Gobeille v. Liberty Mut. Ins. Co.

The U.S. Supreme Court decision, Gobeille v. Liberty Mutual Ins. Co. (“Gobeille”), found ERISA pre-empts a Vermont state statute requiring certain entities, including self-funded ERISA plans, to provide claims payment data to the State.  

Vermont enacted a law requiring certain entities that provide and pay for health care services, including ERISA plans, self-insured health benefit plans and third-party administrators, to report information to a state agency. Liberty Mutual Life Insurance Company (“Liberty”) maintained a ‘self-insured and self-funded’ ERISA health plan that provided benefits in all 50 states and Blue Cross Blue Shield of Massachusetts, Inc. (“Blue Cross”) was the plan’s third-party administrator. Liberty was concerned about the disclosure of its members’ confidential information and filed an action in Vermont District Court, seeking a declaration that ERISA pre-empts the “application of Vermont’s statute and regulation to the Plan and an injunction forbidding Vermont from trying to acquire data about the Plan or its members.” Cross motions were filed and the District Court held the “State’s reporting scheme was not pre-empted.” The Court of Appeals reversed the District Court’s decision and the US Supreme Court affirmed the decision of the Court of Appeals, holding “ERISA’s express pre-emption clause requires invalidation of the Vermont reporting statute as applied to ERISA plans. The state statute imposes duties that are inconsistent with the central design of ERISA, which is to provide a single uniform national scheme for the administration of ERISA plans without interference from laws of the several States, even when those laws, to a large extent, impose parallel requirements.”

In reaching its decision, the Supreme Court noted ERISA’s comprehensive pre-emption provision at 29 U.S.C. section 1144(a), and stated ERISA had pre-empted two categories of state laws. First, ERISA pre-empts a state law if it has a ‘reference to’ ERISA plans, and second, ERISA pre-empts a state law that has an impermissible ‘connection with’ ERISA plans, meaning a state law that “governs…a central matter of plan administration” or “interferes with nationally uniform plan administration.” Liberty contended Vermont’s law had an impermissible ‘connection with’ ERISA plans. The Supreme Court stated that when presented with these arguments, it has “considered ‘the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive,’ and ‘the nature of the effect of the state law on ERISA plans.’”

The Supreme Court stated the ERISA statute “…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.” The Supreme Court noted  that ERISA’s “reporting, disclosure, and recordkeeping requirements for welfare benefit plans are extensive,” that “welfare benefit plans governed by ERISA must file an annual report with the Secretary of Labor,” and “that these requirements are integral aspects of ERISA.” The Supreme Court held “Vermont’s reporting regime…both intrudes upon ‘a central matter of plan administration’ and ‘interferes with nationally uniform plan administration.’” The Supreme Court stated the Vermont state law governs plan reporting, disclosure, and recordkeeping and that “These matters are fundamental components of ERISA’s regulation of plan administration,” and that the “Secretary of Labor, not the States, is authorized to administer the reporting requirements of plans governed by ERISA.” Thus, the Supreme Court held “the uniform rule design of ERISA makes it clear that these decisions are for federal authorities, not for the separate States.”

The Supreme Court found that the State’s “traditional power to regulate in the area of public health” did not save it from ERISA pre-emption and that ERISA “certainly contemplated the pre-emption of substantial areas of traditional state regulation.” The Supreme Court further held that “ERISA pre-empts a state law that regulates a key facet of plan administration even if the state law exercises a traditional state power” and that “[a]ny presumption against pre-emption, whatever its force in other instances, cannot validate a state law that enters a fundamental area of ERISA regulation and thereby counters the federal purpose in the way this state law does.”

Click here for the opinion.