U.S. Supreme Court Holds that ERISA Preempts State Reporting Requirements for Insurance Companies

In What's New in ERISA Litigation?, What's New in the Courts by gravierhouse1 Comment

Vermont’s law requires health insurers, health care providers, health care facilities, and governmental agencies to report any “information relating to health care costs, prices, quality, utilization, or resources required” by the state agency, including data relating to health insurance claims and enrollment. Health insurers must submit claims data on members, subscribers, and policyholders. The Vermont law defines health insurer to include a “self-insured … health care benefit plan,” as well as “any third party administrator” and any “similar entity with claims data, eligibility data, provider files, and other information relating to health care provided to a Vermont resident.” The database must be made “available as a resource for insurers, employers, providers, purchasers of health care, and State agencies to continuously review health care utilization, expenditures, and performance in Vermont.”

The U.S. Supreme Court held that these requirements, (at least with respect to policies or plans subject to ERISA), were preempted:

“ERISA does not guarantee substantive benefits. The statute, instead, seeks to make the benefits promised by an employer more secure by mandating certain oversight systems and other standard procedures. Those systems and procedures are intended to be uniform. ‘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….’

“ERISA’s reporting, disclosure, and recordkeeping requirements for welfare benefit plans are extensive. ERISA plans must present participants with a plan description explaining, among other things, the plan’s eligibility requirements and claims-processing procedures. Plans must notify participants when a claim is denied and state the basis for the denial. Most important for the pre-emption question presented here, welfare benefit plans governed by ERISA must file an annual report with the Secretary of Labor. The report must include a financial statement listing assets and liabilities for the previous year and, further, receipts and disbursements of funds. The information on assets and liabilities as well as receipts and disbursements must be provided to plan participants on an annual basis as well…. The Secretary of Labor has authority to establish additional reporting and disclosure requirements for ERISA plans….

“Vermont’s reporting regime, which compels plans to report detailed information about claims and plan members, both intrudes upon ‘a central matter of plan administration’ and ‘interferes with nationally uniform plan administration.’ The State’s law and regulation govern plan reporting, disclosure, and—by necessary implication—recordkeeping. These matters are fundamental components of ERISA’s regulation of plan administration. Differing, or even parallel, regulations from multiple jurisdictions could create wasteful administrative costs and threaten to subject plans to wide-ranging liability. Pre-emption is necessary to prevent the States from imposing novel, inconsistent, and burdensome reporting requirements on plans.

“The Secretary of Labor, not the States, is authorized to administer the reporting requirements of plans governed by ERISA.”

Gobeille v. Liberty Mut. Ins. Co., 2016 WL 782861 (March 1, 2016).

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