority's decision effectively reinstates an overly broad 'super-preemption' doctrine that the Court had previously reined in.
Analysis:
This decision reinforces the broad preemptive scope of ERISA, particularly concerning aspects of plan administration, reporting, and disclosure. It limits the ability of states to implement their own data collection initiatives on ERISA plans, even for public health purposes, underscoring Congress's intent to create a uniform national regulatory scheme for employee benefit plans. Future state efforts to collect health care data from ERISA plans will likely need to align with federal reporting requirements or seek federal approval, rather than imposing independent state-specific mandates, to avoid preemption. The ruling suggests a high bar for state laws to survive preemption challenges if they touch upon areas considered 'central' to ERISA plan administration, regardless of the state law's underlying objective.
