The U.S. Supreme Court Tuesday issued a majority ruling noting Vermont cannot require health insurers to release data on the amount paid on medical claims, and in a 6-2 decision backed Liberty Mutual Insurance’s contention that federal law prohibited such requirements.

The court found that a 2005 Vermont data collection law aimed at improving the quality of healthcare did not apply to self-funded insurance plans, which are most commonly used by large companies, and ran afoul of ERISA.

“Reporting, disclosure and record-keeping are central to, and an essential part” of the federal law, meaning that it trumps the state’s efforts to legislate on the same issue noted Justice Anthony Kennedy, writing for the court’s majority.

"The fact that reporting is a principal and essential feature of ERISA demonstrates that Congress intended to pre-empt state reporting laws like Vermont’s," he added.

The decision is “a victory for employer-sponsored health benefit plans,” says Brian Marcotte, president and CEO of the National Business Group on Health. “It reinforces that ERISA pre-empts state laws and regulations that would complicate plan administration.”

The verdict assures multi-state employers can operate employee health benefit plans by the same rules nationwide, saving costs for both employers and employees. “While employers support the intentions behind Vermont’s law, we believe that a national approach to rules for all-payer claims databases will be more productive and less costly,” he adds.

“Although the decision itself will not directly affect many employers or plans – it really has to do with a fairly unique Vermont law – it will preclude states from any number of attempts to enact regulations that have an effect on ERISA plans,” says Andrew Holly, a partner at the international law firm Dorsey & Whitney, who specializes in ERISA issues. “Employers who sponsor self-funded ERISA plans should consider this decision any time they have concerns that state laws might affect the administration of their plans."

In the dissenting opinion, Ruth Bader Ginsburg argued that Vermont’s law and ERISA serve different purposes, and thus ERISA shouldn’t supersede it. ERISA’s domain is the design and administration of employee benefit plans, while the Vermont law in question “aims to improve the quality and utilization, and reduce the cost of healthcare in Vermont by providing consumers, government officials and researchers with comprehensive data about the healthcare delivery system,” she wrote.

“The impact of this decision could severely impinge state efforts to fully understand trends in the healthcare markets they regulate.”

“The impact of this decision could severely impinge state efforts to fully understand trends in the healthcare markets they regulate,” notes Joe Ditré, senior director of enterprise and innovation at Families USA, on the decision. “It’s like asking a doctor to diagnose a patient, while withholding vital symptoms – in this case, critical data.”

“As Justice Ginsburg noted in her dissenting opinion, about half of Americans with health insurance get their coverage from their employer, and of those, about 61% are enrolled in employer self-insured plans,” he adds. “This decision could create a gaping hole in the data that employers, insurers, consumers, health providers, and state policymakers need to understand the effects of benefits policies, payment models, and to provide price transparency.”

The decision was one of two issued by the court on its first day of rulings since the Feb. 13 death of Justice Antonin Scalia, but one of several cases on a divided court that have ramifications for benefits professionals.

Allison Klausner, a principal and government relations leader at Xerox HR Services, notes several cases on docket include additional challenges to the ACA’s contraception mandate (Zubik v. Burwell) and new limits on class-action lawsuits (Tyson Foods v. Bouaphakeo).

While the political games play out between Senate Republicans and President Barack Obama in naming a justice to replace Scalia, Klausner advises employers to maintain a status quo.

“What employers need to know is the likelihood of the status quo continuing in these areas of uncertainty will continue for some time,” she says. “[Employers] will need to determine if they’re affected by more than one appellate court and how best to satisfy those rules or they need to continue with their risk analysis based on the circuit within [which] they sit.”

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