Supreme Court Upholds Key ERISA Preemption Case

March 04, 2016

Concerns that the loss of U.S. Supreme Court Justice Antonin Scalia would jeopardize the strength of the ERISA preemption were dispelled this week when the Court, in a 6 to 2 ruling, held that ERISA preempts state laws that require self-insured health plans to report claims data to state all-payer claims databases.  Large employers are hoping that the ruling could also presage a striking down of the State of Michigan's tax on self-insured health care claims.  In Gobeille v. Liberty Mutual Insurance, Justice Kennedy's majority opinion said the "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."  The Association and four other business groups filed an amicus curiae brief supporting HR Policy member Liberty Mutual's position.  The Association is a strong advocate of health care transparency, but subjecting large companies to fifty different sets of requirements would be a counter-productive step towards that goal.  The justices are now expected to decide whether to grant a petition from the Self-Insurance Institute of America seeking to overturn a 2014 Sixth Circuit Court of Appeals decision upholding the State of Michigan's Health Insurance Claims Assessment Act that imposes a one percent tax on health care claims paid by third-party administrators on behalf of self-insured employers.  This case is particularly important because if the Sixth Circuit decision is upheld, other states are likely to enact their own taxes on self-insured employers to help pay for Medicaid costs and other state health care programs.  However, this week's decision by the Supreme Court significantly increases the likelihood the Michigan tax will be struck down.