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

5

93-1414, 93-14

Nos. 93 -

Supreme G@ourt of tt ke

Gnited States —————

October Term, 1994

——

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

—_>

BEST AVAILABLE COPY’

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.

EEE SEO>@q_ENESSSS_Q@{_=antaell‘e_es_eoe_OOEOEee—

TABLE OF CONTENTS

Page

Table of Authorities.................-.c-ccccceereeeeeenenereeseennens ii

Statement of the Amici Curine ....................-cccvssss !

ATRIOS n-ne cccccccscrseesesseseessnssnsenssnsecssecsansnnnsnnsnssnsensnees 3

ee 4

RE RE RARE SS 5

3. Cireuit Court Decision in Travelers ..................... 6

4. Policy Considerations .............c.....ccsssssssseeeeesneee 8

DFID BIW ciccccneccccccnccccssistesencocerccsccesescccsseccsccenees 9

“Se oe

i

Contents

Page

Table of Authorities

Cases Cited:

Connecticut Hospital Assn. v. Pogue,

____ F. Supp.__.__ @. Conn. Nov. 17, 199” ............. 10

District of Columbia v. Greater Washington Board «j Trade,

506 U.S. (OQ 5

Fort Halifax Packing Co. v. Coyne,

EE Le ee 5

Ingersoll-Rand v. McClendon,

SG OO 5

New England Health Care Employees Union District 1199,

SEIU. etal v. Mount Sinai Hospital,

846 F. Supp. 190 (D. Comm. 1994). ccccccccceceeees 9, 10n

NYSA-ILA and Clinical Services Fund v. David Axelrod,

MD.,

RG ( ( Eee 11

Rebaldo v. Cuomo,

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

I dinietstitenicnrcasnsierentesinntianteenttatomenighemmnestheieusmns 7

Shaw v. Delta Air Lines, Inc.,

A nats 5

Travelers Ins. Co. v. Cuomo,

Fo fb FF ee en 6, 7,9

Trustees of and The Pension, Hospitalization Benefit Plan

of the Electrical Industry et al. v. Cuomo,

CV-92-5589 EDNY 2, Passim

* Fy

— - eS se eS ee

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

EE ne Te rre

Statutes, Laws and Rules Cited:

Labor-Management Relations Act $302 .000000000000......cccccceeeees

Ee

TTT ES on

Sr

29 U.S.C. §§1103(cX1) and 1104(aX1A).....................

EE

re

ERLS.A. §403(cX1) amd 404(a)( 1A) ..........cccccccccccecceereeees

EA Cree

(i ea maria maa

Internal Revenue Code §162(m) ...................ccccccccceeeceeneeeneeeees

New York Public Health Law (“P.H.L.”) §2007-c(1)(0)......

§$2807-d...............

§2807-c{ 1 Ka)iii)

§$2807-<(1)d).......

§2807-c(14)a)-(c)

Omnibus Budget Reconciliation Act of 1993, Pub. L. No.

103-66 §13442, 107 Stat. 568 rs

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

In The

Supreme Court of the

Gnited States

THE TRAVELERS INSURANCE COMPANY, ET AL.,

Respondents.

HOSPITAL ASSOCIATION OF NEW YORK STATE,

Petitioner,

~against-

THE TRAVELERS INSURANCE COMPANY, ET AL.,

Respondents.

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.1.S.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

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payments for participants whose doctor’s fees exceed the

allowable charges contained in the PLAN. Additionally,

the prescription drug benefit was amended to reimburse

participants for the cost of prescription drugs based on

the costs of generic equivalents.

5

The PHL. subjects the ELECTRICAL

INDUSTRY PLAN (which has participants in

States) to inconsistent state regulation since the PLAN is

required to pay for services rendered in hospitals i

states. For instance, the B.D.C.C. surcharge is

universal. It is just such “patchwork regulation” which

E.RILS.A. was designed to eliminate. Fort Halifax

Packing Co. v. Coyne, 482 U.S. 1, 9 (1987); Shaw v.

Delta 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 Trustees v. Cuomo that these surcharges

result in direct out-of-pocket losses constituting reduction

in fund reserves. As a result, the self-insured welfare

Additionally, the fund administrators have pointed to the

lost interest income and investment opportunities as a

result of the drain on the FUNDS’ treasury caused by

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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.R.1L.S.A. plans

structure, administration, or the type of benefits furnished

by the welfare plan. “The surcharges substantially increase

the cost to ER1S.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 plens;

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 ‘issent in that case;

d) the thirteen (13%) percent payor differential

“...force[s] E.R.LS.A. plans to increase either plan costs

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CONCLUSION

For the foregoing reasons, this Court should affirm

the Judgment below.

Dated: December 7, 1994

Colleran, O’Hara & Mills

Attorneys for Electrical Industry Plan

and U.F.C.W. Funds, Amici Curiae

by: Edward J. Groarke

Garden City, New York 11530

(516) 248-5757

Counsel of Record

1225 Franklin Avenue - Suite 450