Michigan’s tax on paid health care claims is not preempted by ERISA, according to a decision by the United States Court of Appeals for the Sixth Circuit. On remand from the United States Supreme Court, the federal appellate court held that the Health Insurance Claims Assessment Act does not impermissibly interfere with the uniform administration of group health plans or impose additional burdens on self-insured plans and third-party administrators.
The Act, which became effective in January 2012, generates revenues for funding the Medicaid state share through a tax on paid health claims. The tax is assessed against commercial insurers, HMOs, nonprofit health and dental corporations, Medicaid managed care organizations, specialty prepaid health plans, third-party administrators and group health plan sponsors.
In 2011, the Self-Insurance Institute of America challenged the Act on behalf of self-funded ERISA plans, including plan sponsors, administrators, and third-party administrators. The Act was upheld by the United States District Court for the Eastern District of Michigan. The Sixth Circuit affirmed that decision in 2014. Subsequently, the United States Supreme Court decided Gobeille v Liberty Insurance Co., an ERISA preemption case involving Vermont’s all-payer claims database statute. The Supreme Court remanded the Michigan case to the federal appeals court for reconsideration in light of Gobeille.
On July 1, the Sixth Circuit reaffirmed its prior decision and again held that the Act is not preempted by ERISA. The court viewed the recordkeeping and reporting obligations imposed by the Michigan act as similar to those required by other tax statutes that have survived ERISA preemption challenges. The court held that the requirements for complying with the Act are peripheral to an ERISA plan’s administration and only constitute incidental burdens that do not interfere with efficient and uniform operations of ERISA plans.
Although the Self-Insurance Institute of America can file a petition requesting review by the Supreme Court, it seems quite unlikely that the Court would grant certiorari and hear since the governing legal principles were recently considered in Gobeille.