In Gobeille v. Liberty Mutual Insurance Co., No. 14-181 (U.S. Supreme Court 2016), the Court considered Vermont law, which requires certain entities, including health insurers, to report payments relating to health care claims and other information relating to health care services to a state agency for compilation in an all-inclusive health care database.
In this case, Respondent Liberty Mutual Insurance Company’s health plan (the “Plan”), which provides benefits in all 50 States, is an “employee welfare benefit plan” under ERISA. The Plan’s third party administrator, Blue Cross Blue Shield of Massachusetts, Inc. (“Blue Cross”), which is subject to Vermont’s disclosure statute, was ordered to transmit its files on eligibility, medical claims, and pharmacy claims for the Plan’s Vermont members. Respondent, concerned that the disclosure of such confidential information might violate its fiduciary duties, instructed Blue Cross not to comply and filed suit, seeking a declaration that ERISA pre-empts application of Vermont’s statute and regulation to the Plan and an injunction prohibiting Vermont from trying to acquire data about the Plan or its members. The District Court granted summary judgment to Vermont, but the Second Circuit reversed, concluding that Vermont’s reporting scheme is pre-empted by ERISA.
Upon reviewing the case, the Supreme Court held that ERISA pre-empts Vermont’s statute as applied to ERISA plans. Why? The Court noted that ERISA expressly pre-empts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U. S. C. §1144(a). As relevant here, the clause pre-empts a state law that has an impermissible “connection with” ERISA plans, i.e., a law that governs, or interferes with the uniformity of, plan administration.
The Court concluded that the considerations relevant to the determination whether an impermissible connection exists lead to the conclusion that Vermont’s regime, as applied to ERISA plans, is pre-empted. ERISA seeks to make the benefits promised by an employer more secure by mandating certain oversight systems and other standard procedures, and those systems and procedures are intended to be uniform. ERISA’s extensive reporting, disclosure, and recordkeeping requirements are central to, and an essential part of, this uniform plan administration system. Vermont’s law and regulation, however, also govern plan reporting, disclosure, and recordkeeping. Pre-emption is necessary in order to prevent multiple jurisdictions from imposing differing, or even parallel, regulations, creating wasteful administrative costs and threatening to subject plans to wide-ranging liability. ERISA’s uniform rule design also makes clear that it is the Secretary of Labor, not the separate States, that is authorized to decide whether to exempt plans from ERISA reporting requirements or to require ERISA plans to report data such as that sought by Vermont.