# Amicus Curiae Brief — FMC Corp. v. Holliday

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1990
- **Citation:** 498 U.S. 52

## Text

if Supreme Court, U.S.

| FILED

| JUN 4 1990
J} | yoserPt F. SPANIOL, JR.”
CLERK

— mer’

No. 89-1048

IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 1929

FMC CORPORATION,

Petitioner,
V.

CYNTHIA ANN HOLLIDAY,

Respondent.

2.
ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE PENNSYLVANTA TRIAL

LAWYERS ASSOCIATION AS AMICUS CURIAE
IN SUPPORT OF RESPONDENT

John Patrick Lydon, Esquire
Counsel of Record

Sikov and Love, P.A.

1400 Lawyers Building
Pittsburgh, PA 15219

(412) 261-4202

Counsel for Amicus Curiae,
Pennsylvania Trial Lawyers Association

TABLE OF CONTENTS

Page

Table of Authorities.......... ii
Statement of Interest of

MMIGUS CUPITRC. cccccccceoce ]

Summary of Argument......ceece 3

Arguments:

1. CONGRESS DID NOT INTEND
AND THE DECISIONS OF
THIS COURT DO NOT REQUIRE
THAT THE PENNSYLVANIA
MOTOR VEHICLE FINANCIAL
RESPONSIBILITY LAW BE
PREEMPTED BY SECTION 514
OP ERISA. .cccee eoccccces 6

ra ERISA DOES NOT PERMIT A
PARTIAL PREEMPTION OF A
STATE LAW AS PETITIONER
REQUESTS occ ccccccccccccs 17

3. REVERSAL IN THE CASE AT
BAR WILL NOT PROMOTE
UNIFORMITY IN THE ADMINIS-
TRATION OF ERISA PLANS... 25

4, SECTION 1720 OF THE MVFRL
DOES NOT "DEEM" THE FMC
BENEFIT PLAN TO BE IN THE
BUSINESS OF INSURANCE.... 26

DORE See GenceeccSoecvcecos 35

ii 1ii

TABLE OF AUTHORITIES Liberty Mutual Insurance Group v.
Iron workers Health See Eastern
Page Michigan, 6579 F.2d 13 th Cir.
Al 1 Raybest Manhatt I 3
essi v. Raybestos-Manhattan nc., COSCO SESOeeeeeeeeeeoeeeeocecoccccce Sh
aa 504, 101 S.Ct. 1985 i
1951 Mackey v. Lanier Collections Agenc
ones oc ccc cccee ee been wen anne Be OS. 825, 108 S.ct. 2182, 100 -_
L.Ed 2d 836 (1988) 14, 15,
Allstate Insurance Co. v. Clarke, POSS CC SECS eee eeccerecccccecoccoccs coe LY, 22
364 Pa. Super. 196, 527 A.od
1021 (1987) Metropolitan Life Ins. Co. ue
eon TOVETTTTTTiTTT?,.t—“—tsO Massachusetts 471 U.S. 724, 105
S.Ct. 2380, 85 L.Ed 2d 728 (1985) By
Baxter v. Lynn, 886 F.2d 182 (8th PUPPET hinadedecesce DCSE Cheb eee cee. ll, 12,
Cir. 1989) 19, 31
coccccceeeeeesesn eel coeoceseeee Bee ee
Northern Group Services v. Auto
Children's Hospital v. Whitcomb, Owners Inc. Co., 833 F.2d 85 (Ath
773 F.2d 239 (Sth Cir. 1985) Cir. 1987), cert. denied, 108 S.Ct.
occvceeenten eee 000 cee ues enn 1754 (1988)
Beeeesecessecoocce peeeeeeeeecescececee 30, 34
FMC Corp. v. Holliday, 885 F.2d 79
(3d Cir. 1989) Pilot Life Ins. Co. v. Dedeaux,,
occceeseecese oun cocccscoeceeees On Oe 461 U.S. 41, 107 S.Ct. 1549, 95
L.Ed 2d 39 (1987)
Fort Halifax Packing Co., Inc. v. PTT TT CLUE Dene eeeeeoeee 11, 30
Coyne, 482 U.S. 1, 107 S.Ct. e2ll,
96 L.Ed 2d 1 (1987) Powell v. Chesapeake & Potomac
occcesccteen eee 000 ee eee eee eee Telephone Co. of Virginia, 780 F.2d
14 419 (4th Cir. 1965), cert. denied,
|S 32
Insurance Board of Bethlehem Steel
Corporation v. Muir, 819 F.2d 408 Rebaldo v. Cuomo, 749 F.2d 133
(3d. Cir. 1987) Cand Cir. 1984)

cocccccccescceceeseseeee enn coeeeee 10, 30 POSS eee eeresccececcsccsescccccsese LF

Shaw v.

Delta Air Lines

iv

, Inc., 463

U.S. 95, 103 S.ct. 26090, 77 L.Ed

2d 490 (1983)

United Food & Commercial Workers

v. Pacyga, 801 F.od 1157 (9th Cir.
1986)

STATUTES:

29 U.S.C.

29
29

75

Pa.

Cons.

Cons.

Cons.

Stat.

seat.

stat.

§1144(a).....

~C. §1144(b) (2) (B)

Ann.

Ann.

Ann.

eGo FRSCRERDERIA) ccc cbeccdees

eGo BADOCL OMA 6c cckeandatswes

SITZOccccves

TLS ae

1. 24,
16

30, 3e,
33

6, Ts
26

7, 26
8, 27
21

5, 28,
29

18, 26,
28

18

STATEMENT OF THE INTEREST OF
AMICUS CURIAE PENNSYLVANIA
TRIAL LAWYERS ASSOCIATION

Pursuant to Rule 37.2 of the Rules
of the Supreme Court of the United
States, the Pennsylvania Trial Lawyers
Association files this Brief as Amicus
Curiae supporting the position of
Respondent Cynthia Ann Holliday. Signed
consents permitting the filing of this
Brief, from Counsel for Petitioner FMC
Corporation Charles Kelly, and from
Attorney Thomas G. Johnson representing
Respondent Cynthia Ann Holliday, have
been filed with the Clerk of this
Honorable Court. The Pennsylvania Trial
Lawyers Association is a private
non-profit association with a membership
of nearly 4,500 trial attorneys in the
Commonwealth of

Pennsylvania,

predominately representing injured

2
parties in their attempt to seek redress

for their injuries in the Courts. The
issue of subrogation in Pennsylvania
automobile cases has a- significant
impact on the interests of injured
parties and on the practice of law in
Pennsylvania. Any determination,
therefore, by this Honorable Court of
the issues in the case at bar will
directly affect the members of the
Pennsylvania Trial Lawyers Association
and the interests of their clients.

This Brief is filed timely pursuant
to the schedule established by Order of
this Honorable Court for the filing of

the Brief of the Respondent.

3
SUMMARY OF ARGUMENT

This Court has repeatedly stated
that it is necessary to consider the
Congressional purpose behind the ERISA
preemption, savings and deemer clauses
in order to determine if a state law is
preempted by ERISA. There is a
presumption against preemption and this
Court has determined that Congress did
not intend that the ERISA preemption
clause would invade the traditional
areas of state regulation, including
motor vehicle insurance laws~ which
includes the Pennsylvania Motor Vehicle
Financial Responsibility Law.

The "pright line" test of

Metropolitan Life Insurance Co., does

not provide an easy answer to the facts

of this case. FMC itself has invoked

4
the Pennsylvania law in question and

has used and seeks to continue to use
parts of the state law to its own
advantage. It therefore asks that this
Court only preempt certain portions of
the Pennsylvania law although this
Court has previously stated that a law
that is preempted by ERISA is not saved
merely because it furthers the purpose
of a plan or the substantative
requirements of the ERISA statute.
Therefore, FMC cannot’ preempt’ only
those portions of the law it seeks to
ignore. Any administrative burden
caused by different motor’ vehicle
insurance laws in each state was
willingly assumed by FMC when it
specifically incorporated those
different laws into its plan. If this

Court were to reverse the decision

5
below, it would not promote national

uniformity in the administration of
this ERISA plan since the plan itself
sought to invoke the benefits of the
different statute in each state.

The Pennsylvania law comes within
the definition of the "savings clause"
and it does not "deem" the plan to be
an insurance company. The law in
question regulates insurance companies
as well as other entities and the Court
below found that the plan was covered
by Section 1719 of the Pennsylvania
law, which section applies to insurance
companies as well as to other
noninsurance entities. Therefore, the
Pennsylvania law does not run afoul of

the deemer clause of ERISA.

6
ARGUMENT

CONGRESS DID NOT INTEND AND THE
DECISIONS OF THIS COURT DO NOT
REQUIRE THAT THE PENNSYLVANIA MOTOR
VEHICLE FINANCIAL RESPONSIBILITY LAW
BE PREEMPTED BY SECTION 514 OF
ERISA.

All of the parties and virtually
all of the Amicus briefs agree that
three sections of the Employment
Retirement Income Security Act of 1984
(ERISA), 29 U.S.C. §1144, must be
analyzed to determine if the
Pennsylvania Motor Vehicle Financial
Responsibility Law (MVFRL) is preempted
in this case.

Section 514(a) of ERISA, 29 U.S.C.
§1144(a), provides that ERISA "shall
Supersede any and all State laws
insofar as they may now or hereafter
relate to any employee benefit plan".

Therefore the first test of preemption

is whether a state law comes within the

7
meaning of section 514(a) such that it

would be preempted.

If a state law comes within this
section, then one must determine if it
comes within the "savings clause" which
provides as follows:

Except as provided in

subparagraph (B), nothing in

this title shall be construed

to exempt or relieve any

person from any law of any

State which regulates

insurance, banking or

securities.
29 U.S.C. §1144(b)(2)(A). <All of the
parties and their amicus’ supporters
agree that the MVFRL is "Saved" by the
savings clause.

When a particular state law is
"saved" by this section, then we must
still look to the so-called "deemer
clause" which provides as follows:

Neither an employee benefit

plan .. . nor any trust

established under such a

plan, shall be deemed to be
an insurance company or other

8

insurer, bank, trust company,
or investment company or to
be engaged in the business of
insurance or banking for
purposes of any law of any
State purporting to regulate
insurance companies,
insurance contracts, banks,
trust companies or investment
companies.

29--U.S.C. §1144(b)(2)(B).

It might initially seem that one
could simply read these three sections
and reach a determination as to whether
or not the MVFRL is preempted by ERISA.
However, the path to such a decision is

not that clear. This Court has noted

that:

The two preemption sections,
while clear enough on their
faces, perhaps are not a
model of legislative
drafting, for while the
general pre-emption clause
broadly preempts state law,
the savings clause appears
broadly to preserve the
States' lawmaking power over
much of the same regulation.
While Congress’ occasionally
decides to return to the
States what it has previcusly

9
taken away, it does not
normally do both at the same
time.

Metropolitan Life Ins. Co. Vv.

Massachusetts, 471 U.S. 724, 105 S.Ct.

2380, 2389, 85 L.Ed.2d 728 (1985).

The FMC Corporation and its Amicus
Supporters would argue that the Court
can simply apply the "bright line" test

of Metropolitan Life to determine

whether or not a particular law is
preempted. The test would solely turn
on whether a plan was self-funded or
purchased insurance policies to provide
benefits. Apparently, FMC argues that
a self-funded plan is not subject to
any state laws of any type no matter
how tenous the relationship is to a

plan. This method of analysis is

10
appropriate and useful in determining

whether ERISA preempts state laws that
require insurance companies or other
entities to provide certain mandatory
minimum benefits. However, *he test is
too simplistic and inappropriate to
apply in a case such as the matter at
bar which does not involve the
mandatory provision of benefits. The
Court of Appeals below has applied this
bright line test in appropriate cases,

see Insurance Board of Bethelem Steel

ll
intention of the Congress in enacting

the preemption clause in order to
determine if a particular law is

preempted by ERISA. Shaw v. Delta

Airlines, Inc., 463 U.S. 85, 95, 103

S.Ct. 2890, 77 L.Ed.2d 490 (1983);

Metropolitan Life Ins. Co., 105 S.Ct.

at 2389; Pilot Life Ins. Co. v.

Dedeaux, 481 U.S. 41, 51-52, 107 S.Ct.

1549, 95 L.Ed.2d 39 (1987). There is a
presumption against preemption.

Metropolitan Life Ins. Co., 105 S.Ct.

Corp. v. Muir, 819 F.2d 408, 410 (3d

Cir. 1987). However, the Court of
Appeals held that this test was
inappropriate to determine the issues
in the case at bar.

Contrary to the argument of FMC
and its supporters, this Court has held

that it is necessary to determine the

at 2390.

While the preemption clause of

ERISA is very broad, this Court has

determined that "we must also presume
that Congress did not intend to preempt
areas of traditional state regulation."

Metropolitan Life Ins. Co., 105 S.Ct.

at 2389. Certainly state automobile

12
insurance laws are a familiar example

of an area of traditional state

regulation; see Metropolitan Life Ins.

13
Fort Halifax Packing Co., 107 S.Ct. at

Co., 105 S.Ct. at 2383.

The Congressional intent in
enacting the preemption provision of
ERISA was to shield benefit plans from
conflicting state and local regulations
which would interfere with the
administration of employee benefit

plans. Fort Halifax Packing Co., Inc.

2221, citing Alessi _v. Raybestos-

Manhattan, Inc., 451 U.S. 504, 522, 101

v. Coyne, 482 U.S. 1, 107 S.Ct. 2211,

2216-2217, 96 L.Ed.2d 1 (1987); Shaw,
463 U.S. at 105. Congress intended for
ERISA to do this without interfering
with the ability of the states to
regulate their “traditional areas of
responsibility.

ERISA pre-emption analysis

"must be guided by respect

for the separate spheres of

governmental authority

preserved in our federalist
system,'

S.Ct. 1895, 1905 (1981). This is
exactly the analysis which the Court of
Appeals undertook in this matter. This
analysis was in keeping with the clear
mandate of the decisions of this Court.
State automobile insurance laws
are clearly a traditional area of
regulation by the states and all of the
briefs submitted in this matter agree
that the MVFRL is such a state auto-
mobile insurance plan. Nonetheless,
Petitioner and its amicus supporters do
not undertake any analysis as to the
Congressional intent behind the
preemption clause other than to argue
that it is an automatic preemption

which requires no further analysis.

14
This argument does not comport with the

decisions of this Court noted above.
This Court has in several of its
recent decisions permitted state laws
to withstand preemption even beyond
those that would be saved by the

"savings clause" of ERISA. Mackey v.

Lanier Collections Agency, 486 U.S.

825, 108 S.Ct. 2182, 100 L.Ed.2d 836

(1988); Fort Halifax Packing Co., Inc.

v. Coyne, supra.

In Mackey v. Lanier Collections

Agency, the Supreme Court considered a
Georgia garnishment law which
specifically exempted the funds. or
benefits of an ERISA employee benefit
plan from garnishment. The Court
initially struck that portion of the

Georgia garnishment law because it

15
specifically applied only to ERISA

plans. However, the Court refused to
rule that ERISA superseded Georgia
garnishment laws in general and as part
of its discussion listed numerous state
laws which "although obviously
affecting and involving ERISA plans and
their trustees, are not preempted by
ERISA §514(a)." 108 S.Ct. at 2187.
The Court in Mackey analyzed the
purpose behind the preemption clause
and held that Congress did not intend
to preempt garnishment laws even though
they do "relate to" ERISA benefit
plans.

A similar result was reached in

Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir.

1984). There the Second Circuit held
that the state plan regulating hospital

insurance rates was not preempted by

16
ERISA noting that it is clear that

ERISA does not preempt every state law

that incidentally touches pension

plans. 749 F.2d at 138. In Shaw v.

Delta Airlines, Inc., 463 U.S. 85, 87,

103 S.Ct. 2890, 2901 the Supreme Court

held that "some state actions may
effect employee benefit plans in too
tenuous, remote, or peripheral a manner
to warrant a finding that the law
‘relates to' the plan."

The Pennsylvania MVFRL is not
directed at ERISA plans nor does it
deal with the subjects regulated by
ERISA. This Pennsylvania law is

concerned with no-fault automobile
insurance and state civil pleading and
evidentiary rules, all of which are
areas of traditional state regulation.

It does not require employee benefit

II.

17
provide

plans to coverage for
automobile accidents or even to provide
any heaith benefits coverage at all.
The MVFRL does not materially "relate
to" or "purport to regulate" ERISA
plans and therefore is not preempted.
Indeed, it is the FMC Corporation
itself which invoked the Pennsylvania
MVFRL for its benefit and now seeks to
preempt only certain portions of that
law.

ERISA DOES NOT PERMIT A PARTIAL
PREEMPTION OF A STATE LAW AS PETITIONER
REQUESTS.

It must be noted that the FMC plan
specifically invokes state automobile
no-fault motor vehicle coverage. In
this case FMC took advantage of the
Pennsylvania MVFRL to its benefit. As
the Amicus brief for the United States

notes in footnote 1 on page three of

18
its brief, the Plan took advantage of

the statute to have the first
$10,000.00 of medical expenses paid by
Mr. Holliday's automobile insurance
carrier. It also appears, as noted in
that footnote, that the plan obtained
further relief from the Pennsylvania
Catastrophic Loss Trust Fund
established in the Pennsylvania MVFRL,
75 Pa. C.S.A. §§1761 et seq. (Repealed
December 12, 1988). The Catastrophic
Loss Trust Fund was a state established
medical fund financed by a charge on
every registered vehicle in the state
which paid those medical expenses
incurred in motor vehicle accidents in
excess of $100,000.00.

FMC does not actualiy seek to

preempt the entire state law but rather

seeks to preempt Section 17290 of the

ill

19
law while taking advantage of all of

the other benefits of the law. This
Court has already decided trat if a
state law is preempted then it does not
matter that the state law is consistent
with the purposes of the benefit plan
or with the substantative requirements
of ERISA. Mackey, 108 S.Ct. at 2185;

Metropolitan Life, 105 S.Ct. at 2389.

As this Court pointed out in Mackey,

- e« e there is simply no
logical way to construe the

English language so that
, garnishment or attachment
laws "relate to" benefit

plans when they are invoked
by creditors of the bene-
ficiaries, but not when they
are invoked by beneficiaries
or creditors of the plan
itself.

Mackey, 108 S.Ct. at 2188.
In Mackey, the Georgia garnishment
law in question clearly supported the

benefit plan and furthered the purpose

20
of ERISA by exempting funds or benefits

of a plan from garnishment. This Court
held that this portion of the Georgia
garnishment law was preempted. FMC has
not attempted to explain how parts of
the MVFRL would be preempted but other
parts would not.

In its brief before the Third
Circuit Court of Appeals, FMC stated
that it wanted to invoke Pennsylvania
State law on subrogation and cited
several Pennsylvania case decisions to
that effect. (FMC did this even though
Subrogation has not been available in
automobile cases in Pennsylvania since
the passage of the 1974 No-Fault Motor
Vehicle Insurance Act.) If state laws
"relate to" ERISA plans when they
prohibit subrogation, then the state

laws permitting subrogation in other

21
cases would also "relate to" ERISA

plans. These subrogation laws would
also be preempted and therefore not
available to FMC. FMC tried to skirt
this issue by referring to to the
subrogation law as "common law" but its
citation of Pennsylvania cases clearly
indicated that it was referring to
Pennsylvania common law. "Common law"
is judicial decisional law as opposed
to statutory law. Under the definition
section of ERISA:

The term "state law" includes

all laws, decisions, rules,

regulations, or other State

action having the effect of

law, of any State.
29 U.S.C.S. §1144(c)(1). Obviously
this would include judicially decided
common law. If all state laws are

automatically superceded even if they

only remotely relate to an ERISA plan,

22
as FMC argues, then FMC could not take

advantage of state subrogation laws as
it seeks to do in this case. As this
Court determined in Mackey, Congress
never intended to provide such an
unbounded preemption.

The mischief posed by FMC's
interpretation of ERISA preemption
would go even beyond this point. As
the Petitioner quotes its plan on page
5 of its brief the plan requires that:

If you bring a liability

claim against any third

party, benefits payable under

this Plan must be included in

the claim, and when the claim

is settled you must reimburse

the Plan for the benefits

provided.

Under the MVFRL and similar state
automobile insurance laws, injured

parties are often precluded from

pleading or proving certain items of

23
damages in tort actions or are

otherwise restricted in bringing a suit
in tort. FMC's argument, however, is
that its subrogation language in the
benefit plan would be enforced
regardless of state law. This would
mean either that injured parties would
have to pay monies to FMC that they did
not recover in state court actions, a
definition of "subrogation" not known

heretofore, see Allstate Insurance Co.

v. Clarke, 364 Pa. Super. 196, 527 A.2d

1021 (1987), or else IMC would have the
federal courts change state automobile
tort law. Indeed, a plan could write
any procedural or evidentiary rule into
its plan and seek to enforce it against
non-beneficiaries. The state laws
limiting evidence or items of damages

in a no-fault system would be preempted

24
under FMC's argument.

For example, in
the case at bar, Ms. Holliday would be
required to bring FMC's claim against
the Defendant tortfeasor even though a
State law may prohibit the pleading or
proof of certain elements of medical
damages. Such a position would mean
chaos in the legal system. Because a

self-funded ERISA plan put’ certain

provisions into its Plan, a plan
beneficiary could sue a defendant for
damages not permitted to a
non-beneficiary in the same accident.
This would not be a case of federal law
preempting state law but, rather, a
case of a private plan preempting state
law. Such a result could never have
been the intention of Congress. This

would require a severe intrusion upon a

traditional area of state regulation

Ill.

25
while the state law only incidentially

touches an ERISA plan.

REVERSAL IN THE CASE AT BAR WILL NOT
PROMOTE UNIFORMITY IN THE ADMINIS-
TRATION OF ERISA PLANS.

The major argument advanced by
Petitioner and its amicus supporters is
that reversal of the Court below will

somehow enhance uniformity of the

administration of ERISA plans. This is

clearly not the case. It cannot be

overlooked that it was the Petitioner
invoked the

FMC Corporation which

Pennsylvania MVFRL by the language in

its plan. The FMC plan invokes the

state automobile insurance law of each
state in coordinating and construing
its benefits. By doing so, the plan
obviously intends to save money but
itself to

immediately subjects

IV.

26
different state insurance schemes in

each of the 50 states. The fact that
FMC itself would invoke such laws
clearly undercuts its argument that
uniformity is necessary as to its
Subrogation interest when it is the
plan itself that invoked 50 separate
schemes. If uniformity of adminis-
tration had such overriding importance
as FMC argues to this Court, it is hard
to understand why the FMC plan would
deliberately chose to invoke 50
different laws.

SECTION 1720 OF THE MVFRL DOES NOT
"DEEM" THE FMC BENEFIT PLAN TO BE IN
THE BUSINESS OF INSURANCE.

All of the parties and their
amicus supporters agree that if the
MVFRL "relates to" ERISA such that it
is superseded by §514(a), then it is

"saved" by §514(b)(2)(A).

27
This means that the MVFRL would

not be preempted by ERISA unless the
Pennsylvania law "deems" the benefit
plan to be an insurance company or
other insurer for purposes of any law
purporting to regulate insurance
companies or insurance contracts. 29
U.S.C. §1144(b)(2)(B). It is important
to note that the language of the
savings clause and the language of the
deemer ciause are different. The
savings clause is very broadly worded
to preserve all state laws regulating
insurance. The deemer clause will only
allow preemption in the specific
instances where the state law "deems"
the benefit plan to be an insurance
company or other insurer as_ specified

in the deemer clause.

28
An analysis of the plain language

of the MVFRL shows that it does not
"deem" the benefit plan to be an
insurer in refusing to recognize
Subrogation. The language in Sections
1719 and 1720 of the MVFRL differen-
tiates between insurance companies and
other entities that might provide
benefits as listed in that law. FMC
recognizes this and in its brief in the
Court below pointed out that Section
1720 precludes recovery for four types
of entities, each entity defined
separately in Sections 1711, 1712, 1715
and 1719 of the MVFRL. FMC recognized
that Sections 1711, 1712 and 1715 apply
distinctly and solely to insurance
companies. If Cynthia Holliday had
attempted to resist the subrogation

clause pursuant to any of those three

29
sections, then the MVFRL would

effectively be deeming the benefit plan
to be an insurance company or other
insurer. This would not be permitted
under ERISA.

In the case at bar, however, the
Court below found that Section 1719 of
the MVFRL applied to the Petitioner.
This particular section of the MVFRL
applies to insurance companies as well
as to other entities, although "its
principal and substantial effect is
nonetheless on the insurance industry".

FMC v. Holliday, 885 F.2d 79, 86 (3d

Cir. 1989). Therefore, it was not
necessary for the MVFRL to deem the
benefit plan to be an insurance company

or other insurer and the Statute does

30
not run afoul of the "deemer clause".
FMC has argued that several

decisions of the Courts of Appeals for

l. It may be argued that,
because the MVFRL to this extent also
applies to entities other than solely
insurance companies, it may be outside
the savings clause. However such is
not the case. In United Food &

31
the various Circuits have found a

different interpretation of the deemer
clause than argued herein. However,
the cases cited by the Petitioner are
readily distinguished from the issue in

the case at bar. In Childrens Hospital

v. Whitcomb, 778 F.2d 239 (5th Cir.

Commerical Workers v. Pacyga, 801 F.2d
1157 (9th Cir. 1986), a case cited with
approval by FMC Corporation to this
Court, the Court of Appeals for the
Ninth Circuit noted that the
anti-subrogation law in that case
applied to parties other than insurance
companies but held nonetheless that the
law substantially complied with the
test of a McCarran-Ferguson Law and
therefore came within the savings
clause. 801 F.2d at 1161. Both this
Court and the Supreme Court have
recognized that no one part of the
three part McCarran- Ferguson test is
dispositive and a law may regulate the
insurance business without fully
complying with all three requirements.
Pilot Life, 41 U.S. at 51; Insurance

Board of Bethlehem Steel Corp. v. Muir,
619 F.2d 408, 411 (3d Cir. 1987); FMC
v. Holliday, 885 F.2d 79, 86 (3d Cir.

1989); Northern Group Services v. Auto
Owners Insurance Co., 833 F.2d 85, 90

(6th Cir. 1987).

1985), the Court preempted a_ state
statute mandating that benefit plans
provide a certain level of benefits for
mental health problems and other

illnesses. In Liberty Mutual Insurance

Group v. Iron Workers Health Fund of

Eastern Michigan, 879 F.2d 1384 (6th

Cir. 1989), the Court preempted a state
law that required benefit plans to pay
benefits to automobile accident
victims. These decisions are directly
controlled by this Court's decision in

Metropolitan Life and the state law in

32
each case would necessarily treat the

plan as an insurance company.

In Powell v. Chesapeake & Potomac

Telephone Co. of Virigina, 780 F.2d 419

(4th Cir. 1985), cert. denied, 476 U.S.

1170 (1986), the issue was whether the
state insurance trade practices law
applied to a benefit plan. To hold the
plan subject to the insurance trade
practices law would necessarily require
that the state "deem" the plan to be an

insurance company. In United Food &

Commerical Workers v. Pacyga, 801 F.2d

1157 (9th Cir. 1986) and Baxter v.

Lynn, 886 F.2d 182 (8th Cir. 1989), the
Circuit Courts preempted state laws
prohibiting subrogation in general.
Neither of these cases involved a
comprehensive state automobile

insurance law regulating this

33
traditional area of state interest.

Indeed, the Baxter decision determined

that since this was a question of the
state common law prohibition on
Subrogation, the subrogation law was
not directed toward the insurance
industry and therefore did not even
come within the "savings clause" of
ERISA. There is agreement among all of
the parties and the amicus supporters
that the MVFRL does come within the
savings clause. In Pacyga, the Ninth
Circuit gave very limited discussion to
whether the general subrogation statute
was directed at the insurance industry
and noted that it did simply because
"many of the Arizona cases relating to
the law" were insurance cases although
the Court noted that many cases were

not. That case did not involve a

34
comprehensive state automobile

insurance law as does the case at bar.
The only cases which analyzed ERISA
preemption and the traditional state
regulation area of motor vehicle
insurance laws were the case at bar and

Northern Group Services v. Auto Owners

Insurance Co., 833 F.2d 85 (6th Cir.

1987). Both of these decisions found
it necessary to analyze the reasons
behind the preemption, savings’ and
deemer clauses and determined that the
State motor vehicle insurance law was
not preempted by ERISA.

A straightforward reading of the
deemer clause in conjunction with the
Savings clause will show that the MVFRL
does not "deem" the plan to be an
insurance company or other insurer and

therefore, given the agreement by all

35
parties that the MVFRL is covered by

the savings clause so as to avoid
preemption, the Pennsylvania Law is not
preempted.

CONCLUSION

The congressional purpose behind
the ERISA preemption, savings and
deemer clauses does not support
preemption of Section 1720 of the
Pennsylvania Motor Vehicle Financial
Responsibility Law. FMC is not
permitted to pick those portions of
state laws which it wants to preempt
and those portions of state laws which
it wishes to exercise for its own
benefit. The FMC Corporation
specifically incorporated 50 different

state automobile insurance laws into

36
its plan and reversing the Court below

will therefore not further national
uniformity in the administration of
this ERISA plan.

There is no simple test for
determining the congressional intent
behind the preemption clause given the
facts in this case. There is a
presumption against preemption. Given
the tremendous mischief that the FMC
position would wreak on state tort
systems as well as on state
comprehensive automobile insurance
plans, there is no reason for ERISA to
preempt this state law.

The congressional purpose behind

the preemption clause of ERISA would

best be served by affirming the

37
judgment of the Court of Appeals for

the Third Circuit.

Respectfully submitted,

SIKOV AND LOVE, P.A.

¥ Gh [Hbidh Paleo LD

ohn Patrick ti
Pg rots for Ps: at
Curiae Pennsylvania
Trial Lawyers Association

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0698%3A23. Public record. Not legal advice.