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But insured plans still may have to report to an ‘all-payer claims database’
In a win for self-insured plans and their providers, the Supreme Court ruled on March 1 that the Employee Retirement Income Security Act (ERISA) bars states from requiring self-insured health plans to turn over claims data.
“This decision makes it easier to establish ERISA pre-emption” and easier for self-funded plans “to fight back,” said Ann Caresani, an attorney with Tucker Ellis in Cleveland.
The ruling “reinforces that ERISA pre-empts state laws and regulations that would complicate plan administration,” said Brian Marcotte, president and CEO of the National Business Group on Health. It “assures that multistate employers can operate employee health benefit plans by the same rules nationwide, which saves costs for both employers and employees." (The National Business Group on Health is a nonprofit organization devoted to representing large employers' perspective on national health policy issues.)
The decision “confirms the expansive reach of ERISA’s pre-emption clause,” noted Andrew Holly, an attorney with Dorsey & Whitney in Minneapolis. It may stall other state initiatives, such as state-sponsored 401(k) plans, he added. Such proposals “would have to contend with ERISA pre-emption.”
And state privacy laws that affect self-funded ERISA plans might face pre-emption issues as well, he said. Employers will have to take a look at state regulations and determine if they are something to worry about, or will be pre-empted, Holly added.
Ruling for Self-Insured Plans
In this case, Liberty Mutual successfully challenged the applicability of a Vermont law requiring the disclosure of payments relating to health care claims.
Liberty had asked its third-party administrator, Blue Cross Blue Shield of Massachusetts, to resist Vermont’s subpoena to report all the files it has on member eligibility, medical claims and pharmacy claims for Vermont members. (Liberty Mutual and Blue Cross Blue Shield of Massachusetts are insurers. Both are based in Boston.)
Liberty Mutual then sued, seeking a declaration that ERISA pre-empts application of Vermont’s record-gathering statute. The district court denied this request, but the appeals court and Supreme Court ruled for Liberty Mutual.
“Requiring ERISA administrators to master the relevant laws of 50 states and to contend with litigation would undermine the congressional goal of minimizing the administrative and financial burdens on plan administrators—burdens ultimately borne by the beneficiaries,” the Supreme Court said in its 6-2 ruling in favor of Liberty Mutual.
Moreover, “ERISA’s reporting, disclosure and record-keeping requirements for welfare benefit plans are extensive,” the court added.
‘All-Payer Claims Database’
The database Vermont compiles from its data gathering is called an “all-payer claims database,” as it requires submission of data from all health insurers.
Seventeen other states have enacted similar database systems: Arkansas, Colorado, Connecticut, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Oregon, Rhode Island, Tennessee, Utah, Virginia, Washington and West Virginia, according to the National Governors Association. In Vermont, about 20 percent of the database’s total content originates from employer self-insured plans.
States created these databases when health care costs began rising steeply to help analyze health care outcomes and costs, said Andrew Oringer, an attorney with Dechert in New York City.
The all-payer claims databases still will be able to get information from insured plans, just not self-insured plans, as ERISA pre-empts state law generally, but not state insurance law, he predicted.
“Innumerable rules” might have applied to self-insured plans had the court ruled against Liberty Mutual, Oringer said, noting that not just states, but localities such as San Francisco and Nassau County, N.Y., have over the years tried to issue rules governing health and welfare plans.
ERISA pre-emption applies to some insured plans, but there are certain carve-outs it does not apply to, such as state laws regulating insurance, noted Howard Shapiro, an attorney with Proskauer in New Orleans. He said that health care reformers will keep pushing for the broad application of these kinds of laws and that insured plans “will have to deal with this going forward,” meaning more litigation.
Secretary of Labor’s Role
The Secretary of Labor has authority to establish additional reporting and disclosure requirements for ERISA, Justice Anthony Kennedy noted in the majority opinion.
But this fact might ultimately lead to more paperwork for employers.
Concurring, Justice Stephen Breyer wrote, “I see no reason why the Secretary of Labor could not develop reporting requirements that satisfy the states’ needs, including some state-specific requirements, as appropriate. Nor do I see why the department could not delegate to a particular state the authority to obtain data related to that state, while also providing the data to the federal secretary for use by other states or at the federal level.”
This approach, according to Breyer, has its advantages, as “The federal agencies are more likely to be informed about, and to understand, ERISA-related consequences and health care needs from a national perspective. Their involvement may consequently secure for the states necessary information without unnecessarily creating costly conflicts—particularly when compared with such alternatives as giving each state free rein to go its own way or asking nonexpert federal courts to try to iron out, regulation by regulation, such conflicts.”
“Whether or not the Department of Labor will want to or could participate are questions for another day,” Holly said.
This decision is Gobeille v. Liberty Mutual Ins. Co., No. 14-181.
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
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