PERSPECTIVE: DEFINING THE SCOPE OF ERISA PREEMPTION IN GOBEILLE V. LIBERTY MUTUAL INSURANCE CO.

The Supremacy Clause of the U.S. Constitution makes the laws of the United States supreme law, making any state law in direct conflict with federal law invalid. As such, federal law pre-empts state law. In Gobeille v. Liberty Mutual Ins. Co., the Court addressed the issue of whether a federal regulation, the Employee Retirement Income Security Act of 1974 (ERISA), pre-empts a Vermont state law that requires disclosure of health care claim payments. The Employee Retirement Income Security Act of 1974 (ERISA) was enacted by Congress to regulate the entire field, replacing any existing state law and circumventing any future law. ERISA requires health plans to keep detailed records to satisfy disclosure requirements. Per the Vermont Healthcare Claims Uniform Reporting and Evaluation System statute, a health care database maintains records for state disclosure requirements. The goal is to improve efficacy and minimize costs in the administration of health care. The Vermont statute states: “the database shall contain unique patient and provider identifiers and a uniform coding system and shall reflect all health care utilization, costs, and resources in this State, and health care utilization and costs for services provided to Vermont residents in another state [1].” To satisfy the requirements of the regulation, disclosure of medical claims data is required from health insurers, health care providers, health care facilities, and governmental agencies. [2].

The Respondent, in this case, Liberty Mutual Ins. Co is an employer-sponsored health plan for Vermont residents. The Plan uses Blue Cross Blue Shield of Massachusetts as a third-party administration for residents of Vermont receiving services outside of Vermont. The contract between Liberty Mutual Insurance Co. and Blue Cross and Blue Shield provides that Blue Cross will manage the ‘processing, review and payment of claims’ for Liberty Mutual [3]. As a result of this contractual relationship, Blue Cross and Blue Shield of Massachusetts are subject to Vermont’s disclosure regulation for medical claims data. This disclosure requirement is in direct conflict with federal law. As a result, the Respondent filed this claim in the U.S. District Court of Vermont seeking “a declaration that ERISA pre-empts 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 [4].” The District Court determined that ERISA did not pre-empt Vermont’s disclosure requirement. The Court of Appeals for the Second Circuit reversed, and the U.S. Supreme Court granted certiorari to determine the scope of ERISA pre-emption.

In Gobeille v. Liberty Mutual Ins. Co., the Respondent argues that Vermont’s disclosure scheme regulates a central aspect of plan administration. If not pre-empted, health plans will face the possibility of complying with conflicting state reporting laws that interferes with a nationally uniform plan administration and disclosure requirements. The Court agreed. The Court notes that “pre-emption is necessary to prevent the States from imposing novel, inconsistent and burdensome reporting requirements on plans [5]. It further contends that separate States’ argument of authority on the issue is not palpable by invoking the State’s traditional power to regulate in the area of public health. This case determined that the reporting of medical claims data is a principal and essential feature of ERISA, demonstrating that Congress intended to regulate the entire field pre-empting state disclosure laws that operate to contain health care costs.

[1] 18 . §9410(b).

[2] 18 . §9410 (c)(3).

[3] Gobeille v. Liberty Mutual Ins. Co, 577 US (2016).

[4] Id.

[5] Id.