The U.S. Supreme Court will decide whether ERISA preemption shields a self-funded health plan from state requirements to report health claims data. The court agreed June 29 to hear Gobeille v. Liberty Mutual Ins. Co. (2015 WL 2473478).
The state of Vermont is appealing the 2nd U.S. Circuit Court of Appeals’ ruling in Liberty Mutual v. Donegan, 746 F.3d 497 (2nd Cir., 2014), that the state law could not be applied to compel Liberty Mutual to report its plan data. The High Court granted certiorari to address the following question: Whether ERISA preempts Vermont’s reporting mandates insofar as they require self-insured plans governed by ERISA to submit data about claims paid under the terms of the plan.
Starting in 2008 under the Vermont Health Care Uniform Reporting and Evaluation System, Vermont required health care providers and all public and private health care payers (including insurers, government programs and TPAs) to provide claims data and related information to the State’s health care database.
The statute creates, and provides for the maintenance of a unified health care database containing claims data and other health care-related data. The state uses the data to: evaluate health resource capacity; identify health care needs; develop programs to improve patient outcomes; rein in costs; and promote quality and affordability of health services in the state. Penalties for knowing and willful failure to comply can be as much as $10,000 per violation.
Do State Assessments Conflict with Core ERISA Goals?
Liberty Mutual is litigating in its role as sponsor of a self-insured health plan for its employees in the state. It sued after Vermont subpoenaed its TPA for the required records.
In February 2014, the 2nd Circuit ruled that ERISA preemption applied because:
- the Vermont law created a new complex state requirements for ERISA plan administrators;
- the plan sponsor suffered an injury-in-fact as a result of Vermont’s reporting law and rules; and
- the state’s law and rules had “connection with” ERISA plans, because “reporting” is a “core” ERISA competency.
Alfred Gobeille, chairman of the Green Mountain Care Board (the state agency that takes care of the health care database’s responsibilities), filed a writ of certiorari in August 2014 to overturn the appeals court’s ruling. Liberty Mutual filed a brief in opposition, to which Gobeille replied in November 2014.
In the reply brief, Gobeille argued that the 2nd Circuit’s ruling was drastically out of step with other circuits, and failed to give proper weight to an amicus brief arguing against preemption filed by the U.S. Department of Labor, the federal agency that administers ERISA. DOL argued in its brief that the state’s reporting and evaluation system “does not relate to ERISA plans in any way that dictates benefit choices or interferes with plan administration or structure.”
“The federal government, seven states, another court of appeals, and the dissenting judge below all disagree with the 2nd Circuit’s sweeping expansion of ERISA preemption. Nothing short of clarification by this Court will resolve this confusion,” Gobeille argued in his reply.
Sixteen states are developing similar databases to which all payers must report, and the 2nd Circuit’s holding creates “a gaping hole” in those databases, by cutting out data for tens of millions of Americans covered by self-insured plans, according to Gobeille’s brief. Because most Americans who receive health insurance coverage from their employers are covered by self-insured plans, “an all-payer claims database that omits self-insured plans cannot be considered accurate or comprehensive.”
For more information on ERISA’s scope and preemptive powers, see Sections 712 and 741 of the Guide to Self-Insuring Health Benefits.