Petition — DAWSON v. WHALAND (Nos. 77-772, 77-765)

evpreme Court, U.S

| “PILED

| NOV 29 I977

- JR., CLERK

In The ‘

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

i A RS NE

no. 77 -7'72

A EE TT Se A

JAMES M. DAWSON, Administrator of

Northern New England Carpenters Health and Welfare Fund,

New Hampshire Masons Health and Welfare Fund,

New Hampshire Plumbers Health and Welfare Fund,

New Hampshire Sheet Metal Works #297

Health and Welfare Fund,

PETITIONER,

VS,

FRANCIS E, WHALAND, Commissioner,

Department of Insurance,

State of New Hampshire,

RESPONDENT,

A i =

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

ee eae eee

STANLEY M, BROWN, Esq.

DAVID L, NIXON, Esq.

RANDOLPH J, REIS, Esq.

of Counsel

BROWN & NIXON

PROFESSIONAL ASSOCIATION

67 Central Street

Manchester, New Hampshire 03101

a =

TABLE OF CONTENTS

Page

COUMIORD BOO ccc ccc ccccnencccccccnccccccccccnn |

PUN. vc ccneccedsccccccesvecesssc ,eeeecese 2

Question Presented:

Whether the Employee Retirement Income Security

Act of 1974 and the Supremacy Clause of the Consti-

tution of the United States preempt application of

Chapter 57 of the New Hampshire Laws of 1976 to the

Health and Welfare Funds administered by the Peti-

BED a cccc ences cceeeeemscccsecceeeocsececces 2

Constitutional Provisions, Statutes and Regulations ...... 2

ORONO GE GD GD ca ccccccccccsecersccesenecec 2

Reasons for Granting the Writ:

I. The extent to which the preemption provision of

ERISA [29 U. S, C. 61144(a)) shall supersede

state law is an important question of federal law

which has not been, but should be, settled by this

OME wc cccccrccececesccenensccneecccceces 3-5

Il. The interpretation of the preemption clause of

ERISA 29 U. S.C, 1144(a) has resulted in conflict-

ing dispositions within various federal Courts,

resulting in the hindrance of the administration of

PEED Gh a pedicescneenectesasbevecerssees 5-6

ED boc ba ude b4bn0s ee bake ben dbecieesbabece 6

In The

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

ae —_ - .-

No,

JAMES M, DAWSON, Administrator of

Northern New England Carpenters Health and Welfare Fund,

New Hampshire Masons Health and Welfare Fund,

New Hampshire Plumbers Health and Welfare Fund,

New Hampshire Sheet Metal Works #297

Health and Welfare Fund,

PETITIONER,

VS,

FRANCIS E, WHALAND, Commissioner,

Department of Insurance,

State of New Hampshire,

RESPONDENT

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

Petitioner James M, Dawson, Administrator of the aforesaid

mentioned Health and Welfare Funds, respectfully prays that a

Writ of Certiorari issue to review the judgement and opinion of

the United States Court of Appeals for the First Circuit entered

in this proceeding on September |, 1977,

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

First Circuit, which is not yet reported, is separately appended

as Appendix “A”. The opinion of the United States District

afin

Court for the District of New Hampshire which is not yet re-

ported, is separatley appended as Appendix “B",

JURISDICTION

The judgement of the Court of Appeals for the First Circuit

in this case was entered on September |, 1977, The jurisdiction

of this Court is invoked under Title 28 U, 8S, C, 61254(1) and

Title 28 U.S.C, 62101(¢),

QUESTION PRESENTED

Whether the Employee Retirement Income Security Act of

1974 and the Supremacy Clause of the Constitution of the

United States preempt application of Chapter 57 of the New

Hampshire Laws of 1976 to the Health and Welfare Funds ad-

ministered by the Petitioner,

CONSTITUTIONAL PROVISIONS,

STATUTES AND REGULATIONS

The Supremacy Clause of the Constitution of the United

States [Article VI, paragraph second], pertinent provisions of

the Employee Retirement Income Security Act of 1974 [29

U. S. C, 1001 et. seq.) pertinent provisions of Chapter 57 of

the New Hampshire Laws of 1976 [R. S. A, 415:18-a, R. S.A,

419:5-a, and R. S, A, 420:5-a] and federal regulations [29

C, F, R. 62560,.5(g), 42 F, R. 27425 (5/27/77)) are involved in

this action and are set forth in Appendix “C"’,

STATEMENT OF THE CASE

The Petitioner, Plaintiff below, is an administrator of various

Health and Welfare Funds which provide benefits to employees,

located throughout the Northeastern United States, through

employer contributions and the purchase of group health insur-

ance. Each of the Health and Welfare Funds administered by

the Petitioner is an “employee benefit plan”, within the mean-

ing of the Employee Retirement Income Security Act (ERISA),

and consequently is subject to the provisions of that act,

_

The Petitioner commenced this action by filing a petition for

declaratory judgement and injunctive relief in the United States

District Court for the District of New Hampshire against the

Respondent, Defendant below, who is the Chief Executive

Officer of the New Hampshire Department of Insurance.

The Petitioner sought a declaratory judgement that Chapter

57 of the New Hampshire Laws of 1976 was unconstitutional

and preempted by ERISA insofar as it might otherwise apply to

the Health and Welfare Funds which he administers. Chapter 57

is entitled “An act to alter the minimum mental illness coverage

requirements under major medical and non major medical acci-

dent and heaith insurance and to decrease grants to community

mental health services.’’ Chapter 57 purports to require the in-

clusion of certain minimum mental health benefits in the insur-

ance policies purchased by the Petitioner for the Health and

Welfare Funds which he administers. The employee-benefi-

ciaries of the Health and Welfare Funds in question have elected

not to purchase such benefits in the past (Transcript of Hearing

at 18), and a requirement to purchase such benefits may likely

result in the bankruptcy of these Health and Welfare Funds.

Transcript of Hearing at 24; affidavit of Richard Charpentier.

The Court of Appeals for the First Circuit affirmed the deci-

sion of the District Court that Chapter 57 was neither uncon-

stitutional nor preempted by ERISA from its application to the

Health and Welfare Funds administered by the Petitioners.

REASONS FOR GRANTING THE WRIT

I. THE EXTENT TO WHICH THE PREEMPTION PRO-

VISION OF ERISA [29 U. S. C. §1144(a)] SHALL

SUPERSEDE STATE LAW IS AN IMPORTANT QUES-

TION OF FEDERAL LAW WHICH HAS NOT BEEN,

BUT SHOULD BE, SETTLED BY THIS COURT.

The instant action presents what has been described as ‘“‘an

important and fundamental question of federal preemption...”

Wadsworth v. Whaland (C. A. \st, September 1, 1977) at 2.

That question is: to what extent does ERISA preempt state re-

gulation of employee benefit plans? The importance of this

=

federal question derives, in part, from the fact that employee

benefit plans, as was found by Congress [29 U. S. C. §1001(a)]

are growing rapidly and are increasingly interstate. In fact, in

1975, 45 million employees across the country contributed

31.6 billion dollars to employee benefit plans, and 15.1 billion

dollars in benefits were paid from such plans during that same

year. See The Handbook of Labor Statistics, 1975.

This large and growing method of security for millions of

Americans was the subject of extensive consideration by Congress

prior to the enactment of ERISA. See e.g. Hearings on H. R.

1045, H. R. 1046 and H. R. 16462 before the General Sub-

committee on Labor of the House Committee on Education and

Labor. Following. lengthy hearings, Congress found it necessary

to enact strict and detailed legislation to regulate these employee

benefit plaas (See, eg. 29 U. S. C. §§1051-61, 1081-1102,

1021-51), for the protection of plan participants and their bene-

ficiaries. 29 U. S. C. §1001(c). That legislation (ERISA) has

been called “‘the greatest development in the life of the American

worker since social security”’ 120 Cong. Rec. $15742 (8/22/74)

(Remarks of Senator Javits). Among the many sections in

ERISA is the preemption provision entitled “‘Supersedure;

effective date”. 29 U. S. C. §1144(a). An authoritative inter-

pretation of that section has not yet been made, but since that

issue is present in this action it should be finally decided by this

Court’s granting of this petition.

A final resolution of the ERISA preemption issue will have a

most important effect on millions of Americans. It will deter-

mine whether employee benefit plans will be subject to super-

vision and regulation solely by the federal government or by the

federal government to a limited extent, with duplicate or con-

flicting regulation by state governments. A ruling to the effect

that all state laws are preempted from application to employee

benefit plans would insure a uniformity of regulation for em-

ployee benefit plans across the country. See, 120 Cong. Rec.

29197 (1974) (Remarks of Congressman Dent).

Regardless of the eventual ruling on this issue, it is one of

such national importance that it should be resolved by this

~~

Court at the earliest possible time. The future impact that these

employee benefit plans will have on our national economy will

be determined to a large degree by the final determination of

this important question of federal preemption.

Il. THE INTERPRETATION OF THE PREEMPTION

CLAUSE OF ERISA 29 U. S. C. 1144(a) HAS RE-

SULTED IN CONFLICTING DISPOSITIONS WITHIN

VARIOUS FEDERAL COURTS, RESULTING IN THE

HINDRANCE OF THE ADMINISTRATION OF THESE

PLANS

Three Federal District Courts have recently ruled that em-

ployee benefit plans were not subject to State regulation,

because of the preemption clause of ERISA. Hewlett-Packard

Co. v. Barnes, 425 F. Supp. 1294, (D. Cal. 1977); Wayne

Chemical Inc. v. Columbus Agency Services, 426 F. Supp. 316

(N. D. Ind. 1977); Azzaro v. Harnett, 414 F. Supp. 473 (D. C.

N. Y. 1976). The First Circuit Court of Appeals, in the instant

action, along with another Federal District Court have reached

the opposite conclusion. Jnsurer’s Action Council, Inc. y.

Heaton, 423 F. Supp. 921 (D. Minn. 1976).

With the continuing uncertainty as to the interpretation of

the preemption clause of ERISA, as is evidenced by this con-

flict in decisions, the effective administration of the numerous

employee benefit plans throughout the country is seriously

hindered. The administrators of these multi-state plans are left

in doubt as to whether a state has the power to regulate either

the administration or contents of an employee benefit plan.

Plan administrators during the present state of uncertainty

must either formulate different policies for each of the States

in which the plan has a participant employee, based upon the

belief that such state regulation is not preempted; or formulate

a single policy for all of the participants regardless of the

number of states in which the participants work or reside,

taking the position that all state regulation of these plans is

preempted. Obviously, the task presented by the former alter-

native is one which if not required, because of ERISA’s broad

preemption language, would relieve an administrator of a major

~~

burden. See, Dawson v. Whaland, (D. C. N. H., 2/11/77) at 8.

Furthermore, an incorrect guess by an administrator as to which

course of actian to follow could lead to serious consequences

under the sanctions imposed by ERISA. See, e.g. 29 U. S. C.

§ § 1021, 1133, 1105, 1131, 132(c), 1140.

The fact that this recent piece of legislation has already re-

sulted in conflicting holdings by various Federal Courts through-

out the country, emphasizes the need for an authoritative resolu-

tion by this Court. By granting this petition for certiorari, this

Court will secure uniformity of judgements and resolve conflicts

of opinion, on this important federal question, as well as aiding

the effective administration of all employee benefit plans.

CONCLUSION

The preemption provision of ERISA has proven to be a

fertile ground for litigation. It is also a provision which is of

national concern because it will determine how. employee

benefit plans, which affect millions of Americans, are going to

be regulated. Furthermore, without an authoritative ruling on

this issue, employee benefit plan administrators are seriously

hindered in the effective administration of those plans. Thus,

an authoritative ruling by this Court is required, and Petitioner

respectfully prays that this honorable Court grant this Writ of

Certiorari directed to the United States Court of Appeals for

the First Circuit.

RESPECTFULLY SUBMITTED,

STANLEY M. BROWN, Esq.

DAVID L. NIXON, Esq.

RANDOLPH J. REIS, Esq.

of Counsel

BROWN & NIXON

PROFESSIONAL ASSOCIATION

67 Central Street

Manchester, New Hampshire 03101