Appellate courts have been all over the map recently in determining when ERISA supersedes state laws in claims against employers.
In a brief to its members, the ERISA Industry Committee examined four appellate court decisions in recent weeks that prove how complex the application of ERISA can be, and the challenges employers face staying in compliance with federal and state laws.
ERISA, as a federal law, supersedes all state laws that relate to benefit plans. But exceptions exist to state laws that regulate insurance, banking and securities, according to ERIC's brief.
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Courts have historically struggled in determining when a state law "relates to" a benefits plan, said the brief's authors.
ERIC's brief suggests the trend seems to be continuing.
The 6th Circuit recently held that the state of Michigan can tax the claims paid by self-insured health plans. In Self-Insurance Institute of America Inc. v. Snyder, ERISA did not supersede, or pre-empt, Michigan state law, which imposes a 1 percent tax on all paid claims by carriers and third-party administrators to health care services provided in Michigan, for Michigan residents. The SIIA argued the tax was a breach of ERISA law, because it imposed administrative burdens.
The 6th Circuit disagreed, saying the tax didn't interfere with ERISA regulations. Congress did not intend for ERISA to preempt state laws of "general applicability," according to ERIC's analysis of the case.
The 3rd Circuit of Appeals also recently ruled that a New Jersey wage law was not pre-empted by ERISA. In New Jersey Carpenters v. Tishman, laborers sued for fringe benefits guaranteed by state law. The defendants claimed protection under ERISA. But the 3rd Circuit said ERISA protection did not apply because Congress did not intend for ERISA to displace state laws that govern wages.
Elsewhere, the 2nd Circuit found a New York state law prohibiting the reimbursement of medical benefits from plaintiff's tort settlements was pre-empted by ERISA for self-funded insurance plans, but not for fully insured plans.
Finally, the 1st Circuit recently found a city ordinance in Illinois was pre-empted by ERISA. The city of Quincy, Illinois, required bidders on city projects to maintain an apprentice training program of the kind protected under ERISA. The appellate court sided with the construction company that sued under ERISA, saying the city's ordinance demanded standards that were too specific of the bidding contractors, according to ERIC's analysis of the case.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
