Amicus Curiae Brief — FMC Corp. v. Holliday

No. 89-1048

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In the Supreme Court of the Hnited States

OCTOBER TERM, 1989

BRIEF AMICUS CURIAE OF

AMERICAN OPTOMETRIC ASSOCLTATION

IN SUPPORT OF RESPONDENT

PCCT AVAIL ADIC Cf NApV

(1)

TABLE OF CONTENTS

Page

Interest of American Optometric Association ................ l

Summary of Argument ..............00ccccceecceseedececeseecccs.... 4

SUNNY lies iia eles sth ins sipedavsecsreescoccsiccc ck. 5

SIN Selah (Siac d belied scoshaintamdesaseycécscasicicec tec 19

TABLE OF AUTHORITIES

Page

Cases:

Blue Cross and Blue Shield of Kansas City v. Bell,

798 F.2d 1331 (0th Cir. 1986) ........000000000 6

Blue Cross Hospital Service, Inc. y. Frappier, 472

U.S. 1014 (1985), on remand, 698 S.W. 2d 326 (Mo.

EN, sutarubelintSusmentueinetebheveadGuberceutacesiavess<.c.s..cc. h

Blue Shield of Virginia v. Met ‘ready, 457 U.S. 465

MEN snwehciaiinits teiausembiniseee caging ssc) 1k 14,15

Blum v. Bacon, 457 U.S. 132 (1982) .....0...0. 4

Cohens v. Virginia, 6 Wheat. 264 (1821)... 1s

FTC v. Indiana Federation of Dentists, 476 U.S. 447

Socata EESEDEEN TC Iss tA a 15

Fort Halifax Packing Co. vy. Coyne, 482 U.S. 1

NM : sortinnbaieennnieirinccsacatuaieicbbekicduenckasansaveneaeseec.cc.. 11, 14

Granfinanciera, S.A. vy. Nordberg, 109 S.Ct. 2782

NUNN Ueinshatiachntenttentnccstacéasackicecscdtiwenerseeess....... 4

Green v. United States, 355 U.S. 184 (1957)... 1s

Lane v. Goren, 743 F.2d 1337 (9th Cir. ae 10

Mackey v. Lanier Collection Agency & Serv., 486

ey PO face 4, 11, 12, 15

McDaniel v. Sanchez, 452 U.S. 130 (1981)... 1s

Metropolitan Life Insurance Co. vy. Massachusetts,

471 U.S. 724 (1985) ........cccccccccccscesceceese 2, 3, 6, 9, 11, 18

Rebaldo v. Cuomo, 749 F.2d 133 (2nd Cir. 1984), cer-

tiorari denied, 472 U.S. 1008 (1985) ............... 10)

Savings and Profit Sharing Fund of Sears Employ

ees Vv. Gago, 717 F.2d 1038 (7th Cir. 1983) .......... 10

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) ..... 9, 16

UI Saw ea eT cla Schack cessedaucec dc -cx. 9

(II)

United States v. Halper, 109 S.Ct. 1892 (1989) ......... 18

Virginia Academy of Clinical Psychologists v. Blue

Shield of Virginia, 624 F.2d 476 (4th Cir. 1980),

certiorari denied, 450 U.S. 916 (1981) .....0............. 15

Wilk v. American Medical Ass'n, 895 F.2d 352 (7th

Oe |) I ee 15

Statutes:

Civil Rights Act of 1964, Title VII ......................24: 16

Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. §91144 et seq. .......0.0.-cs0esees passim

Multiemployer Pension Plan Amendments Act of

1980, PL. 96-364, codified as 29 U.S.C. §§1001a et

SOQ. ...cccccececceceseecssosssessesesecenenneennnnnnnnnnnnnnnnEEE 14

PL. 93-363, adding what is now 5 U.S.C. §8902(k) .... 16

PL. 93-916, amending 5 U.S.C. §8101(2)

ANG (3) ......cccccceeccesessoccenseeseusennennnnnnnnnnnnnnn i 16

PL. 99-509, Section 9336, amending Clause (4) of Sec-

tion 1861(r) of the Social Security Act, 42 U.S.C.

SISSSK(T) ......0+ssccceccesesenesseseennnunsieeneennnnnnnnnnnnEn 7, 16

Pennsylvania Motor Vehicle Financial Responsibility

Law, 75 Pa. Cons. Stat. Ann. §§1701-1798 (Purdon

BOGE) ncniccnvesussvenes ,cosccenescuseevecsessuensininnnninnnnnnnnn passin

Other:

126 Cong. Rec. 23042 (August 25, 1980) ................... 14

H. Rept. 99-727, 99th Cong., 2d Sess., (October 17,

ISBG) .....ccrccoccccccsceccesoccccnscesenssneenennsnnnnnnnnnEE S

U.S. Department of Health, Education and Welfare,

Report to Congress: Reimbursement Under Part B

of Medicare For Certain Services Provided by Op-

tometrists, as required by Title 1, Section 109, of

P.L. 94-182 (July 1976) .....s0cccccccsscuseunsuseeneeeee S

No. 89-1048

In the Supreme Court of the United States

OCTOBER TERM, 1989

FMC CORPORATION, PETITIONER

v.

CYNTHIA ANN HOLLIDAY, RESPONDENT

ON WRIT OF CERTIORARI TO THE

NITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF AMICUS CURIAE OF

AMERICAN OPTOMETRIC ASSOCIATION

IN SUPPORT OF RESPONDENT

The American Optometric Association submits this brief

amicus curiae in support of respondent. Letters granting

consent, received from counsel for each of the parties,

have been filed with the Clerk of this Court.

INTEREST OF AMERICAN OPTOMETRIC ASSOCIATION

The American Optometric Association (“AOA”), a non-

profit membership organization incorporated under Ohio

law, is a national professional association of more than

27,000 members consisting of licensed Doctors of Optom-

etry, optometry students, and educators. AOA’s objects,

as set forth in its Constitution, “are to improve the vision

care and health of the public and to promote the art and

science of the profession of optometry.” AOA has as af-

filiates the State optometric associations in each of the

te

50 States and in the District of Columbia, the Armed

Forces Optometric Society and the American Optometric

Student Association.

As the national professional organization representing

the optometric profession, AOA has always been, and i-

now, vitally interested in matters which affect the ade-

quacy of vision care available to the public. This includes,

among other things, AOA’s interest in supporting and

sustaining what is usually called “freedom of choice” ley-

islation, whether in connection with insured or self-funded

health care plans. “Freedom of choice” is the universally

enacted State legislation which, so far as it applies to the

field of vision care, prevents insurance companies, health

benefit plans and others from discriminating against the

practice of optometry; it likewise prevents discrimination

against patients who in obtaining vision care wish to

utilize the professional services of optometrists instead

of physicians for those services within the lawful scope

of the practice of optometry.

The present case is one of a series that —depending on

what this Court says about the scope of the ERISA

preemption — may have a substantial impact on such mat-

ters on a national basis. When the Massachusetts ERISA

litigation was before this Court, AOA filed a brief amicus

curiae in support of the Commonwealth of Massachu-

setts, urging affirmance. The Massachusetts court had

held that the “mandated benefit” provision (requiring

reimbursement to be made for certain mental illness costs),

which the Massachusetts statute made applicable to em-

ployee health benefit plans placed with insurance car-

riers, was not preempted by ERISA because such ap-

plication of the mandated benefit statute was saved by

the insurance savings clause in ERISA’s preemption pro-

vision. This Court affirmed the judgment. Metropolitan

Life Insurance Co. v. Massachusetts, 471 U.S. 724 (1985).

AOA also urged that, no matter what decision this Court

might reach as to whether the Massachusetts mandated

benefit statute was preempted, the Court should in any

event avoid any intimation which might impair or cast a

cloud on the continuing validity of the widely-adopted,

but very different, State freedom of choice legislation.

We submit that the Court’s opinion in Metropolitan Life

was responsive likewise to this concern.

The substance of AOA’s position is this: While the broad

preemption language in ERISA is to be interpreted gen-

erously, the preemption should not be given an over-

zealous overbreadth which would smother legitimate State

legislation that Congress never would have intended to

displace. In the present case the Third Circuit's judgment

strikes a fair balance between the conflicting contentions

of the parties concerning the antisubrogation provision

of the Pennsylvania Motor Vehicle Financial Responsi-

bility Law. By legislation generally applicable to actions

arising out of the maintenance or use of a motor vehicle.

Pennsylvania has provided that there shall be no right

of subrogation with reference to a broad range of recov-

eries. The question here is whether ERISA’s preemption

provisions nullify this Pennsylvania statute with respect

to certain medical expenses paid out by petitioner's health

benefit plan for automobile accident injuries suffered by

respondent. If such preemption occurs, then petitioner

will recoup the money and respondent will be deprived

of the antisubrogation protection which the Pennsylvania

legislature has sought to confer generally on persons who

are injured in automobile accidents. While AOA’s interest

in the narrower aspects of the issue as to this antisub-

rogation provision may seem in some respects peripheral,

AOA’s interest in this Court’s disposition of the case is

strong.

SUMMARY OF ARGUMENT

As the Third Circuit correctly viewed the case, the

question of the valid applicability of the antisubrogation

provision in the Pennsylvania Motor Vehicle Financial

Responsibility Law called for the examination, if nec-

essary, of three successive clauses in the preemption pro-

visions in Section 514 of ERISA, 29 U.S.C. §1144—namely,

the “preemption clause,” the “insurance savings clause,”

and the “deemer clause.”

The “preemption clause” itself starts off by preempting

“all State laws insofar as they may now or hereafter relate

to any employee benefit plan.” Here the critical word is

the word “relate.” While it is broad, it is not to be given

an unlimited or overbroad reading. The teachings of prior

decisions, and particularly Mackey v. Lanier Collection

Agency & Serv., 486 U.S. 825 (1988), show that some

reasonable limits must be placed on it, and that general

State legislation which happens to have some impact on

ERISA plans does not necessarily come within this pre-

emption clause. The antisubrogation provision of the

Pennsylvania Motor Vehicie Financial Responsibility Law

is illustrative of the type of general State legislation which

should not be caught by the net of the ERISA preemption

clause’s “relates.” The Third Circuit too readily came to

the contrary conclusion; its judgment should neverthe-

less be affirmed on the ground that the preemption clause

does not apply as an initial matter. But in any event, and

however this Court may now decide to treat this question,

AOA urges that care be taken to avoid any intimation

which might impair or cast an ERISA cloud on the va-

lidity of any of the widely-enacted State freedom of choice

legislation.

However, if it be either decided or assumed for pur-

poses of decision that the ERISA preemption clause does

initially apply to the antisubrogation provision in the

5

Pennsylvania Motor Vehicle Financial Responsibility Law,

then the next question is whether the antisubrogation

provision is a law which “regulates insurance” within the

meaning of ERISA’s insurance savings clause. On this

question there has been no controversy; the parties and

amicus all agreed below that the antisubrogation pro-

vision is in fact a law which “regulates insurance” within

the meaning of the savings clause. The Third Cireuit

correctly concluded that this is plainly so, and the con-

clusion is beyond reasonable challenge.

This brought the Third Circuit to a detailed analysis

of the deemer clause. Its conclusion that certain limits

must be placed on the deemer clause is supported by not

only the structure of ERISA but by the extensive leg-

islative history recounted in the Third Circuit’s opinion.

This led the Third Circuit to the view that self-insured

plans must be considered under the deemer clause on a

case-by-case basis to see whether the State regulation

concerned “affects a central concern of ERISA” (885 F.2d

at 89; Pet. A27). For the persuasive reasons specified by

the Third Circuit —even if the Pennsylvania antisubro-

gation provision were held or assumed to be covered

initially by the preemption clause—the deemer clause

does not apply. Hence the Pennsylvania antisubrogation

provision is not removed from the insurance savings clause

and is not wiped out by ERISA preemption.

ARGUMENT

In seeking to find an accommodation of ERISA’s rather

complex, and by no means crystal-clear, preemption pro-

visions, this Court and the lower federal courts sensibly

have proceeded on a case-by-case basis. AOA’s primary

interest in this and comparable litigation is to assure that,

when the issue finally comes squarely before this Court

(if it ever does), all of the State freedom of choice laws

6

are sustained against any claim of ERISA preemption. '

As ERISA preemption law develops in the meantime,

no needless impediment should be placed in the way of

this ultimately sound result.

At the outset it should be noted that the freedom of

choice laws are totally unlike the mandated-beneft law

which was before this Court in the Massachusetts liti-

vation. The State freedom of choice laws do not require

that a health plan shall cover any particular illness or

condition. They do not force upon a plan the coverage

for this or that illness or condition. For example, with

respect to vision care, the freedom of choice laws do not

require that a plan cover vision care at all; and if the

persons responsible for formulating the plan do wish to

cover particular aspects of vision care, the freedom of

choice laws do not dictate which types of eve diseases or

eye conditions or eye examinations shall be covered or

with what frequency such coverage may be availed of by

the employee.

Instead, the freedom of choice laws consist of a vast

body of State enactments, on the books in one or more

forms in all 50 of the States and in the District of Co-

lumbia, which safeguard a patient's freedom of choice to

select a provider of a particular health care service. With

“When Blue Cross Hospital Service, Tne. Vv. Frappr Yr Was Fre-

manded by this Court, 472 U.S. 1014 (1985), for further consideration

in light of Metropolitan Life, supra, the Missouri Supreme Court

disposed of the case by holding that, in the light of Metropolitan

Life. it is clear that State freedom of choice statutes applicable to

insured plans (such as the Missouri statute) come within ERISA’s

insurance savings clause and hence are not preempted by ERISA.

Blue Cross Hospital Service, Ince. vy. Frapprer, 698 S.W. 2d 326 (Mo.

1985). Accord, Blue Cross and Blue Shield of Kansas City v. Bell,

798 F.2d 1331 (0th Cir. 1986), holding that the Kansas freedom of

choice statute applicable to insured plans comes within ERISA

insurance savings clause and hence has not been preempted by ERISA.

~)

respect to vision care coverage —if and to the extent that

such coverage is actually provided for by an employee

benefit plan—this means that there was and is pervasive

State legislation requiring that the plan reimburse the

patient who prefers to use the professional services of

an optometrist (instead of a physician), as long as the

services come within what may lawfully be performed

by a licensed optometrist under the laws of the particular

State. Moreover, the freedom of choice laws do not inflict

on the benefit plans any additional costs in the vision

care field; and indeed, practical experience has indicated

that, on the whole, the costs of services performed by

optometrists tend to be less than the costs of comparable

services performed by ophthalmologists.

Throughout the Nation these freedom of choice stat-

utory provisions have been enacted to assure to the pa-

tient his or her right of choice and, so far as vision care

is concerned, to prevent discrimination against using the

professional services of optometrists. The freedom of choice

statutes represent deep-rooted policies of the States con-

cerned, ina field normally governed by State law. More-

over, since optometrists usually are more widely dis-

persed geographically, and more conveniently located,

within a State than are ophthalmologists, such legislation

helps to assure that patients, particularly the elderly,

will have greater access to convenient prepaid health

care.”

~ In 1980, Congress expanded Medicare coverage to include ser-

vices performed by optometrists in connection with the condition of

aphakia. See 42 U.S.C. §1395x(r)(4), discussed in note 4 infra. In a

1976 Report recommending the adoption of this amendment, the

Department of Health, Education and Welfare stated: “6. Access to

services. Vision/eye care services for aphakic and cataract patients,

as well as for patients more generally, can be made more accessible

to the Medicare eligible population by providing reimbursement for

services when provided by optometrists. In general, optometrists»

Accordingly, it has been and remains AOA’s position

that:

(1) State freedom of choice laws are outside the scope

of ERISA’s “preemption clause” fairly interpreted —this

turns on a fair but not over-extravagant reading of the

phrase “all State laws insofar as they may now or here-

after relate to any employee benefit plan,” in Section

514(a) of ERISA, 29 U.S.C. §1144(a); and

(2) in any event, proper recognition should be given to

the scope of the “insurance savings clause” in Section

514(b) of ERISA, 29 U.S.C. §1144(b)—it is clear that

insured benefit plans are plainly covered by the insurance

savings clause under the doctrine of Metropolitan Life,

supra; at least some of the freedom of choice laws are

readily classifiable as a law “which regulates insurance”

whether the particular benefit plan is insured or self-

insured or a combination of the two; and

(3) in any event, the “deemer clause,” Section

514(b)(2)(B) of ERISA, 29 U.S.C. $1144(b)(2)(B), should

he properly interpreted, so as to confine its reach to its

true purpose and scope—as the Third Circuit has done

in this case.

are more widely distributed geographically and practice in many

smaller communities where other vision/eye care practitioners are

not available.” U.S. Department of Health, Education and Welfare,

Report to Congress: Reimbursement Under Part B of Medicare For

Certain Services Provided by Optometrists, as required by Title I,

Section 109, of P.L. 94-182 (July 1976), p. v. Similarly, in connection

with a 1986 Medicare amendment eliminating discrimination against

optometry (also discussed in note 4 infra) the House Committee

teport stated: “Many beneficiaries are either foregoing covered eye

care or are paying out-of-pocket for eye care services furnished by

optometrists because they do not have ready access to an ophthal-

mologist and because the present rules are too difficult to under-

stand.” H.Rept. 99-727, 99th Cong., 2d Sess., p. 81 (October 17,

1986).

9

No one can reasonably quarrel with the Third Circuit's

observation in this case that “ERISA’s section 514, 29

U.S.C. $1144, is hardly a model of legislative drafts-

manship.” 885 F.2d at 83; Pet. All. But by now the

starting point is this Court's analysis in Metropolitan

Life, supra, to the effect that the Massachusetts man-

dated benefit law “relates to” ERISA plans, “and thus

is covered by ERISA’s broad pre-emption provision,” 471

U.S. at 739—though, as it turned out, for the insured

plans in issue there, the Massachusetts law was saved

by the insurance savings clause.

The contention that the Pennsylvania antisubrogation

provision does not “relate,” in the ERISA sense, Is a

contention which was decided by the Third Circuit ad-

versely to respondent (885 F.2d at 85; Pet. A15). Never-

theless, respondent here may rely on this contention as

an independent ground in support of the judgment below.

See, for example, United States v. Arthur Young & Co.,

465 U.S. 805, 814 note 12 (1984); Blam v. Bacon, 457

U.S. 132, 137 note 5 (1982); Granfinanciera, S.A. Vv.

Nordberg, 109 S.Ct. 2782, 2788 (1989).

About two years before Metropolitan Life was decided,

Shaw vy. Delta Air Lines, Inc., 463 U.S. 85 (1983), had

acknowledged that some State laws “may affect employee

benefit plans in too tenuous, remote, or peripheral a

manner to warrant a finding that the law ‘relates to’ the

plan,” 463 U.S. at 100 note 21, and cited as an example

a decision holding that State garnishment of a spouse's

pension income to enforce alimony and support orders is

not preempted. Nothing in Shaw addressed the question

whether freedom of choice laws came within the pre-

emption clause; and the Metropolitan Life opinion was

meticulous in leaving this matter for future consideration.

Freedom of choice laws raise the question of what is

10

the fair and reasonable interpretation of the word “relate”

in ERISA’s preemption clause. In our highly interde-

pendent world, it can be argued that almost anything

“relates” to almost anything else, and yet it must be clear

that Congress could not have intended that the doctrine

of preemption be carried to the utmost or even too far.

For example, it might be argued that a State law which

imposes minimum safety standards for x-ray equipment

used in a clinic examining and treating employees under

a plan is a law which “relates” to an employee benefit

plan; vet it is hard to believe that anyone would take

seriously the claim that ERISA preempts such a State

law. For another example, a State law which imposes

certain minimum fire safety standards on a facility made

available to employees under a benefit plan could, ar-

guably, be said to be a law which “relates” to the plan;

but, again, the contention that ERISA preempts such a

law would defy common sense.

In other words, an appropriate place must be found

for deciding where, under ERISA, the preemption line

is to be drawn. As the Second Circuit stated in Rebaldo

v. Cuomo, T49 F.2d 133, 138 (2nd Cir. 1984), certiorari

denied, 472 U.S. 1008 (1985):

“the preemptive scope of ERISA is neither all

encompassing, Lane v. Goren, 743 F.2d 1337, 1339

(9th Cir. 1984), nor unlimited, Savings and Profit

Sharing Fund of Sears Employees vy. Gago, 717

F.2d 1038, 1040 (7th Cir. 1983).”

and, again, in holding specifically that ERISA did not

preempt New York’s statutory limitation on hospital in-

patient charges as applied to self-insured employee bene-

fit plans (/d.),

“The containment of hospital costs is an exercise of

a State’s police powers, which should not be

superseded by federal regulations unless that was

11

the clear intent of Congress [citations omitted |. Ac-

cordingly, a State’s promulgation of hospital rate

schedules should not be found to ‘relate’ to ‘the

terms and conditions of employee benefit plans’ un-

less this conclusion is unavoidable.”

In important decisions subsequent to Vetropolitan Life,

this Court has made it clear that the question of where

the line is to be drawn should turn on a fair consideration

of the historical context, and of whether the Congres-

sional purposes manifested in ERISA would be aided or

subverted by interpreting the preemption provision to

be applicable. Fort Halifas Packing Co. v. Coyne, 482

U.S. 1 (1987) (holding that a Maine statute mandating a

one-time severance payment in the event of a plant clos-

ing did not “relate to any employee benefit plan”); and

Mackey v. Lanier Collection Agency & Serv., 486 U.S.

825 (1988).

Mackey decided that ERISA does not preempt Geor-

gia’s general garnishment law and hence does not prevent

creditors of ERISA welfare benefit plan participants from

bringing garnishment proceedings against the plan in

order to collect judgments agzinst plan participants. In

reaching this conclusion this Court said (486 U.S. at &34)

“state-law methods for collecting money judgments

must, as a general matter, remain undisturbed by

ERISA; otherwise, there would be no way to en-

force such a judgment won against an ERISA plan.

If attachment of ERISA plan funds does not ‘relate

to’ an ERISA plan in any of these circumstances,

we do not see how respondent's proposed garnish-

ment order would do so.”

The Court carefully distinguished this general garnish-

ment law from a special exemption the Georgia legisla-

ture had enacted which applied solely to ERISA em-

ployee benefit plans and which exempted them from

EOE EEE ______ EO OO ———————————eEOEaEEeeEEEOEEeEeeEeeEeeeeooooereeoooereeeoeoereeoereeooreererereoereee

12

garnishment; that exemption statute the Court held was

preempted by ERISA since it was specifically designed

to affect employee benefit plans (486 U.S. at 829-830).

In view of the distinction which the Court has thus drawn,

it is important to note that the antisubrogation provision

of the Pennsylvania Motor Vehicle Responsibility Law

involved in the present litigation is not specially designed

to apply to ERISA employee benefit plans, but is general

legislation generally applicable.

Petitioner complains that the Pennsylvania antisub-

rogation law prohibits petitioner from exercising its sub-

rogation rights (Pet. Br. 11). But the fact is that by virtue

of this general Pennsylvania legislation, which is gen-

erally applicable to motor vehicle accident cases, peti-

tioner does not have any such subrogation rights, and it

is the strong public policy of Pennsylvania to prevent

those in petitioner’s position from evading the antisub-

rogation law by seeking to create such subrogation rights

where none exist. It is no more appropriate for a self-

insured benefit plan to seek to nullify such generally

applicable Pennsylvania legislation than it would be for

a self-insured benefit plan to seek to reinject a fault cri-

terion into automobile accident cases in States which have

enacted generally applicable no-fault laws. The reach of

ERISA’s preemption should not, and does not, stretch

to such extremes.

Particularly in the light of the teachings of Mackey, it

would appear that here the Third Circuit was too quick

in rejecting the contention (which AOA supports) that

the antisubrogation provision of the Pennsylvania Motor

Vehicle Financial Responsibility Law does not “relate”

in the ERISA sense, and that hence for this reason the

ERISA preemption clause is inapplicable. But in any

event, and however the Court may now decide to treat

this question, we urge that care be taken to avoid any

intimation which might impair or cast a cloud on the

13

validity of any of the widely-enacted State freedom of

choice legislation.

It should be noted, moreover, that a considerable seg-

ment of the State freedom of choice legislation relating

to vision care—some of it pertaining to insured plans

only, some of it pertaining to plans not incorporated into

insurance policies, and some of it pertaining to both—

was enacted during the 1960s, long before ERISA was

passed in 1974.° Hence the total absence, in ERISA’s

legislative history, of any suggestion that Congress in-

tended to preempt this well-known mass of freedom of

choice legislation adds much weight to the other reasons

for concluding that no such preemption has occurred.

With respect to vision care, the freedom of choice laws

are aimed at protecting people by assuring that more

widespread vision care is available, by safeguarding the

patient's freedom of choice, and indeed by discouraging

monopolistic or restrictive practices— whether indulged

in by insurance companies or by employers or by unions

or by others. Such monopolistic practices would tend to

channel away from optometrists, and in to physicians,

the professional responsibility for and the revenue from

the performance of vision care services which otherwise

Such freedom of choice legislation relating to vision care dating

from the 1960s is to be found in at least 24 States — namely, Alabama,

Arizona, California, Colorado, Hawaii, Idaho, Indiana, Maine, Mary-

land, Massachusetts, Michigan, Mississippi, Montana, Nebraska,

New Hampshire, New Jersey, North Carolina, Oklahoma, Oregon,

South Dakota, Tennessee, Utah, Washington, West Virginia—and

from 1970 through 1973 in at least 10 additional States—namely,

Arkansas, Florida, Kansas, Kentucky, Louisiana, Missouri, Nevada,

New Mexico, New York, Virginia. (This is apart from the consid-

erable body of freedom of choice legislation dating from those periods

and relating to branches of health care other than vision care.)

Accordingly, much of the freedom of choice legislation not only an-

tedates the enactment of ERISA in 1974 (P.L. 93-406, September

2, 1974), but will be found well before 1970.

14

would flow to optometrists. Compare Ble Shield of Vir-

ginia Vv. MeCready, 457 U.S. 465 (1982).

This Court emphasized in Fort Halifax, supra, 482

U.S. at 11, that the Congressional purpose in adopting

the preemption provision was to assist in achieving uni-

formity in the administration of an employee benefit plan

having multi-state scope. In view of the fact that, with

at most some minor variations, State freedom of choice

legislation is universally present in the 50 States and the

District of Columbia, no significant administrative di-

versity or complexity will be imposed by acknowledging

that ERISA has not preempted any of the State freedom

of choice statutes.

AOA’s position— which AOA urges should be fully pro-

tected against dilution or impairment — was further con-

firmed within Congress during the enactment of the ER-

ISA amendments known as the Multiemployer Pension

Plan Amendments Act of 1980, P.L. 96-364, codified as

29 U.S.C. §§1001a et seq. During the final stages of that

bill’s passage in the House, Congressman Thompson (who

was Chairman of the House Subcommittee on Labor-

Management Relations and was piloting the bill through

the House debates and was later one of the House Man-

agers in the Conference Committee) stated (126 Cong. Rec.

23042, August 25, 1980):

“Finally, the distinguished gentleman from Texas,

Representative Frost, has asked me to clarify the

effect of ERISA’s preemption provision on a state

law requiring that health insurance contracts writ-

ten in that state must provide covered persons the

option to choose the specialist of their choice or

must provide that the services of a particular spe-

cialist must be covered by the insurance contract

if that patient chooses to go to that specialist. It is

clear that ERISA does not preempt such a law,

15

which does not require that particular benefits be

provided and therefore does not cause any cost-

creating State law conflicts that preemption was

intended to prevent. For example, a State law re-

quiring that podiatrist, chiropractor, or optometrist

services be covered by health insurance contracts

if a person chooses to have a particular service

performed by a podiatrist, chiropractor, or an op-

tometrist, is not preempted.”

While the views of a later Congress on such matters are

not necessarily controlling, see Mackey, supra, 486 U.S.

at S39-840, the foregoing statement from the pertinent

Congressional leadership furnishes strong confirmatory

support to AOA’s position on this precise issue.’

‘{n the event that the question of preemption of State freedom

of choice laws were to be directly litigated, there are at least two

additional independent grounds supporting AOA’s position that no

such preemption exists.

First, preemption of the State freedom of choice laws would impair

the federal antitrust laws and hence is expressly forbidden by ERISA

itself in Sectio” 514(d), 29 U.S.C. 8114400), which provides that

nothing in ERISA “shall be construed to alter, amend, modify, in-

validate, impair, or supersede any law of the United States” (with

certain specified exceptions not relevant here). Various employee

benefit plans, both insured and self-insured, contain discriminatory

and restrictive provisions having highly anticompetitive effects in-

jurious to the public interest, which create lively and realistic op-

portunities for group boycotts and other seriously discriminatory

practices. Such provisions offend not only the public policy and stat-

utes of many States, but also the federal antitrust laws. Ble S/ive/d

of Virginia v. MeCready, supra: accord, Virginia Academy of Clin-

ical Psychologists v. Blue Shield of Virginia, 624 F.2d 476 (Ath Cir.

1980), certiorari denied, 450 U.S. 916 (1981); Wilk ve American

Medical Ass’n, 895 F.2d 352 (7th Cir. 1990); compare FTC v. lindiana

Federation of Dentists, A476 USS. AAT, 457-465 (1986). The freedom

of choice laws stand as a bulwark against those who would other-

Wise commit serious violations of the federal antitrust laws. If ERISA

were to be interpreted as preempting the State freedom of choice

16

Even if the antisubrogation provision in the Pennsyl-

vania Financial Responsibility Law were held to be—or

were assumed to be —a law which “relates” inthe ERISA

sense, there would then be the questions which were

next addressed by the Third Circuit. Is this law one which

“regulates insurance” within the meaning of ERISA’s

insurance savings clause? On this there has been no con-

laws, it could hardly be doubted that there would be a serious im-

pairment of the federal antitrust laws and of the policies which the

federal antitrust laws espouse. Harmonious reading of ERISA as a

whole should surely lead to the non-preemption result. C ompare

Shaw, supra, 463 U.S. at 102, holding that State fair employment

laws are so important to the federal Title VII statute (of the Civil

tights Act of 1964) that such State laws are not preempted by

ERISA.

Second, preemption of the State freedom of choice laws would

also impair the 1986 federal Medicare law amendment relating to

optometry, and hence for this additional reason is expressly forbid-

den by the same provision in Section 514(d), 29 U.S.C. $1144(d) of

ERISA itself. Until the 1986 Medicare amendment, most services

rendered by optometrists were not a subject for Medicare reim-

bursement, even though the services were authorized to be per-

formed by an optometrist under applicable State law and even though

such services when rendered by an ophthalmologist were reim-

burseable. However, Section 9336 of P.L. 99-509 amended Clause

(4) of Section 1861(r) of the Social Security Act, 42 U.S.C. §1395x(r),

to put the services furnished by optometrists on a totally equal

footing, for Medicare reimbursement purposes, with those furnished

by ophthalmologists, to the extent that the services fall within the

lawful scope of the practice of optometry. This amendment firmly

established a federal statutory policy of nondiscrimination and e qual

treatment with respect to services rendered by optometrists in the

field of vision care. This federal statutory policy had been fore-

shadowed, with respect to the policy of nondiscrimination and free-

dom of choice, by two items of earlier legislation relating to federal!

employees (P.L. 93-363, adding what is now 5 U.S.C. §8902(k): and

P.L. 93-916, amending 5 U.S.C. §8103(2) and (3), which were en-

acted in 1974 by the same Congress which enacted ERISA.

17

troversy, and none should be generated in this Court.

The Third Circuit noted that (s=5 b.2d at 85; Pet. A16)

“Both parties and the amicus agree that the type

of antisubrogation provision found in the Pennsyl-

vania Financial Responsibility Law ‘regulates in-

surance’ within the meaning of the savings clause.”

The Third Circuit correctly concluded that this is plainly

so (S85 F.2d at 85-86; Pet. A16).

Hence the Third Circuit moved on to the next question:

Where the plan is self-insured, does the deemer clause

take the antisubrogation provision of the Pennsylvania

Motor Vehicle Financial Responsibility Law out from un-

der the insurance savings clause and put it over into the

preempted category? On this issue the Third Circuit's

opinion (885 F.2d at 86-90; Pet. Al8-A27) sets forth a

remarkably clear and careful exposition of the relevant

legislative history. Despite petitioner’s unpersuasive ef-

fort to brush aside the details of the legislative history

(Pet. Br. 26-27), the Third Circuit’s recital is an accurate

reflection of what really occurred during the preemption

provision’s journey through Congress. It reaches a con-

clusion which, we submit, comports with the structure

and purposes of ERISA as well as its language. Specif-

ically, the Third Circuit’s analysis has led it to the con-

clusion that, with respect to self-insured plans, the proper

meaning of the deemer clause is that the deemer clause

is intended to cause preemption when the State regu-

lation involved affects a central concern of ERISA but

not when it does not affect a central concern of ERISA,

and that since the Pennsylvania antisubrogation law is

in the latter category the deemer clause does not apply

and accordingly the Pennsylvania law is not preempted.

To put the matter another way, the Third Circuit has

1s

held that “the deemer clause guards against any insur-

ance regulation that infringes on such ERISA areas as

reporting, disclosure, and nonforfeitability” (885 F.2d at

88; Pet. A23), and that Pennsylvania's antisubrogation

law does not involve any such infringement.

The fact that the Third Circuit's careful analysis led it

to bypass (8&5 F.2d at 89; Pet. A24-A26) a dictum which

appears in this Court’s opinion in Metropolitan Life, su-

pra, does not in any way detract from the correctness of

the Third Circuit's analysis. If all dicta were binding, the

law would be paralyzed beyond repair; this Court has

often recognized the propriety—and indeed the neces-

sity —of revisiting dicta when a point later becomes ac-

tually in issue. See, for example, Cohens vy. Virginia, 6

Wheat. 264, 399-400 (1821); Green v. United States, 355

U.S. 184, 197 note 16 (1957): MeDaniel y. Sanchez, 452

U.S. 130, 141 (1981); United States v. Halper, 109 S.Ct.

1892, 1903 note 11 (1989).

19

CONCLUSION

For the reasons we have summarized, the [hird Cir-

cuit’s judgment should be affirmed. In any event—and

no matter how this Court decides to deal with the issues

raised—the Court is urged to avoid any decision route

which would impair or cast a cloud upon any of the State

freedom of choice legislation which is so important to the

Nation's welfare.

Respectfully submitted,

ELLIS LYONS*

BENNETT BoskEY

EDWARD A. GROOBERT

Volpe, Boskey and Lyons

918 16th Street, N.W.

Washington, D.C. 20006

Telephone: 202/737-6580

Attorneys for the American

Optometric Association

May y, 1990 “(Counsel of Record)