Amicus Curiae Brief — District of Columbia v. Greater Washington Bd. of Trade

~~ &\

PQ — .

2 & No. 91-1326

In The

Supreme Court of the United States

OCTOBER TERM, 1991

THE DISTRICT OF COLUMBIA AND

SHARON PRATT KELLY, MAYOR,

Petitioners,

THE GREATER WASHINGTON BOARD OF TRADE,

Respondent

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

MOTION FOR LEAVE TO FILE AND BRIEF OF THE

CONNECTICUT BUSINESS AND INDUSTRY ASSOCIATION

AS AMICUS CURIAE IN SUPPORT OF PETITIONERS

Daniel L. FitzMaurice

Counsel of Record

Thomas Z. Reicher

Glenn W. Dowd

Day, Berry & Howard

CityPlace

Hartford, CT 06103-3499

(203) 275-0100

Attorneys for the Connecticul

Business and Industry Association

Printed by

Brescia’s Printing Services, Inc.

66 Connecticut Boulevard

East Hartford, CT 06108

528-4254

No. 91-1326

In The

Supreme Court of the United States

OCTOBER TERM, 1991

THE DISTRICT OF COLUMBIA AND

SHARON PRATT KELLY, MAYOR,

Petitioners,

THE GREATER WASHINGTON BOARD OF TRADE,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

MOTION FOR LEAVE TO FILE BRIEF OF THE

CONNECTICUT BUSINESS AND INDUSTRY ASSOCIATION

AS AMICUS CURIAE IN SUPPORT OF PETITIONERS

Daniel L. FitzMaurice

Counsel of Record

Thomas Z. Reicher

Glenn W. Dowd

Day, Berry & Howard

CityPlace

Hartford, CT 06103-3499

(203) 275-0100

Attorneys for the Connecticut

Business and Industry Association

The Connecticut Business and Industry Association

(“CBIA”) respectfully moves for leave to file the accompanying

brief as amicus curiae in this case. Letters of consent from the

Petitioners, the District of Columbia and Sharon Pratt Kelly, and the

Respondent, the Greater Washington Board of Trade, have been

filed with this motion.

INTEREST OF AMICUS

The Connecticut Business and Industry Association is the

largest business and trade association in the State of Connecticut,

having approximately 7,000 members who employ a total work

force of over 700,000 employees. CBIA presents the views of its

members on public policy and legal issues to legislative and judicial

authorities.

Petitioners request Certiorari to overturn a decision of the

District of Columbia Circuit. While agreeing with the Petitioners

that this case warrants Certiorari, CBIA seeks an affirmance. The

District of Columbia statute, which was held to be preempted by

ERISA! in this case, was modeled on a Connecticut statute.

Contrary to the D.C. Circuit's holding, the Second Circuit and the

Connecticut Appellate Court have ruled that ERISA does not

preempt the Connecticut statute.

CBIA’s principal interest lics in having this Court resolve

the conflicting lower court decisions in favor of the D.C. Circuit's

analysis of ERISA preemption. The Connecticut statute imposes

significant financial and administrative burdens on nearly all of

CBIA’s members. Furthermore, many of CBIA’s members

sponsor multi-state benefit plans which, despite ERISA’s express

goal of national uniformity, are now subject to disparate local

regulations. Finally, the District of Columbia and Connecticut

| The Employee Retirement Income Seturity Act of 1974, as amended

(“ERISA”), codified at 29 U.S.C. §§ 1001-1461 (1988).

to

‘

Statutes represent only two applications of a growing trend among

states to impose additional requirements on employers based upon

their ERISA-protected plans. This trend adversely affects CBIA and

its members.

For all the foregoing reasons, the Connecticut Business and

Industry Association respectfully moves for leave to file the

accompanying bnef as amicus cuniac.

Respectfully submitted,

Daniel L. FitzMaunce

Counsel of Record

Thomas Z. Reicher

Glenn W. Dowd

Day, Berry & Howard

CityPlace

Hartford, CT 06103-3499

(203) 275-0100

Attorneys for the Connecticut

Business and Industry Association

March 1992

No. 91-1326

In The

Supreme Court of the United States

OCTOBER TERM, 1991

THE DISTRICT OF COLUMBIA AND

SHARON PRATT KELLY, MAYOR,

Petitioners,

THE GREATER WASHINGTON BOARD OF TRADE,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF THE CONNECTICUT

BUSINESS AND INDUSTRY ASSOCIATION

AS AMICUS CURIAE IN SUPPORT OF PETITIONERS

Daniel L. FitzMaurice

Counsel of Record

Thomas Z. Reicher

Glenn W. Dowd

Day, Berry & Howard

CityPlace

Hartford, CT 06103-3499

(203) 275-0100

Attorneys for the Connecticut

Business and Industry Association

TABLE OF CONTENTS

Page

a IT tl

INTEREST OF THE AMICUS CURIAE......................0. l

REASONS FOR GRANTING THE WRIT....................5. l

I FR vis cccincwevnnsiiiciaurtisserscnrensensenienen l

FED. ncncantnvacensiisersannndinainesedansinenteintinnncmeen 3

1. THIS COURT SHOULD GRANT ITS WRIT TO

RESOLVE A DIRECT CONFLICT BETWEEN

THE DISTRICT OF COLUMBIA AND SECOND

NE is-ocivsininivisccsisnsisnisisnhietainiensitaoaieanicadiinbeaiabahininieinnnene-aee 3

ll. THE CASE BELOW PRESENTS SIGNIFICANT

FEDERAL QUESTIONS WARRANTING REVIEW

a iiticnscnineiancianneindsiieieniasenssonsnes 6

A. The Financial and Administrative Burdens

Imposed by the D.C. and Connecticut Statutes

Impel Employers to Eliminate Existing ERISA

Plans or Forgo Establishing New Plans................ 6

B. The Petition Raises Serious Concems Over the

National Uniformity of Laws Applicable to

EUGENE PUTER. ccccccccccccccccscscsccsescsccecese 8

Be IIT kind tcecdnsecwescisindaeneisondcicostennsanseden 13

APPENDIX

TABLE OF AUTHORITIES

Cases Page

FMC Corp. v. Holliday, US. __, 111

Be is SE irediadiitpeiceseninnneninnneantendninen 11, 12

Fort Halifax Packing Co. v. Coyne, 482 U.S. |

ESRI Tn nee 11,12

Gagnon y. Liberty Oil Equipment, 7

Conn. Workers’ Comp. Rev. Op. 81 (1989)............. 7

Greater Washington Board of Trade v. District of

Columbia, 948 F.2d 1317 (D.C. Cir. 1991).....0000..... passim

R.R. Donnelley & Sons Co. v. Prevost,

915 F.2d 787 (2d Cir. 1990), cert. denied,

— ee | Sl eee passim

Ingersoll-Rand Co. v. McClendon, ___ U.S. __.,

BR RK” RSTn ee a meer passim

New Jersey Business & Indus. Ass'n v. State,

249 N.J. Super. 513, 592 A.2d 660 (1991)... 9

Shaw v. Delta Air Lines, Inc., 463 U.S. 85

ER ELE ob SREY CESAR Se ee Ra ee pare 4,5, 11

Stone & Webster Engineering Corp. v. Ilsley,

690 F.2d 323 (2d Cir. 1982) aff d mem.

sub nom. Arcudi v. Stone & Webster

Engineering Corp., 463 U.S. 1220 (1983) ............... 10

Tufaro v. Pepperidge Farm, Inc., 24 Conn.

App. 234, 587 A.2d 1044 (1991).......... ccc cece cece eee 3

ses

-il-

Statutes

ee EE vivennsctadebetenbinccepisesteinesace 12

ee en Se He CD eked nchaciiandesncsccecenccncie l

ee ee OF te ee ics tscsidensceciscccnvencocesions 4

ae a te Se ii tncnanacncdenddininunsadctasensi 4,8

BP OBA. BB DIGG OGD CIBER ccsvesccccccscsscsccccccssccces 9,12

ns Oe es cenndinide-csnpcciicenntedndetenéaden 12

eo 6G GE UR) ree 10

Conn. Gen. Stat. § 31-S10 (1991)... ce cece eee Y

Conn. Gen. Stat. § 31-284b (1991) 2.0.0... eee passim

Conn. Gen. Stat. § 31-3088 (1991) 20.0.0... cece ccc ce eee es 8

Conn . Gen. Stat. § 31-308(a) (1991)... cece 8

Conn. Gen. Stat. § 38a-S38 (1991) ...........ccccseceeeseceses 9

SEK TERUG SEE: IIE dcetnantensnnpnsnidinpundsentanencheen |

Cal. Ins. Code § 10123 (Deering 1977 & Supp.

Fa iiviscvcncniidesonsdscandssimensnandabedaneitantsensianse 9

ee GE GU, © SUPT GPT Di nce cscivccccscccsssseccosscsecs 1,7

D.C. Code Ann. §§ 36-1301 to 36-1317 (1981

GPE ncicnassnddvaioceansatnerensetseseesaneseuse 7)

Mass. Gen. L. ch. 175, § L1O0D (1990) ....... cient aele ste )

-ivV-

Mass. Gen. L. ch. 175, § 110G (1990)....................005. i)

Mass. Gen. L. ch. 176A, § 8D (1990) ................... cee 9

Mass. Gen. L. ch. 176B, § 6A (1990).....................005. 9

Mass. Gen. L. ch. 176G, § 4A (1990) ......00 000.0... c cece eee 7)

Nev. Rev. Stat. § 689B.245 (1991) .............ccceceeeeeceees 9

N.J. Rev. Stat. Ann. §§ 34:11B-1 to

34:11B-8 (1988 & Supp. 1991)..............ccesceseeeeees 9

N.Y. Work. Comp. § 204.2 (McKinney

PUNE cuvasccudsund sensdudeietesatacsedtesienstecedinetsouse 4

Ot! \uthoriti

yp et tt ) errr rare 4

Conn. Dept. of Labor, Connecticut

Occupational Injuries and Iilnesses

PD CIEE sec eceswescseseccenncscusdesdescocsncecvessecess 6

1984 Conn. Op. Att'y Gen. 357, 361 No. 87-93............. 10

Diane Levick, Employer Health Costs Up,

Hartford Courant, January 28, 1991 -

(reporting on the Health Care Benefits

Survey prepared by A. Foster Higgins

SI Cai acah id at ctiiaddanadawsiuacunsebeeten sadditentaes 6

Lewin/ICF, Blue Ribbon Comm'n on State

Health Insurance Proposal to Expand

Access to Health Care in Connecticut,

Rs SID crn oie Ce eece da cacs pc dehscsessckedsanedeete

INTEREST OF THE

AMICUS CURIAE

The interest of the Connecticut Business and Industry

Association in this case is set forth in the accompanying Motion for

Leave To File Bricf as Amicus Curiae.

REASONS FOR GRANTING THE WRIT

Summary of Argument

Special and important reasons, including a direct conflict

between the D.C. and Second Circuits, support review on Writ of

Certiorari of the decision below. Sup. Ct. R. 10.1.(1990). The

goal of ERISA’s! preemption provision “was to minimize the

administrative and financial burden of complying with conflicting

directives among States... .” /ngersoll-Rand Co. v. McClendon,

— US. __, 111 S. Ct. 478, 484 (1990) (citations omitted). At

present, however, two federal circuit courts have rendered

conflicting directives on the permissibility of the same form of state

regulation. The D.C.2 and Connecticut} statutes at issue in these

cases require employers who give benefits to their active employees

through ERISA-covered plans to provide the same level of benefits

to employces cligible to receive workers’ compensation. The direct

conflict in the circuits over the viability of these statutes undermines

the Congressional intent of “ensur{ing] that plans and plan sponsors

would be subject to a uniform body of benefit laws...” /d.

| The Employee Retirement Income Security Act of 1974, as amended

(“ERISA”), codified at 29 US.C. §§ 1001-1461 (1988).

2 Workers’ Compensation Equity Amendment Act of 1990 (D.C. Act 8-261)

(“Equity Amendment Act” or “D.C. statute”) (the relevant portion of which is

codified at D.C. CODE ANN. § 36-307 (a-1); App. Al-A2).

Conn. Gen. Stat. § 31-284b (1991) ("Connecticut Statute”) (App. A3)

Ss

The definitive split between the D.C. and Second Circuits

articulates clearly the important federal issue to be resolved on

Certiorari. While little would be gained by allowing for further

development of this issue by the lower courts, much could be lost

by permitting states to enact other laws that attach themselves to

ERISA-protected plans. The D.C. statute typifies an emerging class

of state laws that impose special burdens on employers based on the

benefits provided in their ERISA-protected plans. Local

governments find it administratively convenient to peg new benefit

requirements to the level of benefits already being provided in

ERISA plans. Thus, the District of Columbia and Connecticut

Statutes require employers to provide benefits to employees eligible

for workers’ compensation that are “equivalent” to those given in

ERISA-protected plans to active employees. Similarly, states have

used employers’ existing ERISA benefit levels to define new

requirements in other areas, including: plant closings, dependent

coverage, family leaves, layoffs and other terminations. This trend

defeats the congressional goals of uniform regulation and of

encouraging employers to provide employee benefits.

To employeis caught in this conflict, the administrative and

financial costs are real. CBIA estimates that Connecticut employers

who provide health insurance benefits to their active employees must

pay an additional $20,315,000 each year to provide “equivalent”

benefits to employees eligible for workers’ compensation.

Employers who change their ERISA plans face the administrative

burdens of tracking subclasses of employees whose benefit levels

were set based on the plan in effect when they first became eligible

to receive workers’ compensation. The easiest way for employers

to avoid these added costs is to eliminate employee benefits

altogether, which cures the problem but kills the patient. Yet for

employers in Connecticut, where state and federal courts have

upheld the analog to the District of Columbia statute, eliminating or

reducing benefits to active employees may well be the only viable

alternative -- unless this Court grants Certiorari.

3

Argument

1. THIS COURT SHOULD GRANT ITS WRIT TO

RESOLVE A DIRECT CONFLICT BETWEEN THE

DISTRICT OF COLUMBIA AND SECOND

CIRCUITS

The Petition seeks review of an important issue regarding a

federal statute, ERISA, over which circuit courts have differed. The

decision below4 and R.R. Donnelley & Sons Co. v. Prevost, 915

F.2d 787 (2d Cir. 1990), cert. denied, __ U.S. _, 111 S. Ct. 1415

(1991) reached squarely conflicting results on whether ERISA

preempted similar laws enacted in Connecticut and the District of

Columbia. The D.C. Circuit's decision also conflicts with a ruling

of the Connecticut Appellate Coun, which adopted the Second

Circuit's holding in Donnelley. Tufaro v. Pepperidge Farm, Inc.,

24 Conn. App. 234, 587 A.2d 1044 (1991).

For purposes of ERISA preemption, the Connecticut and

D.C. statutes are indistinguishable. GWBT, 948 F.2d at 1324.

Indeed, the District modeled its Equity Amendment Act on the

Connecticut statute, Conn. Gen. Stat. § 31-284b (1991). GWBT,

948 F.2d at 1324, n.22. Both laws require employers who

sponsor ERISA-covered benefit plans for their active employees to

provide equivalent benefits to employees eligible to receive workers’

compensation. Both statutes also allow employers various options

for complying with this requirement, including amending their

ERISA plans, establishing separate plans, or self-insuring.

In Donnelley, the Second Circuit held that the Connecticut

statute was “saved from preemption” by section 4(b)(3) of ERISA,

29 U.S.C. § LO003(b)3). 91S F.2d at 792-94. Section 4(b)(3)

exempts from ERISA “plan{s] . . . maintained solely for the purpose

of complying with applicable workmen's compensation laws or

4° Greater Washington Board of rade v. District of Columbia, 948 F.2d

1317 (D.C. Cir, 1991) COGWBT")

unemployment compensation or disability insurance laws... ." 29

U.S.C. § 1003(b)(3) (1988) (App. AS). The Second Circuit

focused on one feature of the Connecticut law: the employer's

option to amend its existing plan for all employees or establish a

separate plan only for employees receiving workers’ compensation.

The court compared this option to language in Shaw v. Delta Air

Lines, Inc., 463 U.S. 85 (1983). In Shaw, this Court observed that

although a State may not require an employer to alter its ERISA

plan, it “may force the employer to choose between providing

disability benefits in a separately administered plan and including the

state-mandated benefits in its ERISA plan.” Shaw, 463 US. at

108.5 The Second Circuit concluded that the Connecticut law

simply put employers to the same choice authorized in Shaw.

Donnelley, 915 F.2d at 793-94.

Unlike the Second Circuit, which relied heavily on Shaw,

the D.C. Circuit distinguished Shaw. The D.C. cour noted that the

Statute in Shaw related solely to plans exempt from ERISA - i.c.

disability plans to provide benefits based upon weekly wages.

GWBT, 948 F.2d at 1322-23; see supra at note 5. By contrast, the

D.C. law relates to both ERISA-covered and exempt plans: it pegs

the required benefits to levels set in ERISA-covered plans, and it

allows employers to provide these benefits through separate, exempt

plans. /d. The D.C. Circuit concluded that this distinction rendered

Shaw irrelevant. /d. Thus, the D.C. and Second Circuits disagreed

about the meaning and applicability of this Court's decision in

Shaw.

5 The New York Disability Benefits Law at issue in Shaw required that

employers provide disability benefits of $95 per week or one-half the

employee's weekly wages, whichever was less. N.Y. Work. Comp. § 204.2

(McKinney 1982-83)(described in Shaw, 463 U.S. at 90 n.4). Thus, the

statute in Shaw did not piggyback onto any ERISA-covered plans by

mandating certain benefits based on those given to active employees. See

ERISA § 3(1), 29 U.S.C. § 1002(1) (1988); 29 C.F.R. § 2510.3-1(b)(1)

(1991) (ERISA “employee benefit plan” defined not to include payment of

weekly wages).

Moreover, the D.C. Circuit directly criticized the Second

Circuit's analysis of the Connecticut statute, and flatly rejected the

holding in Donnelley:

{T]he Second Circuit focused on only half the

story. By concentrating on how and in what ways

the new workers’ compensation plans would be

exempt from ERISA coverage, the court failed to

appreciate the fact that the Connecticut statute . . .

related to an ERISA-covered plan by tying the new

benefits to existing benefits and by limiting the

law's applicability to employers already providing

benefits through ERISA plans. The statute at issuc

in Donnelley is indistinguishable from the Equity

Amendment Act. Based on a plain reading of

ERISA, we disagree with the conclusion of the

Second Circuit. ...

GWBT, 948 F.2d at 1324-25. (footnotes omitted).

By granting its Writ, this Court can readily resolve the clear

split between the Second and D.C. Circuits over the proper

interpretation of Shaw and the correct analysis of ERISA

preemption. Moreover, as explained below, important issues of

federal law and policy strongly favor granting this Wnt.

4

Il. THE CASE BELOW PRESENTS SIGNIFICANT

FEDERAL QUESTIONS WARRANTING REVIEW

ON CERTIORARI

A. The Financial and Administrative Burdens

Imposed by the D.C. and Connecticut Statutes

Impel Employers to Eliminate Existing ERISA

Plans or Forgo Establishing New Plans.

The D.C. statute and its Connecticut counterpart impose

significant and direct financial burdens on employers who sponsor

ERISA-covered employee benefit plans. CBIA estimates that in.

1991, the cost to Connecticut employers of providing just the health

insurance coverage mandated by the Connecticut statute was

approximately $20,315,000. While some employers might

6 — This cost estimate is computed as follows:

a. In 1991, the average per employee annual cost to Connecticut

employers of providing health insurance was $4,232. Diane Levick,

Employer Health Costs Up, Hartford Courant, January 28, 1991, at

Bl (reporting on the Health Care Benefits Survey prepared by A.

Foster Higgins & Co.).

b. The Connecticut Department of Labor estimates that the average

Connecticut employee works 1,620 hours per year which, assuming

a 7.5 hour workday, translates into 216 workdays per year. Thus, the

cost to Connecticut employers of providing health insurance to

employees in 1991 was approximately $20 per work day ($4,232 /

216 days).

c. Connecticut workers who were eligible for workers’ compensation

benefits experienced 1,231,200 days of absence from work in 1990

(the latest year for which such figures are available). See Conn.

Dept. of Labor, Connecticut Occupational Injuries and Illnesses

Report (1990).

d. &%2.5% of Connecticut workers are covered by employer-provided

group health insurance. Lewin/ICF, Blue Ribbon Comm'n on State

Health Insurance Proposal to Expand Access to Health Care in

Connecticut (March 1, 1990). Thus, it can be inferred that 82.5% of

2.

voluntarily bear part of this expense (particularly for short-term

absences), Connecticut allows for no choice in the matter.

In addition to the direct costs of the additional benefits,

these piggyback laws impose several administrative burdens on

sponsors of ERISA-protected plans. For example, both the D.C.

and Connecticut statutes set the required benefits at the level

provided when the employce first became eligible to receive

workers’ compensation. D.C. Code § 36-307(a-1)(3) (App. Al);

Gagnon v. Liberty Oil Equipment, 7 Conn. Workers’ Comp. Rev.

Op. 81 (1989). Thus, each time an employer amends a benefit plan,

it may create another subclass of employces with benefits that differ

from those in the current plan. Over time in the volatile world of

employee benefits, these subclasses may grow in number and range.

Indeed, even after an employer terminates a plan or can no longer

obtain coverage, it will remain liable to provide benefits defined by

earlier plans to all of the subclasses of employees receiving workers’

compensation. Furthermore, an employer must not only keep track

of all of the subclasses of employees, it will probably have to sclf-

insure the inactive employecs because their benefit levels differ from

the employer's current plan.

The adminisirative problems of tracking subclasses of

employees are exacerbated in Connecticut, which sets no time limit

on the employer's obligation to compensation-cligible employces.

Unlike the D.C. statute, which caps the employer's obligation at

fifty-two weeks, Connecticut ties the requirement to provide

equivalent benefits solely to the employee's cligibility for workers’

the days of absence described in ¢ above were incurred with respect to

such employees. Accordingly, approximately 1,015,740 days

(1,231,200 days X 82.5%) of employer-provided coverage were

mandated by the Connecticut statute in 1991.

e¢. Therefore, in 1991, the approximate cost to Connecticut employers

of providing the health care benefits required by the Connecticut

statute was $20,315,000. (1,015,740 days X $20).

*

compensation. Conn. Gen. Stat. § 31-284b(a) (1991) (App. A3).

Since an employee who suffers a “partial permanent disability” may

be eligible for compensation indefinitely, an employer's obligation

under the Connecticut statute can continue for many years. See

Conn. Gen. Stat. §§ 31-308(a), 31-308a (1991).

With the cost of providing health insurance benefits to

employees nsing at an alarming rate, employers are compelled to

search for ways to reduce their health insurance expenditures. All

too often the only viable alternative for employers is to reduce or

even climinate the health insurance benefits that they provide to

employees. Since only employers who do not sponsor ERISA-

covered plans are beyond the reach of the D.C. and Connecticut

statutes, the statutes provide an additional incentive for employers to

forgo creating or maintaining health plans. Moreover, since both

statutes piggyback onto the benefit levels in ERISA-covered plans,

employers who might otherwise provide generous benefits to active

employees are unwilling -- or financially unable -- to do so. Thus,

these statutes burden not only ERISA plan sponsors but also their

active employee participants and dependents.

Accordingly, this Coun should grant its Writ because of the

substantial burdens that these statutes impose on ERISA plans.

B. The Petition Raises Serious Concerns Over the

National Uniformity of Laws Applicable to

ERISA-Covered Plans.

Unless this Court grants its Wnt of Certiorari to resolve the

conflicting rulings of the D.C. and Second Circuits, the Second

Circuit opinion in Donnelley will continue to provide states with a

road map for circumventing ERISA preemption with respect to

piggyback laws in the areas mentioned in ERISA § 4(b)(3):

workers’ compensation, disability benefits, and unemployment

compensation. Under the Second Circuit approach, states may

premise and measure employers’ obligations to provide these kinds

of benefits based upon the terms of cach employer's ERISA-covered

plan.

The District of Columbia, Connecticut, and other states have

been drawn inexorably to regulate ERISA plans and plan sponsors.

States do not ignore the already enormous and still growing

economic stature of employee benefits and benefit plans.

Administratively, states find the benefits prescribed in ERISA plans

to be easy and logical targets. Thus, state laws often attempt to

piggyback onto existing ERISA plans, imposing additional

obligations that are pegged to benefits provided to active employees.

For example, states have passed piggyback laws regarding family

leaves, dependent coverage, plant closings, and employee

terminations. ’

This Court's decision in /ngersoll-Rand held that a state

cannot premise a common law cause of action upon the existence of

an ERISA-covered plan. 111 S.Ct. at 482-84. The case below

presents a good vehicle through which this Court can make clear that

? See, e.g.. family leave: D.C. Code Ann. §§ 36-1301 to 36-1317 (1981 &

Supp. 1991) (requiring employers to maintain existing health coverage on the

same terms for employees who take family leave, and prohibiting loss of such

employees’ benefits accrued prior to the commencement of a family leave);

NJ. Rev. Stat. Ann. §§ 34:11B-1 to 34:11B-8 (1988 & Supp. 1991)

(requiring employers to maintain existing health coverage on the same terms

for employees who take family leave; held preempted in New Jersey Business

& Indus. Ass'n v State, 249 NJ. Super. 513, 592 A.2d 660 (1991));

dependent coverage: Cal. Ins. Code § 10123 (Deering 1977 & Supp. 1992)

(requiring extension of coverage to dependents if self-insured welfare benefit

plan extends coverage to employee after termination), plant closings: Conn.

Gen. Stat. § 31-Slo (1991) (requiring employers to maintain existing group

health coverage at employer cost for up to 120 days alter a plant closing);

Mass. Gen. L. ch. 175, §§ 110D, 110G; ch. 176A, § 8D; ch. 176B, § 6A; ch

176G, § 4A (1990) (requiring continuation of existing group health coverage

on the same terms for up to 90 days); employee terminations: Conn. Gen.

Stat. § 38a-S38 (1991) (requiring that employers, otherwise exempt from

COBRA, 29 USC § 1161-1168 (1988), offer continuation of existing group

health coverage); Nev. Rev. Stat. § 689B.245 (1991) (same).

-10-

the analysis in /ngersoll-Rand applics with equal force to state

statutory law. Indeed, the prevalence of piggyback statutes

demonstrates the need for this message.

The saga of the Connecticut and D.C. statutes tells a

cautionary tale about states’ desire to regulate ERISA-covered plans.

Initially, Connecticut ordered employers to allow compensation-

eligible employees to continue to participate in the employers’

ERISA plans. When federal courts held that ERISA preempicd

Connecticut's forced inclusion of compensation-eligible

employees,® the state enacted section 31-284b, which simply moved

the same substantive requirement to another section of the

Connecticut statutes and gave employers various options for

compliance.? The District of Columbia, following the district court

ruling in Donnelley, enacted the Equity Amendment Act modeled on

the Connecticut statute. GWBT, 948 F.2d at 1324, n. 22. The

most recent chapter of this tale -- the split between the D.C. and

8 Stone & Webster Engineering Corp. v. Isley, 690 F.2d 323 (2d Cir.

1982) aff d mem. sub nom. Arcudi v. Stone & Webster Engineering Corp., 463

U.S. 1220 (1983) held that Conn. Gen. Stat. § 31-Sih (1981), the statutory

predecessor to Conn. Gen. Stat. § 31-284b, was preempted by ERISA. The

current Connecticut statute differs from its preempted predecessor in only one

respect: the old law prohibited an employer from removing from its ERISA

plan those employees who were eligible for workers’ compensation, while the

new statute gives the employer the option of keeping such employees in the

plan or providing “equivalent” coverage through a separately administered

plan.

4% The Connecticut Attorney General aptly summarized the legislative

history of the Connecticut statute as follows:

Section 31-284b was enacted for the purpose of bringing

the requirements of section 31-Sth into the Workers’

Compensation Act without substantive change, in

response to the District Court decision in Stone & Webster,

{S18 F. Supp. 1297 (D. Conn. 1981)}.

1984 Conn. Op. Att'y Gen. 357, 361 No. 87-93 (emphasis added)

Second Circuits -- is not likely to be the last. Indeed, Connecticut

continues to enforce its statute, and other states are likely to rely on

the Second Circuit's permissive view of plan regulation and

piggyback laws.

The split between the D.C. and Second Circuits creates

particularly burdensome consequences for employers who sponsor

ERISA-covered plans that extend to employees in several states.

States now impose conflicting requirements on sponsors of mullti-

state plans. Moreover, the disparate requirements may grow: states

may mandate benefits at levels that differ from the District of

Columbia's and Connecticut's requirements (e.g., 80% of the

coverage provided to active employees); they may set different

mandatory time periods for providing these benefits (e.g., for up to

one year of workers’ compensation eligibility, as in the District of

Columbia, or for the entire period of workers’ compensation

eligibility, as in Connecticut); or they may require employers to pay

the same portion of the cost of coverage as they did when the

employee was active (as in Connecticut) or to pay the entire cost of

the mandated coverage (as in the District of Columbia).

Furthermore, states may target other ERISA plan benefits (c.g.,

severance pay) as the basis for benefits mandated by statute. Thus,

employers who sponsor multi-state benefit plans will not only be

burdened by siate-imposed obligations because of their ERISA-

covered plans; they may well be burdened inconsistently by such

obligations.

“Section 514(a) [of ERISA} was intended to ensure that

plans and plan sponsors would be subject to a uniform body of

benefit laws; the goal was to minimize the administrative and

financial burden of complying with conflicting directives among

States or between States and the Federal Government.” /ngersoll-

Rand, 111 S. Ct. at 484 (citing FMC Corp. v. Holliday, __ U.S.

_. 111 S. Ct. at 409; Fort Halifax Packing Co. v. Coyne, 482

U.S. 1, 10-11 (1987); Shaw, 463 U.S. at 105, and n.25). By

imposing an additional statutory requirement based upon the

existence and terms of ERISA-covered plans, the D.C. and

-]2-

Connecticut statutes “subject plans and plan sponsors to burdens not

unlike those Congress sought to foreclose through [ERISA]

§ §14(a).” Ingersoll-Rand, 111 S. Ct. at 484.10

Blatant circumvention of preemption, which the District of

Columbia and Connecticut have attempted and which the Second

Circuit decision approves, will necessarily foil the Congressional

goal of national uniformity in the regulation of ERISA-covered

plans. The obvious option for employers to avoid state laws that

piggyback onto the terms of ERISA-covered plans is simply to

avoid these plans altogether. FMC Corp., 111 S. Ct. at 408; Fort

Halifax, 482 U.S. at 11. Ultimately, this will harm the very

employees that Congress intended to protect.

10 The enactment of COBRA (codified at §§ 601-608 of ERISA, 29 U.S.C.

§§ 1161-1168 (1988), and § 4980B of the Internal Revenue Code of 1986, as

amended, 26 U.S.C. § 4980B (1988)) further supports ERKISA’s broad

preemption of this area. COBRA requires employers maintaining certain

group health plans to offer covered employees and their dependents the

opportunity to extend coverage, at the employee's cost, upon the occurrence

of certain events. Unlike the D.C. and Connecticut statutes, COBRA is a

comprehensive and procedurally complete statute. For example, COBRA

coverage terminates when the employer discontinues health benefits to active

employees and when the COBRA beneficiary becomes covered under any other

group health plan or entitled to Medicare benefits. ERISA, § 602(2), 29

U.S.C. § 1162(2) (1988). The enactment of COBRA illustrates the role of

ERISA’s preemption provision in reserving to Congress the exclusive

authority to regulate employee benefit plans.

-13.

III. CONCLUSION

For the reasons set forth above, CBIA respectfully requests

that this Court grant the petition for Writ of Certiorari and affirm the

decision of the D.C. Circuit.

Respectfully submitted,

Daniel L. FitzMaurice

Counsel of Record

Thomas Z. Reicher

Glenn W. Dowd

Day, Berry & Howard

CityPlace

Hartford, CT 06103-3499

Attorneys for the Connecticut

Business and Industry Association

March 1992

APPENDIX

CONTENTS OF APPENDIX

Page

ae aa ee a: Al

Conn. Gen. Stat. § 31-284B..............ccccccccscocsecccsecees AB

Se Ob, as OF EE Knttinudvsenecndndadiscnddeedtins AS

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D.C. Code § 36-307(a-1)

§ 36-307. Medical services, supplies, and insurance.

**e kK *

(a-1)(1) Any employer who provides health insurance

coverage for an employce shall provide heath insurance coverage

equivalent to the existing health insurance coverage of the employee

while the employee receives or is eligible to receive worker's

compensation benefits under this chapter.

(2) For purposes of this subsection, the phrase “eligible

10 receive” means:

(A) An employee is away from work due to a job-

related injury for which the employee has filed a claim for workers’

compensation benefits under this chapter; or

(B) An employer has knowledge of a job-related

injury of an employee who is away from work due to the job-related

injury pursuant to which workers’ compensation benefits may

become due under § 36-315.

(3) The provision of health insurance coverage shall not

exceed 52 weeks and shall be at the same benefit level that the

employee had at the time the employee received or was eligible to

receive workers’ compensation benefits.

(4) Except as provided in paragraph (3) of this

subsection, an employer shall pay the total cost for the provision of

health insurance coverage during the time that the employee receives

or is cligible to receive workers’ compensation benefits under this

chapter, including any contribution that the employee would have

made if the employee had not received or been cligible to receive

workers’ compensation benefits.

A2

(S) An employer shall be reimbursed for the provision

of health insurance coverage required by this subsection from t he

special fund established in § 36-340. If an employer fails to provide

health insurance coverage and an employee subsequently procures

the insurance coverage and receives reimbursement for the

procurement of insurance coverage from the employer pursuant to

subsection (d) of this section, the employer shall be reimbursed

from the special fund only for the amount that the employer would

have paid for the coverage if the employer had provided the

coverage.

A3

Conn. Gen. Stat. § 31-284b

Sec. 31-284b. Employer to continue insurance coverage or

welfare fund payments for employees cligible to receive workers’

compensation. Use of second injury fund. (a) In order to maintain,

as nearly as possible, the income of employees who suffer

employment-related injuries, any employer, as defined in section 31-

275, who provides accident and health insurance or life insurance

coverage for any employee or makes payments or contributions at

the regular hourly or weekly rate for full-time employees to an

employee welfare fund, as defined in section 31-53, shall provide to

such employee cquivalent insurance coverage or welfare fund

payments or contributions while the employcc is cligible to reccive

or is recciving workers’-compensation payments pursuant to this

chapter, or while the employee is receiving wages under a provision

for sick leave payments for time lost due to an employment-related

injury,

(b) An employer may provide such equivalent accident

and health or life insurance coverage or welfare fund payments or

contributions by: (1) Insuring his full liability under this act tin such

stock Or mutual Companies or associations as are or may be

authorized to take such risks in this state; (2) creating an injured

employce’s plan as an extension of any existing plan for working

employees; (3) self-insurance; or (4) by such combination of the

above-mentioned methods as he may choose.

(c) In the case of an employee welfare fund, an

employer may provide such equivalent protection by making

payments or contributions for such hours of contributions

established by the trustees of the employee welfare fund as

necessary to mamta continuation of such insurance coverage when

such amount is less than the amount of regular hourly or weekly

contributions tor full-time employees.

(a) In the case where workers’ compensation payments

to an individual for total incapacity under the provision of section

31-307 continue for more than one hundred four weeks, the cost of

such accident and health insurance or life insurance coverage aficr

the one hundred fourth week shall be paid out of the second injury

fund in accordance with the provisions of section 31-349.

(ec) Such accident and health insurance coverage may

include but shall not be limited to coverage provided by insurance or

directly by the employer for the following health care services:

medical, surgical, dental, nursing and hospital care and treatment,

drugs, diagnosis or treatment of mental conditions or alcoholism,

and pregnancy and child care.

AS

ERISA § 4, 29 U.S.C. § 1003

§1003. COVERAGE.

(a) Except as provided in subsection (b) of this section

and in sections 1051, 1081, and 1101 of this title, this subchapter

shall apply to any employee benefit plan if it is established or

maintained

(1) by any employer engaged in

commerce or in any industry or activity affecting

commerce; or

(2) by any employce organization or

organizations representing employees cngaged in

commerce or in any industry or activity affecting

commerce, or

(3) by both

(b) The provisions of this subchapter shall not apply to any

employee benefit plan if

(1) such plan is a govemmental plan

(as defined in sections 1002(32) of this title);

(2) such plan is a church plan (as

defined in section 1002(33) of this ttle) with

respect to which no election has been made under

sections 410¢d) of tithe 26;

: (3) such plan is maintained solely for

the purpose of complying with applicabic

workmen's compensation laws or uncmployment

compensation or disability insurance laws;

(4) such plan is maintained outside of

the United States primarily for the benefit of

persons substantially all of whom are nonresident

aliens; or

(S) such plan is an excess benefit plan

(as defined in section 1002(36) of this title) and is

unfunded.