Earlier this week the Supreme Court held in Gobeille v. Liberty Mutual Insurance Co., No. 14 181, that ERISA preempts Vermont’s healthcare database law when applied to ERISA-governed plans.
ERISA establishes uniform national standards and obligations for the fiduciaries of employee benefit plans. With certain exceptions, it preempts “any and all State laws insofar as they . . . relate to any employee benefit plan” covered by the statute. 29 U.S.C. § 1144(a). Various provisions of ERISA impose mandatory reporting requirements on covered plans.
Like many states, Vermont maintains a healthcare information database designed to assist the government in identifying healthcare needs, comparing costs between various treatment approaches, and providing information to consumers of healthcare. Vermont requires “health insurers” and other entities to file, with a state agency, reports containing claims data and “other information relating to health care.” Vt. Stat. Ann., tit. 18, § 9410(c) (d).
In a 6-2 decision affirming our victory before the Second Circuit, the Court held that ERISA preempted Vermont’s database law as applied to self-funded employer benefit plans governed by ERISA. The majority held that the reporting requirements were preempted because they “intrude upon a central matter of plan administration”— reporting, disclosure, and recordkeeping about plan participants. It also noted that differing database laws in different states would have the potential to create burdensome costs for plans that operate in multiple states and expose them to substantial civil liability for failure to comply. Thus, preemption was also warranted to prevent plans from being subject to these inconsistent regulatory requirements. Critically, the majority held that it was unnecessary for the challenger of the Vermont law to show that it currently bore concrete economic costs as a result of state database laws; it was sufficient that the state database laws created the possibility of having to comply with “disuniform” regulations.
Justice Thomas joined the majority opinion, but wrote a separate concurring opinion expressing concern that ERISA’s preemption provision may be unconstitutionally broad.
Justice Breyer also wrote a separate concurring opinion (citing an amicus curiae brief filed by Mayer Brown) noting that unless the Vermont law was preempted, plans would be subject to many conflicting regulatory requirements of different states.
Justice Ginsburg, joined by Justice Sotomayor, dissented. She was of the view that ERISA does not preempt the Vermont database law because the Vermont law does not serve the same purposes as ERISA’s requirements and because she was not convinced that differing state database laws would impose extraordinary compliance costs on ERISA-governed plans.
This decision should be welcome news to the business community. A decision holding that ERISA does not preempt state databases would have potentially subjected plan administrators to a multiplicity of burdensome state reporting requirements — in addition to those imposed by ERISA itself. The decision clarifies that states cannot impose these sorts of requirements.
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