Today, in Gobeille v. Liberty Mutual Insurance Company, the United States Supreme Court held that the Employee Retirement Income Security Act of 1974 (“ERISA”) preempts a Vermont state law that requires certain entities to report health care information to a state agency for inclusion in a health care database.
ERISA contains a broad preemption clause which states that ERISA supersedes all state laws relating to employee benefit plans with the exception of state laws regulating health insurance. In practice, this generally means that states can regulate fully-insured health plans, but not self-insured health plans. Liberty Mutual Insurance Company (“Liberty”) sponsors a self-insured health plan for the benefit of its employees in all 50 states. Liberty engaged Blue Cross Blue Shield of Massachusetts, Inc. (“Blue Cross”) to act as third-party administrator for its plan. The Vermont health care reporting law would have required Blue Cross to disclose certain eligibility and claims information regarding Liberty’s Vermont employees. Worried that disclosure would violate its fiduciary duties, Liberty directed Blue Cross not to comply with the Vermont law and filed a suit seeking a declaration that the Vermont law is preempted by ERISA, as well as an injunction preventing Vermont from attempting to acquire information about Liberty’s plan. The District Court granted summary judgment in favor of Vermont, but the Second Circuit Court of Appeals reversed and concluded that the law was preempted by ERISA.
In a 6-2 ruling, the United States Supreme Court upheld the decision of the Second Circuit and found that Vermont’s law is preempted by ERISA and therefore does not apply to self-insured health plans. The Court paid special attention to the fact that it would be burdensome for self-insured plans to be required to comply with different reporting laws across the 50 states, especially in light of ERISA’s already extensive reporting and disclosure requirements.
This decision will likely limit similar laws in other states. However, the decision is unlikely to directly impact most plan sponsors as Vermont’s law and those similar to it primarily require health insurers to report information and do not directly regulate plan sponsors.