High Court will review 2nd Circuit’s ERISA Preemption Decision

Seemingly lost in the flurry of activity at the Supreme Court over the last few days was news that the Court granted certiorari on Monday to Gobeille v. Liberty Mut. Ins. Co., a Second Circuit case that had ruled that a Vermont law requiring self-funded health plans to report claims information was preempted by ERISA.

The case started as a declaratory judgment action in the U.S. District Court for Vermont when the state of Vermont subpoenaed documents from the third-party administrator of a self-insured employee health plan operated by Liberty Mutual pursuant to a law requiring health insurers, including self-funded plans, to file reports with the state for the purpose of establishing a healthcare database, known as the Vermont Healthcare Claims Uniform Reporting and Evaluation System. Those reports included claims data and other information. Liberty Mutual sought a declaration that the reporting law was preempted by ERISA but the district court granted summary judgment to the state because it determined the statute was not preempted and Liberty Mutual appealed.

The Second Circuit, in Liberty Mut. Ins. Co. v. Donegan, 746 F.3d 497 (2d Cir. 2014), reversed the district court in part because it determined that although more recent precedent had begun construing ERISA preemption less broadly than earlier decisions, one of ERISA’s core principles was that the preemption clause is intended to “avoid a multiplicity of burdensome state requirements” for plan administration. Looking specifically at the Vermont scheme it stated “the reporting mandated by the Vermont statute and regulation is burdensome, time-consuming and risky” and “considered as one of several or a score of uncoordinated state reporting regimes, it is obviously intolerable.”

Plan administrators and TPAs will want to watch this case closely to see if the Court continues this recent trend constricting ERISA preemption or whether it grants preemption in cases regarding these types of “reporting” requirements that seem to have little or nothing to do with self-funded plan administration.

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