# Amicus Curiae Brief — New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0496%3A27

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1995
- **Citation:** 514 U.S. 645

## Text

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Nos. 93 - 1408, 93-1414, 93-14

In The | cies
, 13 1994

Wnited States ————2 2

Supreme Court of | the,"

October Term, 1994

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NEW YORK STATE CONFERENCE OF BLUE
CROSS AND BLUE SHIELD PLANS and
EMPIRE BLUE CROSS AND . BLUE SHEILD,

Petitioners,
~against-
THE TRAVELERS INSURANCE COMPANY, ET AL.,
Respondents.

(caption continued on reverse)

On Writ of Certiorari to the United States
Court of Appeals for the’ Second Circuit

BRIEF FOR TRUSTEES OF AND THE PENSION,
HOSPITALIZATION BENEFIT PLAN OF THE
ELECTRICAL INDUSTRY AND TRUSTEES OF
AND UNITED FOOD AND COMMERCIAL
WORKERS LOCAL 174 HEALTH CARE FUND,
TRUSTEES OF AND UNITED FOOD AND
COMMERCIAL WORKERS LOCAL 174 RETAIL
WELFARE FUND AND TRUSTEES OF AND
UNITED FOOD AND COMMERCIAL WORKERS
LOCAL 174 COMMERCIAL HEALTH CARE FUND
AS AMICI CURIAE SUPPORTING RESPONDENTS

EDWARD J. GROARKE
COLLERAN, O’HARA & MILLS
Attorneys for Amici Curiae
¥ 1225 Franklin Avenue - Suite 450
: Garden City, New York 11530
(516) 248-5757

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MARIO M. CUOMO, ET AL.,
Petitioners,
~against-
THE TRAVELERS INSURANCE COMPANY, ET AL.,
Respondents.
HOSPITAL ASSOCIATION OF NEW YORK. STATE,
Petitioner,
-against-
THE TRAVELERS INSURANCE COMPANY, ET AL.,
Respondents.

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Contents
Page
Table of Authorities
Cases Cited:
Connecticut Hospital Assn. v. Pogue,
F. Supp. (@. Conn. Nov. 17, 1994)............... 10

District of Columbia v. Greater Washington Board of Trade,

506 U.S. S FSS | See 5
Fort Halifax Packing Co. v. Coyne,

Oe ile i 5
Ingersoll-Rand v. McClendon,

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New England Health Care Employees Union District 1199,

SELU. etal v. Mount Sinai Hospital,

846 F. Supp. 190 (D. Conn. 1994)... 9, 10n
NYSA-ILA and Clinical Services Fund v. David Axelrod

MD.,

££ 3 § { BF Grae a 11
Rebaldo v. Cuomo,

749 F.2d 133 (2d Cir. 1984), cert. denied 472 US.

ET AAT: Re aa, On TR 7
Shaw v. Delia Air Lines, Inc.,

I i 5
Travelers Ins. Co. v. Cuomo,

PO ee Cy i cetientiiecteceecsteenstnienisnnttven 6, 7,9

; Trustees of and The Pension, Hospitalization Benefit Plan
of the Electrical Industry et al. v. Cuomo,

WI SU ROY OO Ra OL IAI SPU Sa gy ee

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Contents
Page

Cases Cited: (continued)

United Wire, Metal & Mach., Health & Welfare Fund v.
Morristown Memorial Hosp.,

995 F.2d 1179 (3d Cir.), cert. denied, 114 S.Ct 382
EES LS Ae le ea 7 7,9

Statutes. Laws and Rules Cited:

Labor-Management Relations Act §302 0000000000000. l
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29 U.S.C. §§1103(cX1) and 1104(a\1A)..................... 3n
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ERLS.A. §403(cX1) amd 404(a) 1A) oo ccc cccccceceeeeeee. 3n

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DEE a a ea aa 10

Internal Revenue Code §162(m) ........0.0.....cccccccesecceceseeeeeeeveeee 8n
New York Public Health Law (“P.HLL.”) §2007-c(1)()...... I
aT 11

§2807-<( 1 Xa\iii) 2

§2807-<(1)d)...... 3

§2807-<(14\a)-{c) 2

Omnibus Budget Reconciliation Act of 1993, Pub. L. No.
BOS-G6 §13442, 107 Gems. SOG... cccccecececececcocecececereses 8n

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Nos. 93 - 1408, 93-1414, 93-1415

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In The

Supreme G@ourt of the
Gnited States

MARIO M. CUOMO, ET AL.,
Petitioners,

THE TRAVELERS INSURANCE COMPANY, ET AL.,
Respondents.

HOSPITAL ASSOCIATION OF NEW YORK STATE,

Petitioner,
-gainst-
THE TRAVELERS INSURANCE COMPANY, ET AL.,
Respondents.

On Writ of Certiorari to the United States
Court of Appeals for the Second Circuit

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BRIEF FOR
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STATEMENT OF THE AMICI CURIAE

This Memorandum is submitted on behalf of the
amici curiae, TRUSTEES of and THE PENSION,
HOSPITALIZATION BENEFIT PLAN of the ELECTRICAL
INDUSTRY (“ELECTRICAL INDUSTRY PLAN” or
“PLAN”) and THE TRUSTREES of and UNITED FOOD
AND COMMERCIAL WORKERS LOCAL 174 HEALTH
CARE FUND, TRUSTEES of and UNITED FOOD AND
COMMERCIAL WORKERS LOCAL 174 RETAIL
WELFARE FUND, as well as THE TRUSTEES of and
UNITED FOOD AND COMMERCIAL WORKERS LOCAL
174 COMMERCIAL HEALTH CARE FUND (collectively,
“U.F.C.W. FUNDS” or “FUNDS”), in support of the
arguments raised by the Respondents on this appeal

Each of the amici plans is an “employee welfare
benefit plan” as defined in the Employee Retirement
Income Security Act of 1974, as amended (“E.R.1S.A.”).
See 29 U.S.C. §1002(3). The trustees of each plan are
fiduciaries as defined in ERISA See 29 USC.
§1002(21). The plans are established and maintained

gpa Por Ma hr age 7 an 2m mm

(100%) percent coverage for all

hospitalization charges. Each plan was established
pursuant to the Labor-Management Relations Act §302,
29 U.S.C. §186, and operates on a self-insured basis

(“P.H.L.”) §2007-c{1)(b), the rate of reimbursement to
hospitals for care rendered to inpatients enrolled in a self-

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theories for the trial court in 7rustees v. Cuomo, as well
as to demonstrate to this Court the repercussions of its
holding at bar, the amici curiae submit this Memorandum
in support of the Respondents in this appeal.
funds are referenced in P.H.L. §2807-c(1\b), the thrust
of the underlying action has been focused on the
shall emphasize the concerns of Taft-Hartley self-insured
funds so that this Court will become cognizant of the
dramatic consequences of the thirteen (13%) percent
“payor differential” on all such plans which must live
with its wrath.

ARGUMENT

The ELECTRICAL INDUSTRY PLAN and the
U.F.C.W. FUNDS each pay approximately six (6%)
percent on bills it receives from its participants and their
beneficiaries for bad debt and charity care (“B.D.C.C.”).
When coupled with the thirteen (13%) payor differential,
this Court can see that these surcharges create a

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deductible for both individual and family subscriptions to
that welfare plan. The schedule of reimbursement for

5

The PHL. subjects the ELECTRICAL
INDUSTRY PLAN (which has participants in numerous
states) to inconsistent state regulation since the PLAN is
required to pay for services rendered in hospitals in other
states. For instance, the B.D.C.C. surcharge is not
universal. It is just such “patchwork regulation” which
E.R.ILS.A. was designed to eliminate. Fort Halifax
Packing Co. v. Coyne, 482 U.S. 1, 9 (1987); Shaw v.
Delia Air Lines, Inc., 463 U.S. 85, 99 (1983) quoting
Representative Dent and Senator Williams.

As _ self-insured funds, the amici curiae have
demonstrated in 7rustees v. Cuomo that these surcharges
result in direct out-of-pocket losses constituting reduction
in fund reserves. As a result, the self-insured welfare

Washington Board of Trade, 506 U.S. , 113° S.Ct.
580, 583 (1992); Ingersoll-Rand v. McClendon, 498 U.S.
133, 111 S.Ct. 478, 483 (1990). Specifically,

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The Circuit Court in Travelers Ins. Co. v. Cuomo,
14 F.3d 708 (2d Cir. 1993), held that the thirteen (13%)
percent payor differential was preempted by E.R.1S.A.

§514(a) since the state law has a “connection with” an

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employee welfare benefit plan. The Circuit Court
rationalized its holding by stating that the state statute
had an indirect economic impact upon E.RILS.A. plans
which was substantial and impermissibly affected the
structure, administration, or the type of benefits furnished
by the welfare plan. “The surcharges substantially increase
the cost to ERIS.A. plans of providing beneficiaries
with a given level of health care benefits.” Jd at 720.
Additionally, the thirteen (13%) percent payor differential
effects the plan’s determination of how best to fund their
level of benefits.

In the Travelers case, the Circuit Court drew the
following conclusions of law which are of great
importance to the amici curiae in Trustees v. Cuomo
which they would like to see this Court adhere to in its
decision on this appeal:

a) the challenged surcharges “relate to” E.R.1S.A.
plans because they have a “connection with” such plans;

b) Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir.
1984), cert. denied 472 U.S. 1008 (1985) is no longer
good law;

c) disavowed the Third Circuit’s majority ruling in
United Wire, Metal & Mach., Health & Welfare Fund v.
Morristown Memorial Hosp., 995 F.2d 1179 (3d Cir.),
cert. denied, 114 S.Ct. 382 (1993) and cited favorably to
Judge Nygaard’s dissent in that case;

d) the thirteen (13%) percent payor differential
“ force[s] E.R.1.S.A. plans to increase either plan costs
or reduce plan benefits”, id. at 720, thus, impermissibly
affects the structure, administration, or the type of
benefits furnished by a plan; and

e) found that differentials in rates of payment to
hospitals by various classes of payors “...purposely
interfere with the choices that E.R.1.S.A. plans make for

benefits.” Jd. at 719-720.°

4.

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benefit
of their employees. “The Act provides a conduit by

which money is transferred from, among others,
E.R.1S.A. plans to hospitals. Rather than spend its own
general funds, New Jersey implemented a money transfer
scheme where E.R.1.S.A. plans subsidize the medical bills
of those who are favored by law.” United Wire, Ibid,
995 F.2d 1179, __ (3d Cir. 1993), quoting from Judge
Nygaard’s dissent.

5. Recent Law:

Despite Petitioners’ claim to the contrary in
Trustees v. Cuomo, the B.D.C.C. add-on is
cost of doing business. Such surcharge differs from

knew could not pay in full. Additionally, in the
marketplace, vendors spread their bad loss (as the amici
curiae contend is appropriate) throughout its entire
customer base and not a few “well-heeled” customers.
Recent opinions filed since the Circuit Court ruled
in Travelers further justify the amici curiaes’ claims and
negate: Petitioners’ defenses in Trustees v. Cuomo. In
New England Health Care Employees Union District
1199, S.E1.U. etal. v. Mount Sinai Hospital, 846 F.
Supp. 190, 198-199 (D. Conn. 1994), then Chief Judge

10

Cabranes held that Connecticut's Uncompensated Care

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U.S.C. §1144(a). Judge Cabranes also denied kA yt
“impair” another federal statute, thus, it gh
by ERIS.A. §514(d), 29 U.S.C. 11

Pool Act was preempted by ERISA §514(a), 29
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two medical centers operated by an employee welfare
benefit fund was preempted by E.RIS.A. NYSA-ILA and
Clinical Services Fund v. David Axelrod, M.D., 27 F.3d
823 (2d Cir. 1994). The Court reasoned that P.H.L.
§2807-d has a “connection with” the employee welfare
benefit fund since the state mandated tax will cause the
fund to reduce benefits and/or increase costs. It is just
should be continued if the cost of health care is to be
equitably financed in our nation.

CONCLUSION

For the foregoing reasons, this Court should affirm
the Judgment below.

Dated: December 7, 1994

Respectfully submitted,

Colleran, O’Hara & Mills
Attorneys for Electrical Industry Plan
and U.F.C.W. Funds, Amici Curiae
by: Edward J. Groarke

Counsel of Record

1225 Franklin Avenue - Suite 450
Garden City, New York 11530
(516) 248-5757

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0496%3A27. Public record. Not legal advice.