Amicus Curiae Brief — Leslie Rutledge, Attorney General of Arkansas, Petitioner v. Pharmaceutical Care Management Association

Supreme Court briefMar 2, 2020

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No. 18-540

IN THE

¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯

LESLIE RUTLEDGE,

in her official capacity as

Attorney General of Arkansas,

Petitioner,

PHARMACEUTICAL CARE

MANAGEMENT ASSOCIATION,

Respondent.

________________

On Writ of Certiorari to the United States

Court of Appeals for the Eighth Circuit

________________

BRIEF OF NATIONAL COUNCIL OF INSURANCE LEGISLATORS AS AMICUS CURIAE

SUPPORTING PETITIONER

¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯

NATHANIEL S. SHAPO

Counsel of Record

THOMAS P. PEABODY

KATTEN MUCHIN ROSENMAN LLP

525 West Monroe Street

Chicago, Illinois 60661

nat.shapo@katten.com

(312) 902-5273

Counsel for Amicus Curiae

TABLE OF CONTENTS

TABLE OF AUTHORITIES ...................................... ii

INTERESTS OF AMICUS CURIAE ......................... 1

SUMMARY OF ARGUMENT.................................... 2

ARGUMENT .............................................................. 4

The States Have—and Require—Broad

Authority

Regulate

Healthcare

Insurance. ......................................................... 4

A. States Regulate Healthcare and

Insurance, and ERISA Did Not Displace

That Authority. .......................................... 5

B. The Affordable Care Act Merges

Healthcare and Insurance Regulation

for the States. ............................................. 9

C. The Eighth Circuit’s Decision Below

Disregards This Critical Context. ........... 12

II. An Expansive View of ERISA Preemption

Frustrates State Authority. ........................... 13

A. The Nation’s Healthcare and Insurance

Challenges Are Well Known. ................... 13

B. A Broad View of ERISA Preemption

Threatens States Working to Address

These Challenges. .................................... 15

CONCLUSION ......................................................... 19

TABLE OF AUTHORITIES

CASES

PAGE(S)

Aetna Health Inc. v. Davila,

542 U.S. 200 (2004)..............................................15

Am. Ins. Ass’n v. Garamendi,

539 U.S. 396 (2003)................................................6

California Div. of Labor Standards

Enf’t v. Dillingham Constr., N.A.,

Inc.,

519 U.S. 316 (1997)......................................2, 5, 12

Conkright v. Frommert,

559 U.S. 506 (2010)................................................7

De Buono v. NYSA-ILA Med. & Clinical

Servs. Fund,

520 U.S. 806 (1997)........................................5, 7, 8

Egelhoff v. Egelhoff,

532 U.S. 141 (2001)......................................7, 8, 15

FMC Corp. v. Holliday,

498 U.S. 52 (1990)..............................................3, 9

Gibbons v. Ogden,

22 U.S. 1 (1824)......................................................5

Gobeille v. Liberty Mut. Ins. Co.,

136 S. Ct. 936 (2016)........................................7, 15

Golden Gate Rest. Ass’n v. City & Cty. of

San Francisco,

546 F.3d 639 (9th Cir. 2008)................................16

Hillsborough Cty. v. Automated Med.

Labs. Inc.,

471 U.S. 707 (1985)................................................5

iii

Kentucky Ass’n of Health Plans, Inc. v.

Miller,

538 U.S. 329 ...........................................................8

Mackey v. Lanier Collection Agency

& Serv., Inc.,

486 U.S. 825 (1988)..............................................17

Medtronic, Inc. v. Lohr,

518 U.S. 470 (1996)............................................5, 6

Metro. Life Ins. Co. v. Mass.,

471 U.S. 724 (1985)........................................3, 8, 9

Nat’l Fed’n of Indep. Bus. v. Sebelius,

567 U.S. 519 (2012)..............................................11

New State Ice Co. v. Liebmann,

285 U.S. 262 (1932)................................................2

New York State Conference of Blue

Cross & Blue Shield Plans v.

Travelers Ins. Co.,

514 U.S. 645 (1995)...................................... passim

Paul v. Virginia,

75 U.S. 168 (1868)..................................................6

Pharm. Care Mgmt. Ass’n v. Gerhart,

852 F.3d 722 (8th Cir. 2017)................................17

Retail Indus. Leaders Ass’n v. Fielder,

475 F.3d 180 (4th Cir. 2007)................................16

Retail Indus. Leaders Ass’n v. Suffolk

Cty.,

497 F. Supp. 2d 403 (E.D.N.Y. 2007) ..................16

Rice v. Santa Fe Elevator Corp.,

331 U.S. 218 (1947)................................................5

Shaw v. Delta Air Lines, Inc.,

563 U.S. 87 (1983)............................................7, 15

U.S. Dep’t of Treasury v. Fabe,

508 U.S. 491 (1993)................................................6

United States v. Se. Underwriters Ass’n,

322 U.S. 533 (1944)................................................6

STATUTES

15 U.S.C. § 1011 ......................................................3, 6

15 U.S.C. § 1012(a)..................................................3, 6

15 U.S.C. § 1012(b)......................................................3

29 U.S.C. § 1001(b)......................................................7

29 U.S.C. § 1144(a)......................................................2

29 U.S.C. § 1144(b)(2)(A) ........................................3, 8

29 U.S.C. § 1144(b)(2)(B) ............................................9

29 U.S.C. § 1185d(b)..................................................10

42 U.S.C. §§ 300gg-1–300gg-63 ................................10

42 U.S.C. § 300gg-16(a).............................................10

42 U.S.C. § 300gg-18(a).............................................11

42 U.S.C. § 300gg-18(b).............................................11

42 U.S.C. § 300gg-18(b)(2) ........................................11

42 U.S.C. § 1320a-7 ...................................................12

42 U.S.C. § 1395cc-3 ..................................................11

42 U.S.C. § 1395jjj .....................................................11

42 U.S.C. § 18031 ......................................................10

42 U.S.C. §§ 18041–18054 ........................................10

42 U.S.C. § 18041 ......................................................12

42 U.S.C. § 18041(d)..................................................10

42 U.S.C. § 18052 ......................................................10

42 U.S.C. § 18063 ......................................................10

42 U.S.C. § 18083 ......................................................12

Ark. Code § 17-92-507 .................................................2

OTHER AUTHORITIES

2019 Employer Health Benefits Survey,

Kaiser Family Foundation (2019) .......................18

Alan Weil & Raymond Scheppach, New

Roles for States in Health Reform

Implementation, 29 Health Affairs

1178 (2010) ...........................................................10

Data Note: Americans’ Challenges with

Health Care Costs, Kaiser Family

Foundation, June 11, 2019 ............................13, 14

Elizabeth Y. McCuskey, Agency

Imprimatur & Healthcare Reform

Preemption, 78 Ohio St. L. J. 1095

(2017) ....................................................................10

The Employee Retirement Income

Security Act of 1974: The First

Decade, An Information Paper

Prepared for Use by the Special

Committee On Aging, S. Prt. 98-221

(2d Sess. 1984) .......................................................6

Erin C. Fuse Brown & Elizabeth Y.

McCuskey, Federalism, ERISA, and

State Single-Payer Health Care, 168

U. Pa. L. Rev. (forthcoming 2020) .......................17

How Much U.S. Households with

Employer Insurance Spend on

Premiums and Out-of-Pocket Costs:

A State-By-State Look, The

Commonwealth Fund, May 23, 2019 ..................14

Jaime S. King & Erin C. Fuse Brown,

ERISA as a Barrier for State Health

Care Transparency Efforts, UC

Hastings Law: Legal Studies

Research Paper Series (2019)..............................16

Jon R. Gabel, Job-Based Health

Insurance, 1977–1998: The

Accidental System Under Scrutiny,

18 Health Affairs 62 (1999) .............................9, 18

Loren Adler et al., State Approaches to

Mitigating Surprise Out-of-Network

Billing, USC-Brookings Schaeffer

Initiative for Health Policy (2019) ......................16

Mallory Jensen, Is ERISA Preemption

Superfluous in the New Age of

Health Care Reform?, 2011 Colum.

Bus. L. Rev. 464 (2011) ........................................18

Mary Ann Chirba-Martin, ERISA

Preemption of State “Play or Pay”

Mandates: How PPACA Clouds an

Already Confusing Picture, 13 J.

Health Care L. & Pol’y 393 (2010) ......................16

vii

Phyllis C. Borzi, There’s “Private” and

Then There’s “Private”: ERISA, Its

Impact, and Options for Reform, 36

J. L. Med & Ethics 660 (2008) .........................9, 18

State Health Systems Innovations,

National Conference of State

Legislatures, May 23, 2019 .................................15

INTERESTS OF AMICUS CURIAE*

The amicus curiae National Council of Insurance

Legislators (“NCOIL”) is a legislative organization

with the nation’s 50 States as members. NCOIL is

represented principally by State legislators serving

on committees that regulate insurance and financial

institutions. NCOIL works to preserve State jurisdiction over insurance as established by the McCarranFerguson Act 75 years ago, and it serves as an educational forum for public policymakers and interested

parties.

NCOIL asserts the prerogative of legislators in

making State insurance policy. As a part of that work,

NCOIL educates State legislators on current and

longstanding insurance issues. NCOIL also promulgates model laws on, among other things, State

healthcare and insurance, including model laws regulating pharmacy-benefit managers. As a legislative

organization focused on State powers in the area of

healthcare insurance, NCOIL is well suited to speak

to ERISA preemption’s negative impact on State innovation and the legal and policy reasons why the

scope of ERISA preemption should not be expanded

further.

* Counsel for each party has consented in writing to the filing of

this brief. No counsel for a party in this case authored this brief

in whole or in part. No counsel for a party nor any party in this

case made a monetary contribution intended to fund the preparation or submission of this brief. The only person or entity—

other than amicus, its members, or its counsel—that made such

a monetary contribution was the Independent Pharmacy Cooperative, which made its contribution through the Insurance Legislators Foundation, NCOIL’s educational and research arm.

SUMMARY OF ARGUMENT

States are the laboratories of democracy. New

State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932)

(Brandeis, J., dissenting). Perhaps nowhere is that

more true—and necessary—than in the evolving and

challenging space of healthcare-insurance regulation.

Today, however, the preemption provision of the

Employee Retirement Income Security Act of 1974

threatens State innovation in a way that Congress

never intended. Congress passed ERISA to protect

employer-provided retirement and health plans. It included a preemption provision, 29 U.S.C. § 1144(a), to

ensure that ERISA’s framework governed over State

laws. Yet that provision’s “unhelpful” and blanket

language has led courts to extend it too far, thwarting

State laws that do not directly regulate ERISA plans,

stem their administration or enforcement, or invade

the areas of ERISA’s fundamental concerns. New

York State Conference of Blue Cross & Blue Shield

Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995).

This case is about one such decision. The United

States Court of Appeals for the Eighth Circuit held

below that Arkansas’s Act 900, Ark. Code § 17-92-507,

which regulates pharmacy-benefit managers, was

preempted under ERISA. In so doing, the Eighth Circuit paid only passing lip service to this Court’s command that when States operate “in fields of traditional state regulation” there is an “assumption” that

such laws are not preempted absent a “clear and manifest purpose of Congress” to the contrary. Cal. Div. of

Labor Standards Enf’t v. Dillingham Constr., N.A.,

Inc., 519 U.S. 316, 325 (1997). This Court should reiterate that command and reverse.

Claims of ERISA preemption usually challenge

two related areas of State power: (1) the healthcare of

residents and (2) the business of insurance.1 That

States are the primary regulators of these areas is

long-recognized in tradition and statute. The McCarran-Ferguson Act of 1945, for example, explicitly reserved for the States control over the business of insurance. 15 U.S.C. §§ 1011, 1012(a), (b). ERISA itself

repeated that reservation by adding the so-called

“saving clause,” which exempts from preemption

State laws relating to insurance. 29 U.S.C.

§ 1144(b)(2)(A). And the Patient Protection and Affordable Care Act of 2010 expanded the States’ role in

regulating healthcare and insurance. Indeed, after

2010, the lines between healthcare regulation per se

and insurance regulation per se have become so intertwined that, for States to make an legislative impact,

they must account for both plan coverage and insurance costs in passing reforms. Viewed as a whole, the

upshot is Congress’s intent to protect, not preempt,

the vast majority of State laws regulating healthcare

insurance.

A sweeping view of ERISA preemption, like the

Eighth Circuit’s, does not respect the States’ role.

That is particularly troubling given the healthcare

challenges facing Americans. Premiums, unexpected

bills, and rising pharmaceutical costs present major

stumbling blocks to many households. In the face of

1 The facts of this case do not directly deal with State insurance

regulation. But State control over that matter is both impacted

by and frequently the subject of this Court’s ERISA-preemption

decisions. See, e.g., FMC Corp. v. Holliday, 498 U.S. 52 (1990);

Metro. Life Ins. Co. v. Mass., 471 U.S. 724 (1985).

those challenges, States should be encouraged to enact reforms—not discouraged by the looming threat of

overbroad ERISA preemption.

As it stands, ERISA preemption has already hampered much of the States’ ability to innovate. This

owes in large part to the growth of employer selffunded plans, which fall outside of ERISA’s saving

clause and are thus subject to preemption. When

ERISA was passed, self-funded plans accounted for a

sliver of the market. But today, 61 percent of all covered workers have self-funded plans. Though Congress did not envision a dwindling role for States in

exercising their traditional powers over healthcare

and insurance, ERISA preemption has caused just

that. This Court should not compound the problem by

extending the scope of ERISA preemption further.

Congress can, when it specifically determines

that such action is in the national interest, make policy decisions and pass laws that apply nationwide

standards for healthcare and insurance regulation.

But ERISA is not that law. Interpreting ERISA’s

preemption provision broadly discourages, if not forecloses, State innovation at a time when it is most

needed.

ARGUMENT

The States Have—and Require—Broad Authority to Regulate Healthcare Insurance.

In deciding claims of ERISA preemption, this

Court starts from the “presumption that Congress

does not intend to supplant state law.” Travelers Ins.,

514 U.S. at 654. “Indeed,” this Court has explained,

when federal law enters “fields of traditional state

regulation,” courts work “on the ‘assumption that the

historic police powers of the States were not to be superseded by the Federal Act unless that was the clear

and manifest purpose of Congress.’” Id. at 655 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230

(1947)).

Claims of ERISA preemption often implicate two

core—and increasingly overlapping—areas of “traditional state regulation”: local healthcare and the business of insurance. Nothing in ERISA’s text or history

signals a “clear and manifest purpose” to disrupt the

States’ general control over those areas. See id. at 661.

As a result, the presumption against preemption applies. The Eighth Circuit’s contrary decision, which

adopts a far-reaching concept of ERISA preemption

that disregards State authority, should be reversed.

A. States Regulate Healthcare and Insurance, and ERISA Did Not Displace

That Authority.

The “regulation of health and safety matters is

primarily, and historically, a matter of local concern.”

Hillsborough Cty. v. Automated Med. Labs. Inc., 471

U.S. 707, 719 (1985). This tradition dates back to the

founding. See Gibbons v. Ogden, 22 U.S. 1, 79 (1824)

(referencing “the acknowledged power of a State[ ] to

provide for the health of its citizens”). And since then

this Court has repeatedly recognized “the historic primacy of state regulation of matters of health and

safety.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 485

(1996); see also, e.g., Dillingham, 519 U.S. at 330–32;

De Buono v. NYSA-ILA Med. & Clinical Servs. Fund,

520 U.S. 806, 814 & n.10 (1997). As such, “federalism

concerns” dictate respect for local healthcare regulation unless Congress clearly meant to displace it.

Medtronic, 518 U.S. at 485; see also Travelers Ins., 514

U.S. at 654–55.

The same is true for State control of local insurance. This Court recognized that control as early as

Paul v. Virginia, 75 U.S. 168, 183 (1868). And after

United States v. South-Eastern Underwriters Association, 322 U.S. 533 (1944), casted doubt on that conclusion, Congress passed the McCarran-Ferguson Act of

1945. See, e.g., U.S. Dep’t of Treasury v. Fabe, 508 U.S.

491, 499–500 (1993). McCarran-Ferguson declares

that “continued regulation and taxation by the several States of the business of insurance is in the public

interest.” 15 U.S.C. § 1011. It reserves for the States

control over the “business of insurance, and every person engaged therein.” Id. § 1012(a). McCarran-Ferguson’s purpose, therefore, is abundantly clear: “limit

congressional preemption” of State insurance laws.

Am. Ins. Ass’n v. Garamendi, 539 U.S. 396, 428

(2003).

With the States’ general authority over

healthcare and insurance established, ERISA entered

the picture in 1974. ERISA did not purport to overhaul healthcare or insurance regulations. As the

name suggests—the Employee Retirement Income Security Act—the law sets minimum standards for most

voluntarily established retirement and health plans.

See generally The Employee Retirement Income Security Act of 1974: The First Decade, An Information Paper Prepared for Use by the Special Committee On

Aging, S. Prt. 98-221, 1–32 (2d Sess. 1984). To that

end, ERISA specifically protects:

participants in employee benefit plans and

their beneficiaries, by requiring the disclosure

and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of

conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by

providing for appropriate remedies, sanctions, and ready access to the Federal courts.

29 U.S.C. § 1001(b); accord Conkright v. Frommert,

559 U.S. 506, 516 (2010) (“Congress enacted ERISA

to ensure that employees would receive the benefits

they had earned.”).

These are the “fundamental area[s] of ERISA regulation.” See Gobeille v. Liberty Mut. Ins. Co., 136

S. Ct. 936, 946 (2016); see also Travelers Ins., 514 U.S.

at 651 (“reporting and disclosure mandates …, participation and vesting requirements…, funding standards…, and fiduciary responsibilities for plan administrators” are ERISA’s methods for carrying out its

employee protections). When State laws “intrude[ ]”

upon those areas, they risk preemption. Gobeille, 136

S. Ct. at 945–46. Also preempted are State laws that

directly regulate ERISA plans, dictate terms or beneficiaries, or alter ERISA’s remedy and enforcement

schemes. Accord Egelhoff v. Egelhoff, 532 U.S. 141,

147–48 (2001); De Buono, 520 U.S. at 814–15; Shaw

v. Delta Air Lines, Inc., 463 U.S. 85, 98–100 (1983).

And that scope of ERISA preemption is sensible, as

far as it goes. ERISA entails “a uniform administrative scheme,” and State laws that interfere with that

scheme, or otherwise invade ERISA’s fundamental

areas of concern, can be fairly deemed preempted.

Egelhoff, 532 U.S. at 148.

Not among ERISA’s “fundamental areas” is a concern for standard-setting on providers, insurers,

third-party suppliers and coordinators, or the products plans consume. Accord Metro. Life Ins., 471 U.S.

at 732 (ERISA “contains almost no federal regulation

of the terms of benefit plans”). For that reason, this

Court has recognized that State laws targeted “only

[at] the health care industry” carry the “starting presumption” against ERISA preemption. De Buono, 520

U.S. at 813–14 & n.10. As to insurance more specifically, ERISA itself exempts from preemption “any law

of any State which regulates insurance.” 29 U.S.C.

§§ 1144(b)(2)(A). That provision, known as the “saving clause,” generally protects, like McCarran-Ferguson, State authority over insurance regulation. In

fact, this Court has suggested that the saving clause

is, in some ways, broader than McCarran-Ferguson.

Kentucky Ass’n of Health Plans, Inc. v. Miller, 538

U.S. 329, 337 (“ERISA’s saving clause, however, is not

concerned (as is the McCarran-Ferguson Act provision) with how to characterize conduct undertaken by

private actors, but with how to characterize state laws

in regard to what they ‘regulate.’”) (emphases in original); see also id. at 340–41.

The saving clause is limited by the provision that

follows, the so-called “deemer clause.” The deemer

clause states that “employee benefit plan[s]”—that is,

self-insured or self-funded plans—are not companies

engaged in insurance for purposes of the saving

clause.2 29 U.S.C. § 1144(b)(2)(B); see also FMC Corp.,

498 U.S at 61; Metro. Life Ins., 471 U.S. at 735 n.14,

747. Critically, however, Congress could not have intended the deemer clause to subvert the saving clause

and its general protection for State insurance regulations. In the 1970s, when Congress enacted ERISA,

only about seven percent of employees had coverage

through self-funded plans. Jon R. Gabel, Job-Based

Health Insurance, 1977–1998: The Accidental System

Under Scrutiny, 18 Health Affairs 62, 70 (1999).3 It

follows that, to the extent ERISA’s enactors “thought

about the effect [of ERISA] on health plans, they probably would have believed that the insurance savings

clause in ERISA’s preemption provisions would have

been sufficient to address any future problems” between State regulation and ERISA’s preemptive

sweep. Phyllis C. Borzi, There’s “Private” and Then

There’s “Private”: ERISA, Its Impact, and Options for

Reform, 36 J. L. Med. & Ethics 660, 661 (2008).

B. The Affordable Care Act Merges

Healthcare and Insurance Regulation

for the States.

Congress did not intend to reform healthcare or

insurance with ERISA. But it did with the Affordable

Care Act.4 Enacted in 2010, the Act sets nationwide

2 A self-funded plan, unlike an “insured plan” or a “fully insured

plan,” is a plan that pays the benefits rather than an insurance

carrier.

3 https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.18.6.62.

4 As is true with McCarran-Ferguson and the saving clause, this

case does not squarely concern the Affordable Care Act. The Act’s

effect on healthcare insurance, however, is notable in assessing

the impact of a broad view of ERISA preemption.

healthcare standards for, among other things, insurance affordability and plan coverage.5 42 U.S.C.

§§ 300gg-1–300gg-63. Yet the law, by large measure,

relies on the States to implement its framework. See

Alan Weil & Raymond Scheppach, New Roles for

States in Health Reform Implementation, 29 Health

Affairs 1178, 1178–79 (2010).6 States, for example,

must oversee insurance markets and run insurance

exchanges. 42 U.S.C. § 18031. They must also set up

and conduct risk-adjustment review programs. Id.

§ 18063. Still more, as was true before 2010, States

are the primary regulators of most forms of

healthcare coverage—like HMOs, PPOs, and, after

the Act, affordable-care organizations (or ACOs)—

plus providers, hospitals, medical suppliers, coordinators, and insurers.

Going a step further, the Affordable Care Act affirmatively guarantees “state flexibility.” Id.

§§ 18041–18054. It does so by disavowing express

preemption, id. § 18041(d), and including a “waiver

for state innovation” so long as minimum standards

are met, id. § 18052. Such waivers, which appear in

Congress’s other major healthcare regimes, like Medicaid (but not ERISA), protect federalism. They endorse State authority over healthcare and insurance

and allow States to craft their own regulations consistent with national policy. See, e.g., Elizabeth Y.

5 The Affordable Care Act carves out ERISA self-funded plans

from certain standards. 29 U.S.C. § 1185d(b); 42 U.S.C. § 300gg16(a).

https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2010.04

48.

McCuskey, Agency Imprimatur & Healthcare Reform

Preemption, 78 Ohio St. L. J. 1099, 1153–57 (2017).

The Affordable Care Act thus recognizes, as

McCarran-Ferguson and the saving clause recognize,

the key role for States in regulating healthcare and

insurance. But the Act also alters fundamentally how

States regulate. Congress’s overhaul brought about a

flood of standards, programs, and rules aimed “to increase the number of Americans covered by health insurance and decrease the cost of health care.” Nat’l

Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 538

(2012) (emphases added). Congress, in other words,

viewed plan coverage and insurance costs as intertwined, believing that new requirements for expanded and better coverage would, with State oversight, lower insurance costs.

Several provisions reflect this union of coverage

and costs. The Affordable Care Act, for example, contemplates State involvement in the application of

medical-loss ratios. 42 U.S.C. § 300gg-18(b)(2). Such

regulations mandate that insurers spend a certain

percentage of premiums on care or improving care;

otherwise those insurers must issue rebates. Id.

§§ 300gg-18(a)–(b). Medical-loss ratio laws, therefore,

govern the relationship among insurers, providers,

and policyholders, by controlling the amounts owed

from insurers to policyholders when certain amounts

have not been paid to providers. The Affordable Care

Act also contemplates the use of tools like shared-savings programs and gainsharing. Id. §§ 1395jjj, 1395cc3. These regulations likewise frame arrangements

among certain insurers, providers, and policyholders.

So, too, do numerous reform programs promoted by

the Affordable Care Act for States to control, such as

those relating to the curbing of waste, abuse, and

fraud in the healthcare system. See, e.g., id.

§§ 1320a-7, 18041, 18083.

In short, the current regime not only assumes

States’ rights over healthcare and insurance—it marries the two, for as long as the Affordable Care Act

remains the law.

C. The Eighth Circuit’s Decision Below

Disregards This Critical Context.

On balance, two facts are clear: (1) States maintain control over healthcare and insurance regulation,

limited only by clear congressional intent; and

(2) States, in exercising that control, operate under a

regime that has increasingly blurred the lines among

regulations of plans, providers, and insurers.

The Eighth Circuit’s decision below is not in keeping with the first fact. The decision treated this

Court’s “presumption” against preemption as an afterthought. See Pet. App. 5a–7a; Travelers Ins., 514

U.S. at 654–55. And it ignored the settled principle

that ERISA does not preempt “traditionally state-regulated substantive law in those areas where ERISA

has nothing to say.” Dillingham, 519 U.S. at 330.

The Eighth Circuit’s decision does not account for

the second fact either. Its interpretation of ERISA

preemption, sweeping as it is, makes it even more difficult for States to regulate. If ERISA preempts, as the

Eighth Circuit thought, State laws that “implicitly refer[ ]” to ERISA plans and laws that are well beyond

ERISA’s fundamental areas of concern (as rate regulation is, see Travelers Ins., 514 U.S. at 667 & n.6),

then States are further hamstrung in regulating the

overlapping relationships among plans, providers,

and insurers. See Pet. App. 5a–7a.

This Court should therefore reject the Eighth Circuit’s interpretation of ERISA preemption and reinforce the presumption against preemption when it

comes to the States’ exercise of traditional authority.

II. An Expansive View of ERISA Preemption

Frustrates State Authority.

The need for clarity on the limits of ERISA

preemption is especially necessary today. The evolving structure of healthcare and insurance markets expands the threat ERISA preemption poses to State solutions. And it does so at a time when those solutions

are required, given rising healthcare costs and inadequate care.

A. The Nation’s Healthcare and Insurance Challenges Are Well Known.

Consider first the healthcare challenges facing

Americans, which are unfortunately well known. “The

cost of health care affects every aspect of the U.S.

health systems.” Data Note: Americans’ Challenges

with Health Care Costs, Kaiser Family Foundation,

June 11, 2019.7 A few statistics suffice to demonstrate

the problem:



Fifty-eight percent of people who spend more

than $100 per month on prescriptions have

difficulty affording their medication.

https://www.kff.org/health-costs/issue-brief/data-note-americans-challenges-health-care-costs/.



About half of adults admit that they or a

family member put off visiting a provider

or skipped treatment due to costs.



The problem is even worse for households

with serious medical conditions. Sixtyfour percent of those households admit to

putting off care, and in 23 percent of

cases, conditions were worse as a result.



Twenty-nine percent of adults admit to

having not taken their medications as

prescribed due to costs.



More than one in four adults say they or a

family member had difficulty paying medical bills in the past year, and half of that

group reported that their bills have a “major impact” on their family.

Id. These challenges extend even to those with employer-sponsored coverage. About half of Americans

with employer-sponsored coverage report that they or

a family member skipped or postponed receiving care

or obtaining prescriptions in the past year due to

costs. Id. And almost 24 million Americans with employer-sponsored coverage spend a large share of

their income on premiums or out-of-pocket costs. How

Much U.S. Households with Employer Insurance

Spend on Premiums and Out-of-Pocket Costs: A StateBy-State Look, The Commonwealth Fund, May 23,

2019 (considering a “large share” of income to be

5 percent for those with low income and 10 percent

otherwise).8

https://www.commonwealthfund.org/publications/issue-briefs/

There is serious room for improvement. Compared to many other countries, “the United States

ranks last or near the bottom on measures related to

health indicators, such as access, efficiency, and equity.” State Health Systems Innovations, National

Conference of State Legislatures, May 23, 2019.9

B. A Broad View of ERISA Preemption

Threatens States Working to Address

These Challenges.

As noted, this Court’s decisions have generally

held that ERISA preemption is appropriate if State

law “intrudes” upon a fundamental area of ERISA

concern, Gobeille, 136 S. Ct. at 945–46, or otherwise

requires benefits, Shaw, 463 U.S. at 97–98, dictates

beneficiaries, Egelhoff, 532 U.S. at 148–49, or alters

ERISA’s contemplated remedies and means of enforcement, see Aetna Health Inc. v. Davila, 542 U.S.

200, 221 (2004). This Court should not expand ERISA

preemption any further. A broader interpretation

would further undercut States’ ability to enact reform

and address the nation’s pressing healthcare challenges.

The Eighth Circuit’s decision below is an example

of a broad interpretation of ERISA preemption frustrating State advancement in healthcare reform. See

Pet. App. 5a–7a. Another is the rejection of “play or

pay” laws, which require (or strongly encourage) by

various means employers to offer or contribute to

2019/may/how-much-us-households-employer-insurance-spendpremiums-out-of-pocket.

https://www.ncsl.org/research/health/state-health-systems-innovations.aspx.

healthcare coverage. See Retail Indus. Leaders Ass’n

v. Fielder, 475 F.3d 180, 190–97 (4th Cir. 2007) (holding a Maryland law preempted); Retail Indus. Leaders

Ass’n v. Suffolk Cty., 497 F. Supp. 2d 403, 416–18

(E.D.N.Y. 2007) (holding a similar county ordinance

preempted); but see Golden Gate Rest. Ass’n v. City &

Cty. of San Francisco, 546 F.3d 639, 651–661 (9th Cir.

2008) (holding a similar county ordinance not

preempted); see also Mary Ann Chirba-Martin,

ERISA Preemption of State “Play or Pay” Mandates:

How PPACA Clouds an Already Confusing Picture, 13

J. Health Care L. & Pol’y 393 (2010).

But more important than the particular laws that

have already been struck down, a broad view of

ERISA preemption hampers State innovation in a

fundamental way: it creates a growing disincentive

for States to pass reforms. Preemption looms over efforts to regulate healthcare insurance. Commentators, for example, have recognized preemption’s challenge to State laws that combat surprise, out-of-network medical bills. Loren Adler et al., State Approaches to Mitigating Surprise Out-of-Network Billing, USC-Brookings Schaeffer Initiative for Health

Policy, 38 (2019)10 (noting that the “unpredictab[ility]” of “ERISA preemption”). The same is true for iterations of different price-transparency laws, see

Jaime S. King & Erin C. Fuse Brown, ERISA as a

Barrier for State Health Care Transparency Efforts,

https://www.brookings.edu/wp-content/uploads/2019/02/Adler_et-al_State-Approaches-to-Mitigating-Surprise-Billing2019.pdf.

UC Hastings Law: Legal Studies Research Paper Series 7, 10–11 (2019),11 and even experiments with single-payer insurance, see Erin C. Fuse Brown & Elizabeth Y. McCuskey, Federalism, ERISA, and State

Single-Payer Health Care, 168 U. Pa. L. Rev. (forthcoming 2020).12

To avoid the too-broad view of ERISA preemption,

States are often forced to sacrifice meaningful reform

with workarounds to circumvent preemption. The

workarounds are not easy. Under Mackey v. Lanier

Collection Agency & Service, Inc., 486 U.S. 825, 828

(1988), even laws that exempt ERISA plans from their

reach are subject to preemption. Accord Pharm. Care

Mgmt. Ass’n v. Gerhart, 852 F.3d 722, 728 (8th Cir.

2017) (stating that a law that “specifically exempts

[self-funded] ERISA plans from an otherwise generally applicable statute” is in “reference to” ERISA

plans). And even if a State thinks it has done enough

to evade ERISA preemption, protracted litigation often awaits. States thus face grave uncertainties in

dedicating the resources and political capital necessary to pass new healthcare-insurance reforms.

The problem has only grown over time. When

Congress passed ERISA, State authority over

healthcare insurance for employer plans was largely

preserved. This owed to ERISA’s saving clause, which

protects State insurance regulation over all plans but

self-funded ones. As noted, in the 1970s, only seven

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=32141

73.

62.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=33954

percent of workers had self-funded plans, leaving the

vast majority of employer and non-group insureds

subject to State control. Gabel, Job-Based Health Insurance, 18 Health Affairs at 70. Not so today. Since

the 1970s, the number of covered workers with selffunded plans has ballooned to 61 percent in 2019.

2019 Employer Health Benefits Survey, Kaiser Family

Foundation (2019).13 This has left increasingly little

for States to regulate. And nothing in ERISA suggests

that Congress envisioned such a result. When ERISA

passed, “no member of Congress” could “seriously

have foreseen a time when … ERISA—a law primarily meant to regulate pensions—would have become

such a stumbling block to national health reform.”

Borzi, There’s “Private” and Then There’s “Private”, 36

J. L. Med & Ethics at 663.

The Affordable Care Act’s sea change puts States

in a precarious position as well. As explained, the

Act’s set of nationwide standards, programs, and

rules conflates the lines between strictly insurance

and healthcare regulation. States are left to carry out

much of this framework and more. While the Act provides timetables and State-innovation waivers to protect State regulation, it makes no mention of ERISA

preemption. See Mallory Jensen, Is ERISA Preemption Superfluous in the New Age of Health Care Reform?, 2011 Colum. Bus. L. Rev. 464, 501–03 (2011).

States, therefore, continue to risk ERISA preemption

in attempting to exercise control of healthcare insurance after the Act.

https://www.kff.org/report-section/ehbs-2019-summary-offindings/.

The troubling condition of American healthcare

and the States’ already-curbed role in regulating modern markets militate against any further expansion of

this Court’s ERISA-preemption jurisprudence.

CONCLUSION

This Court should reverse the judgment below.

Respectfully submitted,

March 2, 2020