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

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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 Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia

BRIEF AMICUS CURIAE OF THE

AMERICAN ASSOCIATION OF RETIRED PERSONS

IN SUPPORT OF PETITIONERS

STEPHEN R. BRUCE STEVEN S. ZALEZNICK

1212 New York Ave.,N.W. CATHY VENTRELL-MONSEES *

Suite 500 AMERICAN ASSOCIATION OF

Washington, D.C. 20005 RETIRED PERSONS

(202) 371-8013 601 E Street, N.W.

Washington, D.C. 20049

(202) 434-2060

Attorneys for Amicus Curiae

American Association of

Retired Persons

* Counsel of Record

WILSON - Eras Printinc Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

® SEEEEP20 co

TABLE OF CONTENTS

TABLE OF AUTHORITIES ............................ senmdidnna -

INTEREST OF AMICUS CURIAE |

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

INTRODUCTION _.. Spalatesiebdaniiiibdilinsligtpepiecadinsencs

I. HEALTH INSURANCE COVERAGE IS AN

III.

IV.

INTEGRAL PART OF AN INJURED EM-

PLOYEE’S COMPENSATION ....00000....

THE DISTRICT’S WORKERS’ COMPENSA-

TION PROGRAM IS EXEMPT FROM ERISA

PREEMPTION UNDER SHAW v. DELTA

ENE SS ee Le ee

ERISA SECTION 514 DOES NOT PREVENT

THE CALCULATION OF REMEDIES FOR

LOST COMPENSATION BY REFERENCE

TO EXISTING BENEFITS |...

THE GWBT DECISION IMPOSES A RE-

STRICTION ON STATE WORKERS’ COM-

PENSATION LAWS THAT NEITHER ERISA

SECTION 514 NOR ITS LEGISLATIVE HIS-

TORY SUPPORT

CONCLUSION

TABLE OF AUTHORITIES

CASES Page

Alessi v. emenneesi es 451 U.S. 504

(1981) .. : 16

General Motors Corp. v. Romein, 60 US.LW.

4203 (March 9, 1992) . ‘i 7

Greater Washington Board of Trade 1 v. . District of

Columbia, 948 F.2d 1317 (D.C. Cir. 1991) _..... 9,10, 11,

14, 16

Green v. Stringer, 389 N.E.2d 510 (Ohio 1978)... 16

Jaskilka v..Carpenter Technology Corp., T57 F.

Supp. 176 (D. Comm. SOB ED ...cncccsscccoscssiseennee 12

Martori Bros. Dist., Inc. v. James-Massengale, 781

F.2d 1349 (9th Cir. 1986), modified, 791 F.2d

799, cert. denied, 479 U.S. 949, 1018 (1986) ...... 11

Morrison-Knudsen Constr, Co. v. Director, Office

Workers’ Comp. Programs, 461 U.S. 624

(1983) . sansa veasnerseappessevageeenninnannee 4,6

Myco v. Super Conerete Co., 565 A.2d 293 (D.C.

1989) . | Pn et 5

Myers v. State, 428 P. 2a 83 ( Colo. 1967) . _ 16

R.R. Donnelley & Sons, Co. v. Prevost, 915 F.2d 787

(2d Cir. 1990), cert. denied, 111 S. Ct. 1415

(1991) ....... 10,14

Richardson v. Lahood & Assoe., ‘Ine., BTL ‘So.2d

te Sb) 14

Schultz v. Nat'l Coalition of Hispanic Mental

Health Organizations, 678 F. Supp. 936 (D.D.C.

ee 12

Shaw v. Delta Air Lines, Ine. 463 U. Ss. 85 (1983) . x

Stone & Webster Eng’g Corn. v. Ilsley, 690 F.2d

823 (2d Cir. 1982), aff'd mem., 463 U.S. 1220

(1983) sesoseseoscaeesesenssesesenmesibiunaiiaennane 14

Teper v. Park West Galleries, Inc., 431 Mich. 225,

427 N.W.2d 535 (Mich. 1988) . saniuitiaatadiana 12

STATUTES

D.C. Code Ann. § 36-801 (10) ...............2:0:ccccccccsseereosees 15

Tome PF ' Ot * ee 15

D.C. Code Ann. § 36-304 seiesieiuaiaaaee 5

D.C. Code Amm. § 96-07 (@) ........ccccccccceccscsccoccccccscconesce «=

D.C. Code Amm. § 96-307 (@-1 ) .....00ccccoccccoccccccscoccscesssess 7,9

iii

TABLE OF AUTHORITIES—Continued

Page

D.C. Code Ann. § 36-308 (a me |

D.C. Code Ann. § 36-311 4

D.C. Code Ann. § 36-334 __. i ae x

D.C. Code Ann. § 36-340 ................................. 9

Employee Retirement Income Security Act

(ERISA) 29 U.S.C. § 1001 et seq. ......... i 3

ERISA Section 3(1), 29 U.S.C. § 1002(1) 15

ERISA Section 3 (36), 29 U.S.C. § 1002 (36) _... 13

ERISA Section 4(b), 29 U.S.C. § 1003(b) passim

ERISA Section 514, 29 U.S.C. § 1144.00... passim

MISCELLANEOUS

A. Larson, Law of Workmen's Compensation. 4,6,7

Chen, The Growth of Fringe Benefits, 104 Monthly

Lab. Rev. 3 (1981) ..... ote 6

Employee Benefits for American Workers, “ Re-

search Rep. No. 89-09, The National Commission

for Employment Policy (June 1990) 5

Employee Benefits Research Institute, Public At

titudes on the Value of Benefits (1991) ro 2

L. Friedman, A History of American Law (2d ed.

EE 4

J. Mamorsky, Employee Benefits Lew ( 3d. ed.

1991) . 13

Report of the National Commission o on ‘State Work-

men’s Compensation Laws (1972) ........................ 6

U.S. Chamber of Commerce, 1992 Analysis of

Workers’ Compensation Laws (1992) 7

Wiatrowski, Family-Related Benefits in the Work-

place, 113 Monthly Lab. Rev. 28 (1999) .......... 5

IN THE

Supreme Court of the United States

OcToBer TerM, 1991

No. 91-1326

Tue District or COLUMBIA

and SHARON PRATT KELLY, MAyor,

. Petitioners,

THE GREATER WASHINGTON BOARD OF TRADE,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia

BRIEF AMICUS CURIAE OF THE

AMERICAN ASSOCIATION OF RETIRED PERSONS

IN SUPPORT OF PETITIONERS

INTEREST OF AMICUS CURIAE'

The American Association of Retired Persons (AARP)

is a nonprofit membership organization of more than

thirty-three million persons age fifty and older. More

than eleven million AARP members are employed, many

of whom are covered by employer health insurance plans.

Approximately sixteen million AARP members are under

age 65, and generally not eligible for Medicare.

Since AARP was founded in 1958, access to health care

has been a major Association priority. AARP is com-

1 The written consents of the parties have been filed with the

Clerk of the Court pursuant to Supreme Court Rule 37.3.

mitted to ensuring that persons of all ages have access

to adequate health care coverage.

Health insurance is essential to the well-being and

financial security of workers and their families. Older

persons typically take longer than younger persons to

recover from certain injuries and illnesses. A number

of illnesses that require extensive treatment occur more

frequently in the older population than in the younger

population. In addition, older persons are often fore-

closed from obtaining adequate and affordable health in-

surance, particularly when they have preexisting condi-

tions.

Older persons face significant risks from employment

policies that fail to provide continued coverage to in-

jured employees, their spouses and dependents. The loss

of employer-provided health insurance when an employee

receives workers’ compensation can have disastrous con-

sequences not only for that employee, but also for the

employee’s family. AARP is concerned that ERISA not

be construed to defeat the continuation of health in-

surance for injured employees, particularly when Con-

gress exempted workers’ compensation laws from ERISA

coverage.

Health insurance coverage is an extremely valuable

and integral component of an employee’s total compen-

sation,* particularly for an older worker. While the pur-

pose of workers’ compensation is to provide an adequate

replacement of the employee’s prior earnings, the ruling

2 In a 1991 Gallup survey of 1,000 individuals covered by an em-

ployer health plan, 65% of the respondents said health insurance is

the most important employee benefit. Pensions were named as the

second most important employee benefit by 357 of respondents. See

Employee Benefits Research Institute, Public Attitudes on the Value

of Benefits (1991). Respondents who were covered by an employer

health plan (70% of all respondents) said the average amount of

additional pay they would need in order to give up the benefit wa*

$4,096. Id.

below effectively prevents the states from recognizing

the value of health insurance coverage as part of overall

compensation. In so doing, it impedes the objective of

workers’ compensation laws and jeopardizes the health

and financial security of all workers and their families.

SUMMARY OF ARGUMENT

Since the start of this century, workers’ compensation

laws have been the domain of the state legislatures. In

enacting ERISA* and other federal legislation, Congress

has sought not to impinge upon the states’ authority to

enact adequate remedies for work-related injuries and

diseases. The only exceptions have come when Congress

has enacted comprehensive federal legislation for certain

classes of workers, such as railroad employees, seamen,

longshoremen, government employees, and members of

the armed forces.

ERISA Section 514(a), 29 U.S.C. § 1144(a), should

not preempt the District of Columbia’s Workers’ Com-

pensation law merely because it, in part, measures a

worker’s loss of earning power by the health insurance

coverage that he or she was entitled to at the time of

the injury. Neither ERISA’s plain language nor its leg-

islative history support preemption based on the measure

of a remedy. Far from being preempted by ERISA, the

District's provision carries out the main purpose of work-

ers’ covapensation programs that Congress sought to ex-

empt from ERISA, namely replacing the lost earning

power of injured workers. It is difficult, indeed, to im-

agine how states can measure the lost earnings repre-

sented by an injured worker’s health benefits without

referring to the cost of the insurance coverage the worker

had before the injury.

Moreover, if ERISA Section 514 was held to preempt

state law claims that provide for the recovery of lost

% Employee Retirement Income Security Act, 29 U.S.C. § 1001 et

seq. (1988).

benefits, then the entire spectrum of claims and remedies

that refer to existing benefits would be subject to ERISA

preemption, such as state law remedies for wrongful dis-

charge, discrimination, and even for personal injuries,

as well as state law rules for the plans covered under

each of the other exemptions described in ERISA Sec-

tion 4+b), 29 U.S.C. § 1003(b). Surely, Congress never

intended ERISA to preclude such a vast array of state

law claims or remedies.

INTRODUCTION

Starting with New York’s 1910 compensation statute,

every state enacted workers’ compensation statutes as

“compromise systems” to resolve and redress the loss of

earning power resulting from workplace injuries and

diseases. L. Friedman, A History of American Law (2d

ed. 1985), at 484 and 682-84. Under these statutes,

“le|mployers relinquish|| their defenses to tort actions

in exchange for limited and predictable liability. Em-

ployees accept the limited recovery because they receive

prompt relief without the expense, uncertainty and delay

that tort actions entail.” Morrison-Knudsen Constr. Co.

v. Director, Office Workers’ Comp. Programs, 461 U.S.

624, 636 (1983) (describing balance struck between con-

cerns of employers and workers under 1927 Longshore-

men’s and Harbor Workers Act).

Workers’ compensation statutes typically set benefits

for injured employees by reference to a percentage of

the compensation thet the emplovee was receiving prior

to suffering the injury. 2 A. Larson, Law of Workmen’s

Compersetion, § 60.00. That percentage varies between

50 and 66°", percent. Jd. In the District of Columbia, the

workers’ compensation law provides 66°4 percent of the

emplovee’s average weekly wage at the time of the in-

jury for total disability. D.C. Code Ann. §§ 36-308, 36-

311.‘ Medical expenses of the injured employee that

* If a worker permanently loses the use of part of his or her body, a

fixed schedule of payments applies. In the District of Columbia, for

result from the injury are also required to be paid. D.C.

Code Ann. § 36-307(a).

In the District, as in the states, the statutory com-

pensation coastitutes the exclusive remedy available to

employees to redress work-related injuries and death.

Injured workers are not allowed to draw workers’ com-

pensation and then institute separate lawsuits against

the employer to secure additiona) benefits or damages to

round out the compensation that the state has afforded

them. D.C. Code Ann, § 36-304; see, e.g., Myco, Ine. v.

Super Concrete Co., 565 A.2d 293, 296 (D.C, 1989).

I. HEALTH INSURANCE COVERAGE IS AN INTE-

GRAL PART OF AN INJURED EMPLOYEE’S

COMPENSATION.

Employers pay an ever-increasing portion of total

compensation to employees in the form of benefits that

are in addition to the base hourly, biweekly or monthly

rate of pay. Both employees * and employers’ cite health

insurance as the most important employee benefit within

the compensation package. The primary benefits are

health insurance, pension and/or savings plans, paid

vacation and sick leave, group term life insurance, and

severance pay. Between 1950 and 1990, the percentage

of compensation provided through benefits (including the

employee portion of Social Security) increased from under

10 percent to over 27 percent of payroll. See Wiatrowski,

Family-Related Benefits in the Workplace, 113 Monthly

example, 200 weeks of compensation is awarded for the permanent

loss of hearing in both ears. D.C. Code Ann. § 36-308.

* Employee benefits typically represent between twenty to thirty

per cent of an employee's compensation. Employce Benefits for

American Workers, Research Rep. No. 89-09, The National Com-

mission for Employment Policy, 1 (June 1990).

® See, e.g., note 2, supra.

7 General Accounting Office, Workforce Issues: Employment Prac-

tices in Selected Large Private Companies (1991).

Lab. Rev. 28, 32 (1990), and Chen, The Growth of Fringe

Benefits, 104 Monthly Lab. Rev. 3, 5 (1981) (cited in

Morrison-K nudsen Constr. Co., 461 U.S. at 636).

Because workers’ compensation statutes are exclusive,

it is essential that states have the power to enact statutes

that provide adequate compensatory remedies for a work-

er’s injury and lost earning capacity. To the extent work-

ers’ compensation statutes ignore the benefit component

of compensation and remain rooted in pre-World War II

compensation methods, they provide inadequate replace-

ment compensation for employees whose remuneration is

heavily weighted in favor of such benefits. The 1972 Re-

port of the National Commission on State Workmen’s

Compensation Laws thus found:

“Because workmen’s compensation benefits usually

are tied solely to earnings, the program is increas-

ingly deficient in the protection provided to the re-

muneration [including benefits] of American work-

ers.””

Td., at 54; see also 36-37.

While it is far from the predominant method, six states

include the value of certain benefits in the wage bases

that are used in calculating workers’ compensation

awards. See 2 A. Larson, Law of Workmen’s Compensa-

tion, § 60.12 (1991 Cum. Suppl.) (citing Alabama,

Alaska, Colorado, Florida, Kansas, and Maine).* In five

additional states and three of the same ones, the level of

compensation is set at a higher level, but the employer is

allowed to offset the value of certain benefits against the

worker’s compensation award. /d., at vol. 4, § 97.51(b)

8 Cf. Morrison-Knudsen Constr. Co. v. Director, Office Workers’

Comp. Programs, 461 U.S. 624, 632 (1983) (Congress did not intend

to include fringe benefits in “wages” when it enacted statute that

later became the District of Columbia Workmen’s Compensation

Act; if statute is to be altered to include fringe benefits within

definition, it is the legislature’s task).

and App. B-18A-1 (citing Alaska, Colorado, District of

Columbia, Maine, Michigan and Ohio); see also U.S.

Chamber of Commerce, 1992 Analysis of Workers’ Com-

pensation Laws, at 18-21 (citing same states plus Loui-

siana and Massachusetts). For example, the District of

Columbia has an offset from the worker’s compensation

award if benefits received from “employee benefit plans

subject to [ERISA]” and from Social Security exceed 80

percent of the compensation award. D.C. Code Ann.

§ 36-308 (9).°

With the enactment of the 1990 Equity Amendments

Act, the District of Columbia followed the State of Con-

necticut in taking benefits into account in providing rem-

_ edies for workplace injuries in an innovative way. The

District, like Connecticut, offered injured employees a

remedy that includes the cost of health insurance coverage

for a period up to 52 weeks. Under the 1990 EAA, em-

ployers are required to pay the cost of health insurance

coverage equivalent to that which the injured employee

possessed before the injury. D.C. Code Ann. § 36-307

(a-1).

The EAA was a substantial, but not radical, departure

from existing law. Like all of the states, the District

requires the employer to pay the medical expenses of the

injured employee that result from the injury. D.C. Code

Ann. § 36-307(a). This coverage accounts for 39 percent

of all workers’ compensation expenditures. U.S. Chamber

of Commerce, 1992 Analysis of Workers’ Compensation

Laws, viii; see also 2 A. Larson, Law of Workmen’s Com-

pensation, § 61.00 (one-third of expenditures for medical

coverage in 1961 study). Effectively, the Equity Amend-

ments Act added the cost of continuing the coverage the

® The decision this term in General Motors Corp. v..Romein, 60

U.S.L.W. 42038 (March 9, 1992), concerned whether the Michigan

statute allowing workers’ compensation awards to be coordinated

with employer-funded pension and disability benefits was retro-

active.

employee had prior to his injury, i.e., the cost for medical

expenses not related to the injury and coverage of the

spouse and dependents for a period of up to 52 weeks.

Il. THE DISTRICT'S WORKERS’ COMPENSATION

PROGRAM IS EXEMPT FROM ERISA PREEMP-

TION UNDER SHAW v. DELTA AIR LINES.

When Congress enacted ERISA in 1974, it did not

manifest any intention to impinge upon the states’ ability

to enact adequate remedies for work-related injuries.

Under ERISA Section 514, Congress provided that ERISA

preempts state laws that “relate to any employee benefit

plan described in section 4(a) and not exempt under sec-

tion 4(b).” 29 U.S.C. § 1144(a). Benefit plans that are

“exempt under section 4(b)” include plans that are

“maintained solely for the purpose of complying with ap-

plicable workmen’s compensation laws or unemployment

compensation or disability insurance laws.” 29 U.S.C.

§ 1003(b). Hence, Congress intended that state laws that

“relate to an{] employee benefit plan” that is “main-

tained solely for the purpose of complying with applicable

workmen’s compensation laws” would not be preempted.

In Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 108

(1983), this Court heid that Section 514(a) does not pre-

empt laws requiring insurance plans to include certain

benefits as long as the employer has the option of provid-

ing the benefit under an ERISA plan. Because the EAA

provides such an option to employers, it is not preempted

by ERISA.

Employers satisfy the District’s Workers’ Compensa-

tion law by purchasing insurance from a workers’ com-

pensation insurance carrier. D.C. Code Ann. § 36-334.

Employers can also self-fund their workers’ compensation

program if they meet certain requirements that prove

their financial ability to pay. Jd. The 1990 EAA directs

employers to provide the required “health insurance cov-

erage” as a part of the employer’s workers’ compensation

program. As with the other workers’ compensation bene-

fits, the employer must provide this coverage through an

insurance carrier unless it meets the requirements for

self-funding. /d.

The 1990 EAA does noi require an employer to include

the injured employees under its ERISA health plan or to

alter the ERISA plan in any manner; it merely requires

that the employer pay the cost of equivalent insurance cov-

erage for injured employees.” If the employer chooses, it

can provide the equivalent health insurance coverage by

continuing to include the employee under its ERISA

health plan. However, the statute does not require, or

encourage, employers to use that mechanism."

In the Greater Washington Board of Trade decision

(hereafter “GWBT”’), the U.S. Court of Appeals for the

District of Columbia acknowledged that Shaw permits

state workers’ compensation laws to require minimum

health benefits as a part of an injured worker’s compen-

sation without running into ERISA preemption. 948 F.2d

1317, 1323 (D.C. Cir. 1991). ~The D.C. Circuit’s opinion

thus concludes:

Had the Equity Amendment Act .. . simply re-

quired all employers to provide specified minimum

health benefits for employees receiving workers’ com-

pensation—it would clearly have survived preemption

under the principles announced in Shaw.

943 F.2d at 1323. The Respondent Board of Trade agrees,

as stated in its opposition to certiorari, that “|i]f... the

state mandated health benefits for injured workers which

1 The employer is reimbursed for the entire cost of this coverage

at the end of the year from a D.C. Special Fund. D.C. Code Ann.

§ 36-367(a-1)(5). The Special Fund, in turn, assesses both workers’

compensation insurers and employers who self-fund their programs.

D.C. Code Ann. § 36-340. The cost of the insurance is thus ultimately

borne by employers.

11 Indeed, the rules on self-funding preclude the employer from

using a self-funded ERISA plan to provide this coverage unless the

employer meets the financial ability requirements.

were not tied to the employer’s health insurance... ,

then the Second Circuit’s decision [in Donnelley] would

have been correct.” Opp. to Cert. Petition, at 6; see also

id. at 9, 11.

Ill. ERISA SECTION 514 DOES NOT PREVENT THE

CALCUATION OF REMEDIES FOR LOST COM-

PENSATION BY REFERENCE TO EXISTING BEN-

EFITS.

As discussed immediately above, no one questions the

District’s authority to mandate that employers provide

health insurance coverage as one of the remedies for

work-related injury or disease. Thus, the D.C. and Sec-

ond Circuits, and the parties, actually diverge on only

one issue: Can the District of Columbia (or a state)

determine which injured workers are to receive this rem-

edy and measure its cost by looking to the health insur-

ance coverage the worker possessed before his or her

injury?

The D.C. Circuit identified the critical difference be-

tween its opinion and the Second Circuit’s decision in

R.R. Donnelley & Sons, Co. v. Prevost, in that Donnelley:

(F Jocused on only half the story. {T]he court failed

to appreciate the fact that the Connecticut statute

‘like the Equity Amendment Act in this case) re-

lated to an ERISA-covered plan by tying the new

benefits to existing benefits and by limiting the law’s

applicability to employers already providing bene-

fits through ERISA plans.

948 F.2d at 1324 (emphasis added). The D.C. Circuit

concluded that the EAA’s “tying the new benefits to exist-

12 Universal coverage—requiring all employérs to provide spe-

cified minimum health benefits—is clearly preferable from the

standpoint of the injured employees. But one can readily imagine

the ou‘cry from business associations, such as the Board of Trade,

if the District’s Council had proposed that workers’ compensation

include the cost of health insurance coverage even if the employer

did not offer such coverage to its uninjured workers.

ing benefits” caused it to impermissibly “r 4

ployee benefit plans covered under ERISA. wr pd wa

948 F.2d at 1322 (EAA relates to ERISA plans “by re-

quiring that the new benefits be ‘equivalent’ to those al-

ready provided under an existing covered plan and by

defining the employers who are obliged to provide the

new benefit as those who already provide benefits under

a covered plan”). As the Board of Trade describes it

the “critical fact,” for the purpose of ERISA preemption

was that the workers’ compensation law “triggers and

en beng tn Aaya required health benefit level by the

insu “ iti

ry mth parry rance.” Opp. to Cert. Petition, at

With respect, the D.C. Circuit’s decision w

the ERISA Section 514(a) “relates to” ceeutiete an

unintended direction that unduly impairs the Section

4(b) exemption for workers’ compensation plans. Indeed

the point that the GWBT decision objects to—the EAA’s

tying the new benefits to existing benefits”—is the main

function that workers’ compensation laws are enacted to

carry out. How else is a state to replace an injured em-

ployee’s lost remuneration than by referring to the bene-

fits he or she had at the time of the injury?

Martori Bros. Dist., Inc. v. James-Massenga

1349, 1358-59 (9th Cir. 1986), modified, Ge ras 0.

cert. denied, 479 U.S. 949, 1018 (1986), may best il-

lustrate why the D.C. Circuit’s interpretation of the “re-

lates to” language in ERISA Section™ 514 is inconsist-

ent with ERISA’s preemptive purposes. In Martori, the

California agricultural labor board provided a remedy for

an employer's unfair labor practices that included the

cost of certain benefits as part of the remedy. Like the

Board of Trade, the employer challenged the remedial

order by arguing that ERISA preempted any remedy

that is tied to the benefits provided under ERISA plans

The Ninth Circuit rejected this argument, finding that

the state’s “make-whole orders do not require any change

whatsoever in existing ERISA plans” and holding that

“BRISA [Section 514] does not prevent the calculation

of damages for lost compensation by reference to existing

ERISA plans.” The Ninth Circuit observed that the ex-

pansive reading that the employer proposed would lead

to “absurd” results, such as finding ERISA preemption

in personal injury suits when the damages include loss

of benefits under ERISA plans.

Every other court that has examined the question has

reached the same conclusion as Martori: ERISA does not

preempt a state law law because it measures a remedy

for an unlawful act by an employee’s existing benefits.

For example, in Teper v. Park West Galleries, Inc., 431

Mich. 225, 427 N.W.2d 535, 541 (Mich. 1988), an em-

ployer maintained that ERISA preempted a state law

action for wrongful discharge because the damages that

the employee sought were in part measured by the value

of benefits that had been lost. The Supreme Court of

Michigan held that an award can include damages that

represent the cost of future benefits without being pre-

empted by ERISA. See also Schultz v. Nat'l Coalition of

Hispanic Mental Health Organizations, 678 F. Supp. 936,

938 (D.D.C. 1988) (damages for discharge in violation

of District’s Human Rights Act may include lost benefits

without becoming an ERISA case) ; Jaskilka v. Carpenter

Technology Corp., 757 F. Supp. 175, 178 (D. Conn. 1991)

(damages for breach of employment contract can include

value of lost benefits).

Here, the case against preemption is even stronger be-

cause Congress expressly exempted the workers’ compen-

sation remedies that the states require employers to pro-

vide. If the state law remedies furnished to the employ-

ees in Martori and Teper do not “relate to” employee

benefit plans—even though no exemption appears in

ERISA to preserve those state law remedies—then, a

fortiori, the state law worker's compensation remedy here

—which is protected by ERISA Section 4(b)—should not

be preempted.

The GWBT decision should be reversed because ‘t can-

not logically be confined to its narrow facts. As just one

por of its | emp if the District’s reference to

ng “health insurance coverage” results in preem

tion, then the District’s express offset for benefits sort

from “employee benefit plans subject to the Employee Re-

tirement Income Security Act of 1974”—a provision that

the Board of Trade has not challenged—would also be

preempted. See D.C. Code Ann. § 36-308(9). Similarly.

even the definitions of “wages” in the state workers’ com-

pensation law that include certain benefits would be

preempted.

If the GWBT decision were to be affirmed, all of the

other ERISA Section 4 exemptions that Congress crafted

—for government and church plans, plans maintained

outside of the U.S. primarily for nonresident aliens, and

excess benefit plans-——would also be impaired. For exam-

ple, an “excess benefit” plan that is exempt under ERISA

Section 4(b) (5) may offer a corporate executive 70 per-

cent of final average salary less the pension benefit al-

ready furnished under the covered ERISA plan. If the

GWBT decision were upheld, that offset would be pre-

empted because it “relates to” the existing ERISA plan.

Indeed, if GWBT was applied, the excess benefit plan

exemption would be virtually wiped out of the statute.

This is because ERISA Section 3/36), 29 USC.

$ 1002136), defines an excess benefit plan as a plan

that provides benefits for “certain employees” that are

in “excess of” the benefits offered to the employee under

tax-qualified ERISA plans. See also J. Mamorsky, Em-

ployee Benefits Law, at 5-15 (3d ed. 1991)." ;

Likewise, if a government plan exempt under Section 4(b)(1)

says that certain health benefits are contingent on whether the

worker or the spouse receives benefits under other employer-

provided coverage, including from ERISA plans, the GWRT deci-

sion would preempt that language from the ostensibly “exempted”

government health plan.

On examination of these consequences, it is clear that the

Second Circuit's decision in R.R. Donnelley & Sons, Co. v.

Prevost, 915 F.2d 787 (2d Cir. 1990), cert. denied, 111

S. Ct. 1415 (1991), did not “fail[] to appreciate” this

“half [of] the story.” Instead, like the Ninth Cireuit in

Martori (but with a different rationale), the Second Cir-

cuit drew the line under Section 514(a) in a manner that

protects ERISA plans from state regulation, but does

not wreak havoe on workers’ compensation programs that

Congress sought to exempt from ERISA’s preemption.

In Stone & Webster Eng’g Corp. v. Ilsley, 690 F.2d

323, 329 (2d Cir. 1982), aff'd mem., 463 U.S. 1220

(1983), the Second Circuit had found that an earlier .

version of Connecticut’s workers’ compensation statute

was preempted when it required employers to alter their

ERISA health plars to include injured employees. But

in Donnelley, the Second Circu't held that Connecticut's

new statute fell within the Section 4(b) exemption when

it merely directed employers to provide injured workers

with coverage under the workers’ compensation program

and did not require the employer to alter the ERISA

plan. 915 F.2d at 793. The Second Circuit thus pre-

served the important policies that the Section 4/b) ex-

emption for workers’ compensation plans was designed to

protect while remaining consistent with Section 514/a}’s

aims in regard to protecting ERISA plans from state

regulation."

Finally, the D.C. Circuit decision erred in stating that

the EAA “limited the law’s applicability to employers

already providing benefits through ERISA plans.” 948

F.2d at 1324 (emphasis added) ; see also id. at 1323 (the

™ Accord Richardson v. Lahood & Assoc. Inc., 571 So.2d 1082,

1086 (Ala. 1990) (ERISA does not preempt state workers’ com-

pensation statute prohibiting attachment or garnishment of such

benefits for the repayment of any debt, including to an employee

benefit plan, even though Alessi would preempt the statute if it

prohibited ERISA plans from reducing their benefits by the amount

of a worker's compensation award).

EAA “would clearly have survived preemption” had it

“made no reference to existing ERISA-covered plans”).

In fact, the EAA contains no reference to “ERISA plans,”

nor is its applicability “limited” to ERISA plans. The

Act refers to “health insurance coverage” existing at the

time of the injury. That coverage is not limited to ERISA

plans; instead, it includes insurance coverage that is

offered by an employer on an individual basis and health

coverage offered by an entity that is exempt from ERISA

(such as a governmental agency or church). Compare

D.C. Code Ann. § 36-301/10) and 36-303 with ERISA

Sections 3/1) and 4(b), 29 U.S.C. §£ 1002(1) and

1003 (b).""

IV. THE GWAT DECISION IMPOSES A RESTRICTION

ON STATE WORKERS’ COMPENSATION LAWS

THAT NEITHER ERISA SECTION 514 NOR ITS

LEGISLATIVE HISTORY SUPPORT.

From the standpoint of statutory construction, the

U.S. Court of Appeals for the District of Columbia’s

opinion canrot stand because it reads a restriction into

ERISA Section 514(a) and Section 4(b)(3) that the

plain words and underlying intert of the statute do

not support. As the district court below astutely ob-

served, the analysis that the Board of Trade offered,

and that the~D.C. Circuit later accepted, “infer[{s]” a

requirement under the ERISA Section 4(b) (3) exemption

that the | workers’ compensation] plan [may] not in any

way refer to another ERISA plan.” District Ct. slip op.,

Appendix to Pet. for Cert. at 27a.

The problem with that inference is that neither ERISA’s

plain language nor its legislative history support it. To

the contrary, the legislative history indicates that Con-

gress “acknowledged and accepted” that no “Chinese wall”

™ The health coverage referred to in the Act is also narrower

than that subject to ERISA. The EAA refers to the employee's

“health inswrence coverage” at the time of the injury, whereas

ERISA encompasses both insured and uninsured health plans.

existed “between ordinary ERISA plans and plans main-

tained solely to comply with workers’ compensation laws.”

Dist. Ct. slip op., Appendix to Pet. for Cert. at 28a

(citing Alessi v. Raybestos-Manhattan, Inc.). At the time

that Congress enacted ERISA, workers’ compensation off-

sets, such as that found in D.C. Code § 36-308(9), were

already in existence. See Myers v. State, 428 P.2d 83

(Colo. 1967) (ruling on Colorado R.S. Sec. 8-51-101

(1) (d)); Green v. Stringer, 389 N.E.2d 510 (Ohio 1978)

(ruling on Ohio R.C. 4123.56 [enacted in 1967]."*

The extensive reach of ERISA preemption suggested by

the GWBT decision essentially undermines the main ob-

jective of workers’ compensation programs. Under G WAT,

workers’ compensation statutes in the 50 states and the

District would anomalously be prohibited from measur-

ing injured employees’ loss of earning power by the total

remuneration that the employees were earning at the

time of the injury. Any reference to the benefits that

the employee was earning would be declared off limits.

This is equivalent to saying that workers’ compensa-

tion statutes can now redress only part of the workers’

lost earnings.

There is no indication whatsoever that Congress in-

tended ERISA to impose such a restriction on workers’

compensation laws. Nor did Congress intend preemption

to freeze in time the choices that state legislatures had

theretofore made in enacting workers’ compensation

laws. As Judge Wald pointed out, ERISA’s exemptions

were not created to serve as barriers to the states’ enact-

ment of “innovative” workers’ compensation plans. 948

F.2d at 1318 n.1.

In Alessi v. Raybestos-Manhattan, Inc, 451 US. 504, 524

(1981). this Court overturned a state workmen's compensation law

that directed ERISA plans to alter their benefit formulas.

CONCLUSION

In summary, Congress expressly recognized the states’

traditional interest in enacting adequate workers’ com-

pensation laws in ERISA Sections 514(a) and 4(b).

ERISA Section 514(a) should not be turned around to

restrict the authority of the states and the District in

measuring the remedies for work-related injuries by an

employee’s total compensation, including the value of the

employee’s existing health coverage.

Respectfully submitted,

STEPHEN R. BRUCE STEVEN 8S. ZALEZNICK

1212 New York Ave.,N.W. CATHY VENTRELL-MONSEEs *