Some important recent cases

• The 9th Circuit in WPSA v. Gregoire, filed 6/18/1998, held that a Washington law requiring all HMOs to provide 'alternative' treatments was not preempted by ERISA, since it did not affect self-insured employee benefit plans, but that even if it did, it would be protected from preemption by the insurance 'saving' clause. It raised as the main criterion of such protection whether a law affects the insured's risk.
• In Ward v. MAC/UNUM (2/98) the Supreme Court held that, in spite of explicit plan language, the California "Notice-Prejudice" rule, which requires a showing of prejudice to the insurer to deny benefits for late notice, is a law regulating insurance, and therefore not preempted by ERISA.
• The U.S. Supreme Court in Calif. Division of Labor v. Dillingham Docket#95-789, reported 2/18/97, presaged a dramatic liberalization of the it's hitherto strict interpretation of preemption. Dependance on previous case law may be inadvisable till this new attitude is clarified in pending cases.

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• General HEALTH CARE Legislation is NOT pre-empted by ERISA

  Blue Cross/Blue Shield v. Travelers Insurance

  115 S.Ct.1671, 131 L.Ed.2d 695 (1995)

  Read it

  Relevant Law Review Abstract

  Excerpts:

  Presumption is AGAINST Preemption

  Congress didn't intend it
  << [we] have addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law. See Maryland v. Louisiana, 451 U. S. 725, 746 (1981). >>
  << nothing in the language of the Act or the context of its passage indicates that Congress chose to displace general health care regulation, which historically has been a matter of local concern, see Hillsborough County v. Automated Medical Laboratories, Inc., 471 U. S. 707, 719 (1985); 1B. Furrow, T. Greaney, S. Johnson, T. Jost, & R. Schwartz, Health Law SS1-6, 1-23 (1995). >>

  Especially in areas of traditional State control
  << where federal law is said to bar state action in fields of traditional state regulation, see Hillsborough County v. Automated Medical Laboratories, Inc., 471 U. S. 707, 719 (1985), we have worked on the "assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Rice, supra, at 230. See, e.g.,
  Cipollone v. Liggett Group, Inc., 505 U. S. __, __ (1992) (slip op., at 10-11);
  Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S. 724, 740 (1985);
  Jones v. Rath Packing Co., 430 U. S. 519 (1977);
  Napier v. Atlantic Coast Line R. Co., 272 U. S. 605, 611 (1926). >>

  "RELATE TO" must be interpreted narrowly.
  << If "relate to" were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course, for "[r]eally, universally, relations stop nowhere," >> << ...infinite relations cannot be the measure of pre-emption, ... We simply must go beyond the unhelpful text... >>

  A General Law does not 'make reference to' Erisa Plans. Previous rigid broad preemption rulings don't apply.
  << decisions in Shaw v. Delta Air Lines, Inc., 463 U. S. 85 (1983), and District of Columbia v. Greater Washington Board of Trade, 506 U. S. ___ (1992), holding that ERISA's pre-emption clause must be read broadly to reach any state law having a connection with, or reference to, covered employee benefit plans. >>

  Preemption is aimed mainly at ADMINISTRATIVE procedures. Pre-emption was designed for uniform administration.
  << The basic thrust of the pre-emption clause, then, was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans. >>

  A law forcing changes in coverage might be pre-empted << a state law might produce such acute, albeit indirect, economic effects, by intent or otherwise, as to force an ERISA plan to adopt a certain scheme of substantive coverage or effectively restrict its choice of insurers, and that such a state law might indeed be pre-empted under S514. >>

  ERISA didn't affect existing hospital regulation

  << And yet there is not so much as a hint in ERISA's legislative history or anywhere else that Congress intended to squelch these state efforts. [existing state laws regulating hosp. charges, in effect when ERISA passed] >>

• Laws regulating Insurance Companies are NOT preempted

  but EBPs may not be deemed Insurance companies.

  So benefits under an insurance policy owned by an EBP are subject to state regulation

  But benefits from a self-insured EBP are NOT subject to state regulation (are preempted)

  Is an HMO an 'insurance company'?

  The 8th Circuit says Yes, in Express Scripts v. Wenzel, (No. 00-2788, 8/23/2001)

  Calif. considers all Capitated providers subject to Regulation, but this has not been court-tested.

  Metropolitan Life v. Mass., 471 US 724

  But even self-funded plans may be subject to state insurance regulations, where the state interest in regulation outweighs the federal interest in uniformity.

  Northern Group Services

• Example laws which do not 'RELATE' to EBP's, & NOT preempted

  Discriminatory charges on Costs

  << If, for example, a State were to regulate sales of insurance by commercial insurers more stringently than sales by insurers not-for-profit, the relative cost of commercial insurance would rise; we would nonetheless say, following Metropolitan Life, that such laws "do not `relate to' benefit plans >>

  << {part of OVERRULED opinion} "the three surcharges `relate to' ERISA because they impose a significant economic burden on commercial insurers and HMOs" and therefore "have an impermissible impact on ERISA plan structure and administration." Id., at 721. In the light of its conclusion that the surcharge statutes were not otherwise saved by any applicable exception, the court held them pre-empted. Id., at 723. >>

  Discriminatory surcharges on benefit payments

  << We hold that the provisions for surcharges do not "relate to" employee benefit plans within the meaning of ERISA's pre-emption provision, S514(a), 29 U. S. C. S1144(a), and accordingly suffer no pre-emption. >>

  Laws relating to Insurance

  << pre-emption stops short of "any law of any State which regulates insurance." S514(b)(2)(A), 29 U. S. C. S1144(b)(2)(A). (This exception for insurance regulation is itself limited, however, by the provision that an employee welfare benefit plan may not "be deemed to be an insurance company or other insurer . . . or to be engaged in the business of insurance . . . ." S514(b)(2)(B), 29 U. S. C. S1144(b)(2)(B).) >>

  a law requiring coverage of specified minimum mental health care benefits by policies insuring against hospital/surgical expenses. ...includ[ing] those bought by employee welfare benefit plans. Metropolitan Life Ins. Co. v. Mass., 471 U. S. 724 (1985),

  Criminal Laws

  << Finally, ERISA saves from pre-emption "any generally applicable criminal law of a State." S514(b)(4), 29 U. S. C. S1144(b)(4). >>

  Laws which merely have an adverse economic effect on EBP's

  << An indirect economic influence, however, does not bind plan administrators to any particular choice and thus function as a regulation of an ERISA plan itself; >>

  << [even where not uniform between stated] other common state action with indirect economic effects on a plan's costs leaves the intent to pre-empt even less likely. Quality standards, for example,... >>

  << Even basic regulation of employment conditions will invariably affect the cost and price of services. [and that certainly isn't preempted] >>

  << Indeed, to read the pre-emption provision as displacing all state laws affecting costs and charges on the theory that they indirectly relate to ERISA plans that purchase insurance policies or HMO memberships that would cover such services, would effectively read the limiting language in S514(a) out of the statute, a conclusion that would violate basic principles of statutory interpretation and could not be squared with our prior pronouncement that "[p]reemption does not occur . . . if the state law has only a tenuous, remote, or peripheral connection with covered plans, as is the case with many laws of general applicability." District of Columbia v. Greater Washington Board of Trade, 506 U. S. ___, ____ n. 1 (1992) (slip op., at 4, n. 1) >>

  << ...laws with only an indirect economic effect on the relative costs of various health insurance packages in a given State are a far cry from those "conflicting directives" from which Congress meant to insulate ERISA plans... We therefore conclude that such state laws do not bear the requisite "connection with" ERISA plans to trigger pre-emption. >>

  << The basic DRG system (even without any surcharge), like any other interference with the hospital services market, would fall on a theory that all laws with indirect economic effects on ERISA plans are pre-empted under S514(a). This would be an unsettling result >>

  Indirect increase of EBP costs are NOT basis for Preemption

  << {part of overruled opinion, so not a good reason} [The surcharges] lead, at least indirectly, to an increase in plan costs." >>

  Judgements against EBP benefits

  << "Congress did not intend to forbid the use of state-law mechanisms of executing judgments against ERISA welfare benefit plans, even when those mechanisms prevent plan participants from receiving their benefits." >>

  Laws whose economic effect may influence decision making

  << If a law authorizing an indirect source of administrative cost is not pre-empted, it should follow that a law operating as an indirect source of merely economic influence on administrative decisions, as here, should not suffice to trigger pre-emption either. >>

  per BCBS v. Travelers

• Examples of laws Related to EBP's, & thus Validly Pre-empted

  a law prohibiting pregnancy discrimination

  laws requiring specific benefits,

  a law to insure against an entire category of illnesses, which EBP might otherwise choose to leave without coverage.

  a law prohibiting plans from requiring reimbursement from the beneficiary if he recovers from 3d party

  laws mandating EBP structures or administration.

  laws providing alternate enforcement mechanisms

  per BCBS v. Travelers

• ERISA preempts regulation of self-insured EBPs under the Knox-Keene Act.
  Hewlett-Packard v. Barnes
• 10th Circ. identified 4 categories of laws which RELATE TO an employee benefit plan:
  1. Laws that regulate the type of benefits or terms of ERISA plans.
  2. Laws that create reporting, disclosure, funding, or vesting requirements for ERISA plans.
  3. Laws that provide rules for the calculation of the amount of benefits to be paid under ERISA plans.
  4. Laws and common-law rules that provide remedies for misconduct growing out of the administration of the ERISA plan.
  National Elevator Indus. v. Calhoon, 957 F.2d 1555, 1558 (10th Cir.), cert. denied, 113 S. Ct. 406 (1992)