In a 6-2 decision, the U.S. Supreme Court struck down a Vermont law that would've required health insurers to provide a variety of information about claims to the state. The majority ruled that the federal Employee Retirement Income Security Act (ERISA) prohibited the state’s action.
“ERISA expressly pre-empts ‘any and all State laws insofar as they may now or hereafter relate to any employee benefit plan,’” stated the opinion, authored by Chief Justice John Roberts.
The decision found that the preemption imposed by federal law was necessary to prevent duplicative reporting requirements that create “administrative waste” and “threaten to subject plans to wide-ranging liability.”
Vermont’s arguments in defense of its own rules were “unpersuasive,” the majority wrote. The state had argued that its goals in collecting the data were different from ERISA’s and therefore not subject to federal preemption, but the court wrote that that “does not transform Vermont’s direct regulation of a fundamental ERISA function into an innocuous and peripheral set of additional rules.”
Furthermore, the court rejected the notion that the Patient Protection and Affordable Care Act (PPACA) has undone ERISA’s preemption of state law.
Liberty Mutual Insurance Company, which has a self-insured health plan that includes only 137 Vermont residents, brought the lawsuit against the state. However, it was a part of Blue Cross Blue Shield of Massachusetts, which included several thousand Vermont residents in its network. After the state informed Blue Cross that it had to report all claims on its Vermont members to a state agency or face a $2,000 a day penalty, Liberty Mutual sued in federal court.
The ruling, one of a series of decisions released on Tuesday, was supported by the court’s three remaining conservatives –– Roberts, Samuel Alito, and Clarence Thomas –– as well as two of its liberals, Stephen Breyer and Elena Kagan, and Anthony Kennedy, who is often viewed as a swing vote. Sonia Sotomayor and Ruth Bader Ginsburg, part of the liberal wing, were the two dissenting votes.
The rulings were the first released since the death of Justice Antonin Scalia, which created a vacancy that President Obama is seeking to fill by nominating a new justice. Republicans who control the Senate have said they will not confirm a new justice until a new president takes office next year.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
