Petition for Writ of Certiorari — Gobeille v. Liberty Mut. Ins. Co., 135 S. Ct. 885 (2014) (No. 14-181)

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14-181]

In The

Supreme Court of the Anited States

ALFRED J. GOBEILLE, IN HIS OFFICIAL

CAPACITY AS CHAIR OF THE VERMONT

GREEN MOUNTAIN CARE BOARD,

Petitioner.

LIBERTY MUTUAL INSURANCE COMPANY,

Respondent.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Second Circuit

PETITION FOR A WRIT OF CERTIORARI

PETER K. STRIS WILLIAM H. SORRELL

STrRIS & MAHER LLP Attorney General

19210 S. Vermont Avenue, BRIDGET C. ASAY

Bldg. E Counsel of Record

Gardena, California 90248 Assistant Attorney General

(424) 212-7090 OFFICE OF THE

peter.stris@strismaher.com ATTORNEY GENERAL

109 State Street

Montpelier, Vermont

05609-1001

(802) 828-5500

bridget.asay@state.vt.us

—_—__

——

COCKLE LEGAL BRIEFS (800) 225 6964

WWW COCKLELEGALBRIEFS COM

QUESTION PRESENTED

Vermont, like many other States, requires health

care providers and health care payers to provide

claims data and related information to the State’s

health care database. The law applies to all public

and private entities that pay for health care ser-

vices, including insurers, government programs, and

third-party administrators. The State relies on the

database to inform health care policy. The question

presented is:

Did the Second Circuit — in a 2-1 panel decision

that disregarded the considered opinion advanced by

the United States as amicus — err in holding that

ERISA preempts Vermont’s health care database

law as applied to the third-party administrator for a

self-funded ERISA plan?

PARTIES TO THE PROCEEDING

Petitioner Alfred J. Gobeille, in his official

capacity as Chair of the Green Mountain Care Board,

has been substituted for Commissioner Susan L.

Donegan, who was the appellee in the court of ap-

peals. See Supreme Court R. 35.3. Chair Gobeille has

been substituted because the Vermont Legislature

shifted responsibility for the unified health care data-

base to the Green Mountain Care Board, effective

June 7, 2013. 2013 Vt. Acts & Resolves, No. 79, § 40.

The original defendant in the district court was

Commissioner Stephen W. Kimbell. Commissioner

Donegan was substituted as a party when she re-

placed Commissioner Kimbell in office.

The respondent, Liberty Mutual Insurance

Company, was the appellant in the court of appeals

and the plaintiff in the district court.

ili

TABLE OF CONTENTS

Page

QUESTION PRESENTED.................cccccceseeceeeeees i

PARTIES TO THE PROCEEDING ..................... ii

Ne Ee GF IE BED cr ccccccssccccessccccccecoccscese vi

ET 1

SEE a 2

I scunenuoeny 2

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED .................cccc00eeee0000 3

EERE REE 4

REASONS FOR GRANTING THE WRIT ........... 13

I. The decision below is an unprecedented

expansion of ERISA preemption that

conflicts with this Court’s decisions in

Travelers, Dillingham, and De Buono....... 16

A. Travelers and De Buono narrowed

ERISA preemption by focusing on

Congress’s intent and reaffirming the

presumption that Congress does not

intend to displace state law in areas

traditionally regulated by the States... 16

B. The lower court departed from these

settled principles and adopted a broad

interpretation of ERISA preemption

that directly conflicts with this Court's

lac ace cae ecnalbeeebiddanehembidatens 18

TABLE OF CONTENTS - Continued

Page

Il. The Second Circuit’s unduly broad pre-

emption holding treads on state and federal

interests and is an important issue wor-

thy of this Court’s immediate review ........ 25

A. The lower court’s unwarranted expan-

sion of ERISA preemption is a matter

of exceptional importance to state

legislators and regulators ................... 26

B. The U.S. Department of Labor’s ap-

pearance as an amicus in the court of

appeals confirms that the scope of

ERISA preemption is a pressing and

important issue for the federal gov-

SEES ESE a ae eA 2 LOE OE 35

2 ean eee eee 38

APPENDIX:

Opinion of the United States Court of Appeals

for the Second Circuit, Liberty Mut. Ins. Co.

v. Donegan, No. 12-4881-cv (Feb. 4, 2014)......App. 1

Opinion and Order of the United States Dis-

trict Court for the District of Vermont, Liber-

ty Mut. Ins. Co. v. Donegan, No. 2:11-cv-204

Se We ihe saitcsieshcliltinacsiaicereieliidabamabeliiccisna App. 48

Order of the United States Court of Appeals for

the Second Circuit, Liberty Mut. Ins. Co. v.

Donegan, No. 12-4881 (May 16, 2014).......... App. 81

TABLE OF CONTENTS -— Continued

Page

Statutory Provisions Involved........................... App. 83

A) Eee eae App. 83

Vt. Stat. Amm. tit. 18 § O41 ...........0...0.cccccsscee App. 91

Vt. Stat. Ann. tit. 18 § 9410... App. 92

Vt. Stat. Ann. tit. 18 § 9410 [prior to 2013

I eitrchennsndcentniemcssnsasencunsseccnintduninnnes App. 99

Regulation H-2008-01 .................cccccccceeeseeeee App. 107

TABLE OF AUTHORITIES

Page

CASES

Assoc. Builders & Contractors v. Mich. Dep't of

Labor, 543 F.3d 275 (6th Cir. 2008)............0........... 35

Boggs v. Boggs, 520 U.S. 833 (1997) .............ccccceceeeeee 24

Boyle v. Anderson, 68 F.3d 1093 (8th Cir. 1995)........ 33

Cal. Div. Labor Standards Enforcement v.

Dillingham Constr., 519 U.S. 316 (1997) ....... passim

De Buono v. NYSA-ILA Med. & Clinical Servs.

Fund, 520 U.S. 806 (1997)..............ssccsccsssserees passim

Hillsborough Cnty. v. Automated Med. Labs.,

Ee SIs Ce Ie Ce ceaenesietatiinattiicdsindiatinasetioneniia 1

Mackey v. Lanier Collection Agency, 486 U.S.

| ____ SEIER SAIS AE IEREEHCALC ROCRO On OS 23

N.J. Carpenters & Trs. v. Tishman Constr.

Corp., No. 13-3005, 2014 WL 3702591 (3d

Se i i icticncisericsinstensicintecmammetintinesiiiinntiins 34, 35

N.Y. State Conference of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co., 514 U.S.

IIIT sis icchctsdechdtncidnatindiediailelseibehhanlciitiaiidaiaaaa passim

Self-Ins. Inst. of America, Inc. v. Snyder, No.

12-2264, 2014 WL 3804355 (6th Cir. Aug. 4,

Bei huniinnscsdsentntonnsnstiandeniidinidneniinummeininenennnnnts passim

Thiokol Corp. v. Roberts, 76 F.3d 751 (6th Cir.

ciel ieee teases ela ihlaianiiiaasin bone 33

Wright Elec., Inc. v. Minn. State Bd. of Elec.,

322 F.3d 1026 (Oth Cir. 2008) ........0.0cccccsssccccssesesees 34

Wyeth v. Levine, 555 U.S. 555 (2009) .............ccccceeeeees 17

vil

TABLE OF AUTHORITIES — Continued

Page

CONSTITUTION, STATUTES, REGULATIONS AND RULES

Federal

U.S. Const.:

Art. VI, cl. 2 (Supremacy Clause) ......................0+. 2

I al 2

I i aa ata t 33

| ESERIES C Cuneo on emer, eee Cees passim

State

yO i sccccscisicasssessieieinsienennnin’ 27

Conn. Gen. Stat. § 19a-644.................cccccsseseesessenees 32

I, Gs Ce OF I ciciccsccncsestnsesiascsvenecesctes 32

oe EE eee cee nS ae 32

I I 32

oS EES Rae RE ee 34

Conn. Gen. Stat. § 380-1091 .....................c.cceecceseees 27

Se is MIG II CII cncrdinstnisccicssnittscctivonisiososadons 32

ne a A Bt i iicininssicinencesesdidaniocnsonienie 27

Me. Rev. Stat. Ann. tit. 22, § 8703............00.0.0000... 7

Me. Rev. Stat. Ann. tit. 22, § 8704......................... 27

Md. Code Ann., Health-Gen. § 19-133.................... 27

Mass. Gen. Laws Ann. ch. 12C....................ccceeeeeeees 27

SO eS Ss eee 27

vill

TABLE OF AUTHORITIES — Continued

Page

N.H. Rev. Stat. Ann. § 420-G:1l]e-a .............. ee 27

8S nen 34

N.Y. Pub. Health Law § 2816 .......................ssssseeee 27

2p eee 27

OR 27

ee, Ce ee. Be ncecccecsecevinsnrecevsescessoessetd 27

eee 32

_ & FE neee anne 32

Utah Code Ann. § 26-33a-106.1..............::cccceeeeceeees 27

2013 Vt. Acts & Resolves, No. 79...............ccccsecseeeeees 5

We, Be, Bt, GER, Gy BH Gee ceccccnncnsesocesensesvecsssseenssennes 5

8 PS (78 ee 32

ie 8 OO ee 5

8 FO 8 ee 5, 6

LL 5, 6

ON GE" SS 4

Vu, Beet. Amam. O66. BB, B DGGE ccccccccvesesecssscscevcescesees 32

3 FF Se BS Re passim

3 FF 8 NR en 5

pe a 8 8 ean 27

Be es NO I oicccsecsncvsesensncssccessccerecesconscnsees 27

Cal. R. Prof. Conduct, Rule 4-100........................64. 34

TABLE OF AUTHORITIES -— Continued

Page

N.Y. Comp. Codes R. & Regs, tit. 10, § 440.1

I ceneincncncncenbicsaissigenenintaisiinninininaainivtesinaanenes 32

ke Ba ern 34

Mamalation FE-BOOS-O1 .....cccorcscssesscsccccessoccseees 3, 6, 7, 8

Vermont Early Childhood Program Licensing

Regulations, § III(C) (Policies, Procedures,

Records and Reports), available at http://def.

vermont.gov/sites/dcf/files/pdf/cdd/care/Early_

Se I cnicstisnennscsbatnnseterenenscinnsonne 34

Vt. R. Mandatory Continuing Legal Educ.,

SOUT siuhinbscuspriatabsmncabianendasenionannddsadecdeideadesiiphitiledinnhetiones 34

OTHER MATERIALS

American Bar Association, Mandatory CLE,

http://www.americanbar.org/cle/mandatory_cle.

html (last visited Aug. 3, 2014) .................:cccceeees 34

CMS and Green Mountain Care Board, Data

Use Agreement (No. 25534), available at http://

gmcboard.vermont.gov/sites/gmcboard/files/

CMS_DUA_%2025534_SIGNED_Attachment_

Se STEN Uecspiiiittiineriisrniniiahiaiddanadeniaisitiiaiteanimnnisidtlines 22

Kaiser Family Foundation, Employer Health

Benefits 2013 Annual Survey, available at

http://kff.org/private-insurance/report/2013-

employer-health-benefits/ ...................cccccceeseeeeeeeeees 30

TABLE OF AUTHORITIES — Continued

Page

Chris Kardish, More States Create All-Payer

Claims Databases, Governing (Feb. 4, 2014),

available at http://www.governing.com/topics/

health-human-services/gov-states-serious-

i iieicnsccensrdsocnnncsnssctssesaccessiente 28

Maine HealthCost, https://mhdo.maine.gov/

healthcost 2014/ (last visited Aug. 3, 2014) ........... 29

Medscape, State CME Requirements, http://

www.medscape.org/public/staterequirements

ee I Gt. BD eccinceicncnnisnncsesncsnedhonnepecessa 34

Patrick B. Miller et al., State Coverage Initia-

tives, All-Payer Claims Databases: An Over-

view for Policymakers (May 2010), available

at http://www.statecoverage.org/files/SCI_AIl_

Payer_Claims_ReportREV.pdf.................... 27, 28, 29

New Hampshire HealthCost, http://www.

nhhealthcost.org/ (last visited Aug. 3, 2014).......... 29

Office of the Actuary, Centers for Medicare &

Medicaid Services, National Health Expendi-

tures Tables, available at http://www.cms.

gov/Research-Statistics-Data-and-Systems/

Statistics-Trends-and-Reports/NationalHealth

ExpendData/Downloads/tables. pdf ..................00006 28

Jo Porter et al., APCD Council, The Basics of

All-Payer Claims Databases (January 2014),

available at http://www.apcdcouncil.org/sites/

apcdcouncil.org/files/The%20 Basics%20o0f %

20All-Payer%20Claims%20 Databases. pdf......27, 28

TABLE OF AUTHORITIES — Continued

U.S. Government Accountability Office, Health

Care Price Transparency (September 2011),

available at http://www.gao.gov/assets/590/

Ri eas AA

U.S. Government Accountability Office, State

and Local Governments’ Fiscal Outlook

(April 2012 Update), available at http://

www.gao.gov/assets/590/589908. pdf..................

Utah All Payer Claims Database: Description

and Background, http://health.utah.gov/hda/

apd/about.php (last visited Aug. 3, 2014)..........

Christine Vestal, Can Claims Data Crack the

Health Care Cost Riddle? USA Today

(June 17, 2014), available at http://www.

usatoday.com/story/news/nation/2014/06/17/

stateline-health-care-claims-data/106655777/....

Page

we 29

Alfred J. Gobeille, as Chair of the Vermont Green

Mountain Care Board, respectfully petitions for a

writ of certiorari to review the judgment of the Unit-

ed States Court of Appeals for the Second Circuit in

this case.

INTRODUCTION

Health care policy is a pressing concern at every

level of government. Many States, including Vermont,

rely on health care databases for accurate, complete

information to support, inform, and test health care

policies. The Second Circuit’s unjustified expansion of

ERISA preemption in this case threatens these im-

portant tools adopted by sixteen States. And the

panel majority’s reasoning — that state recordkeeping

or information-gathering requirements of any kind

intrude on core ERISA concerns — applies far more

broadly, creating uncertainty about a wide range of

health and safety regulations.

In our federal system, the “regulation of health

and safety matters is primarily, and historically, a

matter of local concern.” Hillsborough Cnty. v. Auto-

mated Med. Labs., Inc., 471 U.S. 707, 719 (1985). This

Court cautioned nearly twenty years ago that ERISA

was not intended to displace the States’ authority

over “general health care regulation.” N.Y. State

Conference of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 661 (1995). The

Second Circuit disregarded this Court’s direction. It

adopted an expansive view of ERISA preemption that

conflicts with this Court’s holdings and substantially

undermines the States’ historic police powers. The

States’ interests in pursuing their chosen policies,

and the harm to those interests caused by the lower

court’s ruling, strongly support immediate review by

this Court.

OPINIONS BELOW

The opinion of the court of appeals (App. 1-47) is

reported at 746 F.3d 497. The memorandum opinion

and order of the district court (App. 48-80) is not

reported, but is available at 2012 WL 5471225.

JURISDICTION

The judgment of the court of appeals was entered

on February 4, 2014. Petitioner filed a timely petition

for rehearing en banc on February 18, 2014. The

petition for rehearing was denied on May 16, 2014.

App. 81-82. The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Supremacy Clause of the U.S. Constitution

provides:

This Constitution, and the Laws of the Unit-

ed States which shall be made in Pursuance

thereof; and all Treaties made, or which shall

be made, under the Authority of the United

States, shall be the supreme Law of the

Land; and the Judges in every State shall be

bound thereby, any Thing in the Constitution

or Laws of any State to the Contrary not-

withstanding.

U.S. Const. art. VI, cl. 2.

The “other laws” provision of the Employee

Retirement Income Security Act (ERISA), 29 U.S.C.

§ 1144, is set forth at App. 83-90.

Vermont’s health care database statute, Vt. Stat.

Ann. tit. 18, § 9410, is set forth at App. 92-99. The

Appendix also includes the prior version of the stat-

ute, before a 2013 amendment that shifted responsi-

bility for the database to the Green Mountain Care

Board. App. 99-106.

The Regulation that governs the database, Regu-

lation H-2508-01, is set forth at App. 107-41. The

appendices to the Regulation (which include charts,

tables, and forms) are available online at http://

gmcboard.vermont.gov/sites/gmcboard/files/REG_H-

2008-01.pdf.

STATEMENT

1. Vermont's “unified health care database”

collects critical information that informs the State’s

health care policy, including its policy “to ensure that

all residents have access to quality health services at

costs that are affordable.” Vt. Stat. Ann. tit. 18,

§ 9401(a) (App. 91); ic’. § 9410(a)(1) (App. 92). The

database contains information supplied by health

care providers and health care “payers” — that is,

government agencies, insurers, and similar entities

that pay for health care services. Id. § 9410(c), (h), (j)

(App. 94-99). The purposes of the database include:

(A) Determining the capacity and distribu-

tion of existing resources.

(B) Identifying health care needs and in-

forming health care policy.

vention programs on improving patient out-

comes.

(D) Comparing costs between various

treatment settings and approaches.

(E) Providing information to consumers

and purchasers of health care.

(F) Improving the quality and affordability

of patient health care and health care cover-

age.

Id. § 9410(a)(1A)-(F) (App. 92).

Vermont’s Green Mountain Care Board adminis-

ters the database, known as VHCURES.' The Board

was created in 2011 to, among other things, improve

the health of Vermont residents; reduce the growth of

health care costs while protecting access to health

care and quality of care; and simplify health care

financing and delivery. Vt. Stat. Ann. tit. 18, § 9372.

The Board has a broad array of regulatory and

innovative responsibilities, including administering

Vermont’s health care expenditure analysis, id.

§9375a; approving hospital budgets, id. § 9375(7);

overseeing payment reform pilot projects, id.

§§ 9375(1), 9377; approving health insurance rates,

id. § 9375(6); reviewing applications for certificates of

need for new health care projects, id. § 9375(b\8);

and evaluating the quality of Vermont's health care

system, id. § 9375(10).

The Board maintains and uses the health care

database to “carry out [its] duties.” Jd. § 9410 (App.

92). For example, it uses the data to inform its review

of health insurance rates and hospital budgets. Vt.

Stat. Ann. tit. 8, § 4062; Vt. Stat. Ann. tit. 18,

§§ 9375(b)(6)-(7), 9456. The Board also relies on the

data for oversight and evaluation of health care

’ The Vermont Legislature shifted responsibility for the

database from the Department of Financia) Regulation to the

Green Mountain Care Board during the litigation. 2013 Vt. Acts

& Resolves, No. 79, § 40.

payment and delivery system reforms. /d.

§§ 9375(b\(1), 9377.

The database statute requires “[hJealth insurers,

health care providers, health care facilities, and

governmental agencies” to “file reports, data, sched-

ules, statistics, or other information determined by

the Board to be necessary to carry out the purposes”

of the law. Jd. § 9410(c) (App. 94). For this purpose,

“health insurer” includes “any third party adminis-

trator, any pharmacy benefit manager, any entity

conducting administrative services for business, and

any other similar entity with claims data, eligibility

data, provider files, and other information relating to

health care provided to Vermont resident(s].” Jd.

§ 9410G)1B) (App. 98). The implementing rule

notes that the term “may also include, to the extent

permitted under federal law, any administrator of an

insured, self-insured, or publicly funded health care

benefit plan offered by public and private entities.”

Regulation H-2008-01, §3(X) (App. 112-13). Only

insurers with 200 or more covered members living in

Vermont (or receiving covered services in Vermont)

must provide information to the database. /d. § 3(Ab)

(App. 113).

State Regulation H-2008-01 (App. 107-41) sup-

plies the details of database administration.’ The rule

* Reg. H-2008-01, reprinted at App. 107-41, was promulgat-

ed by the Vermont Department of Financial Regulation, which

previously administered the database. The regulation remains

in effect.

sets forth “requirements for the submission of health

care claims data, member eligibility data, and other

information relating to health care provided to Ver-

mont residents or by Vermont health care providers.”

Id. § 1 (App. 107). The rule also provides “conditions

for the use and dissemination of such claims data.”

Id.

Information is collected and maintained so as to

protect personal privacy. The statute requires compli-

ance with the federal Health Insurance Portability

and Accountability Act (HIPAA), see Vt. Stat. Ann. tit.

18, § 9410(h\2) (App. 96), and mandates that confi-

dential information be “filed in a manner that does

not disclose the identity of the protected person.” Jd.

§ 9410(e) (App. 94-95). And it prohibits public disclo-

sure of “direct personal identifiers,” including names,

addresses, and Social Security numbers. /d.

§ 9410(hX3)\D) (App. 97-98). The statute also calls for

a confidentiality code and penalizes violation of

confidentiality requirements. Jd. § 9410(f), (g) (App.

95). The regulation provides standards for code and

encryption requirements, Reg. H-2008-01, § 5(A\(5)

(App. 119-21), and restricts submission of “direct

personal identifiers,” id. § 7(A\(5) (App. 128-29).

As permitted by HIPAA and these confidentiality

requirements, the Board may provide access to data

“as a resource for insurers, employers, providers,

purchasers of health care, and state agencies to

continuously review health care utilization, expendi-

tures, and performance in Vermont.” Vt. Stat. Ann.

tit. 18, §9410(h\3B) (App. 97). The regulation

carefully delineates data sets that are publicly avail-

able, data that may not be disclosed, and data that is

available to researchers that agree to protect confi-

dentiality and control access. Reg. H-2008-01, § 8

(App. 130-39).

2. Respondent Liberty Mutual is an insurance

company based in Massachusetts. Liberty Mutual

provides health care for about 80,000 employees,

retirees, and their families through a self-funded plan

governed by ERISA. Liberty Mutual is the “named

fiduciary” and “plan administrator” for ERISA pur-

poses. App. 7-8, 50.

Liberty Mutual has employees and does business

in Vermont. Its plan provides benefits for 137 Ver-

mont residents. App. 7, 50. Because of its small

number of Vermont participants, Liberty Mutual

itself is not required to provide information for Ver-

mont’'s database. App. 8, 58. Liberty Mutual, however,

contracts with a third-party administrator, Blue

Cross Blue Shield of Massachusetts, to administer

the plan. App. 8, 50-51. Blue Cross “processes medical

claims ... , receives participants’ confidential medical

records and generates claims data.” App. 50-51. Blue

Cross provides or administers benefits for about 7,000

Vermonters, including Liberty Mutual’s plan partici-

pants, Ct. App. J.A. 288, so Blue Cross is obligated to

provide its data to Vermont. App. 8. It provides that

information for other self-funded ERISA plans. App.

72-73 n.5.

Vermont's Department of Financial Regulation

(previously responsible for the database) subpoenaed

Blue Cross in August 2011, seeking claims data and

other required information for the database. App. 8-9.

Liberty Mutual directed Blue Cross not to report

information for its beneficiaries. Blue Cross complied

with the subpoena in all other respects, but did not

submit data for Vermont participants in Liberty

Mutual’s plan. App. 9, 56.

3. Liberty Mutual then filed this lawsuit, claim-

ing that ERISA preempts any requirement that its

third-party administrator provide information for

Vermont’s health care database. App. 9, 48, 56. The

State moved to dismiss for lack of standing and

failure to state a claim; Liberty Mutual moved for

summary judgment. App. 9, 49. With the agreement

of the parties, the district court treated the motions

as cross-motions for summary judgment. /d. In a

written decision, the district court rejected Liberty

Mutual’s preemption claim and granted judgment to

the State. App. 48-80.

The district court first held that Liberty Mutual

had standing. App. 61. Although Liberty Mutual had

no independent obligation to provide information to

the database, the regulation required Blue Cross to

provide information for Liberty Mutual’s plan. App.

58. The court reasoned that Liberty Mutual was

“subject to regulation” through the State’s regulation

of Blue Cross, the third-party administrator. App. 59.

Turning to Liberty Mutual’s claim of preemption,

the district court noted that a “statute that operates

in the health care field will receive the benefit of the

presumption against preemption, even if it does not

directly regulate health care providers or services.”

App. 65. The court then held that Liberty Mutual did

not “overcome the presumption against preemption.”

App. 64-66, 79.

First, the court held that the database statute

does not have a “reference” to ERISA plans. App. 69.

“Vermont's statute and regulation do not act immedi-

ately and exclusively upon ERISA plans, nor is the

existence of ERISA plans essential to their opera-

tion.” App. 69. As the court explained, the law re-

quires numerous entities, including insurers and

providers, to supply information to the database. /d.

Second, the court concluded that the database

statute does not have an impermissible “connection

with” an ERISA plan. App. 70-78. After surveying this

Court’s decisions and relevant circuit precedent, the

district court emphasized that Vermont’s law: (1) did

not “attempt to control, supersede or interfere with

the operation of an ERISA plan”; (2) “has no effect

whatsoever on the core relationships that ERISA was

designed to protect — those between participants,

beneficiaries, administrators and employers”; and (3)

has “no effect whatsoever on the core ERISA func-

tions — such as processing claims or disbursing bene-

fits.” App. 79.

The court recognized that even a generally appli-

cable law might be preempted if it “creates an eco-

nomic effect so acute as to dictate certain

administrative choices.” App. 72. Here, however,

Liberty Mutual had no reporting obligations at all,

and there was “no evidence” that its third-party

administrator, Blue Cross, was “laboring under any

sort of burden” in complying with the law. App. 72

n.5. Blue Cross provided the information for other

ERISA plans. App. 73 n.5. Liberty Mutual did “not

submit{[] any information about any actual burden

suffered by itself or [Blue Cross! in producing this

information.” Jd.

4. On appeal, the Second Circuit reversed in a

split decision. App. 1-47. While agreeing with the

district court that Vermont’s statute and regulation

“lack ‘reference to’ an ERISA plan,” App. 23 n.9, the

majority held that Vermont’s law has an impermissi-

ble “connection with” ERISA plans. App. 23. In a

footnote, the majority concluded that Vermont's

health care database law was not an exercise of “the

states’ historic police powers” and declined to apply

the presumption against preemption. App. 18 n.8.

The court viewed “reporting” as a core ERISA

concern that is undermined by any state requirement

for “plan record-keeping, and filing with a third

party.” App. 23-24. It emphasized that Vermont's

database “is called the ‘Vermont Healthcare Claims

Uniform Reporting and Evaluation System.’” App. 24.

The majority viewed as irrelevant the fact that

Vermont's database seeks information unrelated to

ERISA’s reporting requirements. App. 24 n.11.

The court concluded that, consistent with ERISA,

only a “slight reporting burden” would be permissible.

App. 24. The majority saw Vermont’s “scheme” as

“obviously intolerable,” describing the claims data

reporting requirements as “burdensome, time-

consuming, and risky.” App. 25. Other than merely

citing the regulation, however, the court pointed to no

evidence of financial costs or other burdens. The court

further reasoned that any “burdens and risks must be

multiplied” because of unspecified reporting require-

ments in other states. App. 29. The court described

Vermont’s detailed confidentiality provisions as

“complex but loose” and suggested that the regulation

was problematic because it could be changed in the

future. App. 27-28.

Based on this reasoning, the majority held Ver-

mont’s law preempted. App. 23-29. It reached this

conclusion without addressing the United States

Department of Labor’s support, as amicus curiae, for

the district court’s decision and Vermont’s position.

Judge Straub dissented. App. 30-47. The dissent

sharply criticized the majority for failing to apply the

presumption against preemption. App. 33-34. Judge

Straub also pointed out that the majority’s descrip-

tion of Vermont's reporting requirement as “time-

consuming and risky” was “pure speculation.” App.

46. “There is no evidence to support such a finding.”

Id.

The dissent reasoned that Vermont’s health care

database is “wholly distinct” from ERISA’s reporting

requirements and seeks “after-the-fact information

which plan administrators ... already have in their

possession.” App. 38, 39. “The Vermont statute regu-

lates health care within that state, while imposing a

purely clerical burden on ERISA plans.” App. 46. The

law “does not hinder the national administration of

employment benefit plans” or require any “distinction

in benefits between Vermont and any other state.”

App. 44. For the dissent, that “end[ed] the inquiry.”

Id.

5. Vermont filed a timely petition for rehearing

en banc, which was denied on May 16, 2014. App. 81-

82.

REASONS FOR GRANTING THE WRIT

This Court should grant review to address the

Second Circuit’s broad and unprecedented expansion

of ERISA preemption. The lower court’s decision

sharply conflicts with this Court’s ERISA jurispru-

dence. It will have a profound impact on health care

regulation in sixteen States with programs like the

one held preempted here. And because the Second

Circuit has introduced uncertainty into an important

area of the law, its decision, if left in place, will have a

substantial impact on state and federal regulatory

interests.

1. The lower court’s ruling is not merely an

erroneous application of the law. The Second Circuit

embraced an expansive view of ERISA preemption

that this Court — after many years and countless

ERISA cases — firmly rejected in New York State

Conference of Blue Cross & Blue Shield Plans uv.

Travelers Ins. Co, 514 U.S. 645, 654-56 (1995). Ver-

mont’s database statute is a generally applicable law

through which the State obtains information from the

health care industry to develop policies that support

the health and well-being of its citizens. It is not

targeted at ERISA plans. It does not regulate the

benefits provided, plan governance or finances, or the

relationship between the plan and its participants.

It is therefore not preempted by ERISA. The Second

Circuit held otherwise only by disregarding settled

principles — including the scope of the States’ historic

police powers and the presumption against preemp-

tion. The unacceptable and irreconcilable conflict

with this Court’s precedents warrants immediate

review, a conclusion supported by a recent Sixth

Circuit decision “disagreeling]” with the Second

Circuit’s “literal approach to [ERISA] preemption,”

see Self-Ins. Inst. of America, Inc. v. Snyder, No. 12-

2264, 2014 WL 3804355, at *7 (6th Cir. Aug. 4, 2014)

(hereinafter “SIJA”}.

2. The importance of the issue presented fur-

ther justifies granting the petition. The decision

below undermines efforts by at least sixteen States —

including all three States in the Second Circuit — to

create and use comprehensive health care databases.

The breadth of the lower court’s decision also casts a

shadow over a wide range of other state regulations.

In contrast to this Court’s holdings, which recognize

that States may permissibly impose administrative

costs and burdens on ERISA plans, the Second Cir-

cuit has deemed routine recordkeeping and submis-

sion of information to be a “core” ERISA concern. App.

23-24. The decision thus provides a basis for challeng-

ing state health care regulations, taxes, licensing,

and safety rules — all of which typically require

recordkeeping and reporting of compliance infor-

mation.

The lower court’s ruling treads on both state and

federal interests. The United States Department of

Labor voluntarily participated as amicus curiae in

the court of appeals and supported the district court’s

decision and Vermont’s position. Despite the Depart-

ment’s recognized expertise in ERISA — and its ad-

ministration of ERISA’s reporting requirements — the

2-1 panel decision of the Second Circuit rejected

(without any discussion whatsoever) the Depart-

ment’s considered position. The Department’s deci-

sion to participate as an amicus confirms that this

case — and the scope of ERISA preemption generally —

is a matter of pressing importance to the federal

government as well as the States.

I. The decision below is an unprecedented

expansion of ERISA preemption that con-

flicts with this Court’s decisions in Trav-

elers, Dillingham, and De Buono.

This Court has repeatedly disavowed the “expan-

sive and literal” approach to ERISA preemption that

the 2-1 panel decision of the Second Circuit adopted

in this case. De Buono v. NYSA-ILA Med. & Clinical

Servs. Fund, 520 U.S. 806, 812-14 (1997); see also

Travelers, 514 U.S. at 654-56. Instead, this Court’s

decisions establish a framework for evaluating claims

of ERISA preemption that focuses on the purposes of

ERISA and acknowledges the States’ primary role in

regulating matters of health and safety. The Second

Circuit’s decision marks a clear and unacceptable

conflict with this Court’s precedent.

A. Travelers and De Buono narrowed

ERISA preemption by focusing on

Congress’s intent and reaffirming the

presumption that Congress does not

intend to displace state law in areas

traditionally regulated by the States.

This Court’s decisions in Travelers and De Buono

narrowed and focused the scope of ERISA preemption

in three important ways. First, the Court rejected an

approach to preemption grounded in “uncritical

literalism,” instead directing courts to look to “the

objectives of the ERISA statute as a guide to the

scope of the state law that Congress understood

would survive.” Travelers, 514 U.S. at 656. Given the

“frustrating difficulty” of interpreting ERISA’s “un-

helpful text,” Travelers and De Buono hold that the

preemption inquiry must be guided by ERISA’s

underlying objectives and purposes. /d.; De Buono,

520 U.S. at 813.

Second, Travelers delineated the key areas in

which ERISA preempts state law. The “basic thrust of

the preemption clause ... was to avoid a multiplicity

of regulation in order to permit the nationally uni-

form administration of employee benefit plans.”

Travelers, 514 U.S. at 657. Accordingly, ERISA “pre-

empt(s] state laws that mandate[] employee benefit

structures or their administration.” /d. at 658.

Preempted state laws include coverage mandates,

anti-subrogation rules, alternative enforcement

mechanisms, and laws affecting benefit calculations.

Id. at 657-58. Later cases reiterated this core concern

with state laws that “require[] employers to provide

certain benefits” or govern the calculation of benefits.

De Buono, 520 U.S. at 815; see also Cal. Div. Labor

Standards Enforcement v. Dillingham Constr., 519

U.S. 316, 328 (1997).

Third, the Court “unequivocally concluded” that

ERISA’s preemption clause does not modify the pre-

sumption against preemption of state law. De Buono,

520 U.S. at 813. The Court explained in Travelers that

it “never assume{s] lightly that Congress has derogat-

ed state regulation.” 514 U.S. at 654; see also Wyeth v.

Levine, 555 U.S. 555, 565 (2009) (describing the

presumption against preemption as a “cornerstone” of

the Court’s preemption jurisprudence). Nothing in

ERISA “indicates that Congress chose to displace

general health care regulation, which historically has

been a matter of local concern.” Travelers, 514 U.S. at

661. ERISA accordingly does not preempt “‘myriad

state laws’ of general applicability that impose some

burdens on the administration of ERISA plans.” De

Buono, 520 U.S. at 815 (quoting Travelers, 514 U.S. at

668); see also Dillingham, 519 U.S. at 333-34.

These principles have provided direction to the

States and to the lower courts for almost 20 years.

Claims of ERISA preemption “generated an ava-

lanche of litigation” in the years after ERISA’s adop-

tion. De Buono, 520 U.S. at 808-09 n.1. De Buono was

the Court’s sixteenth ERISA preemption case and the

third case just that term. See id. The series of deci-

sions in Travelers, De Buono, and Dillingham cabined

ERISA preemption to a reasonable scope, and gave

state policymakers necessary guidance on the line

between federal and state authority. As explained

below, the Second Circuit in this case departed so

substantially from this controlling precedent that its

decision creates an unacceptable degree of confusion

and uncertainty.

B. The lower court departed from these

settled principles and adopted a broad

interpretation of ERISA preemption

that directly conflicts with this

Court’s holdings.

As the United States argued below, Vermont’s

law is not preempted because it “does not regulate the

structures or core functions of ERISA plans.” U.S. Ct.

App. Br. 11. The Second Circuit concluded otherwise

only by disregarding this Court’s teachings about the

scope of ERISA preemption.

1. The Second Circuit engaged in precisely the

kind of rigid, literal analysis that this Court disa-

vowed in Travelers and De Buono. The panel majori-

ty’s decision was predicated on its view that, because

ERISA governs plan reporting, any type of state

reporting requirement must intrude on a core ERISA

concern. Consistent with that literal approach, the

court emphasized that Vermont’s law requires Liberty

Mutual’s third-party administrator to “report” claims

data for the health care database. App. 23-24. But

Vermont’s law does not intrude on an area of core

ERISA concern merely because it seeks information

from the plan administrator. This Court explained in

Dillingham that “[iJn enacting ERISA, Congress’

primary concern was with the mismanagement of

funds accumulated to finance employee benefits and

the failure to pay employees benefits from accumu-

lated funds.” 519 U.S. at 326-27 (quotation omitted).

It was “/tlJo that end” that Congress “established

extensive reporting, disclosure, and fiduciary duty

requirements to insure against the possibility that

the employee’s expectation of the benefit would be

defeated through poor management by the plan

administrator.” Jd. (emphasis added) (quotation

omitted). The Second Circuit’s myopic focus on the

word “reporting,” instead of the purposes of ERISA,

conflicts with Travelers and Dillingham. Recognizing

these principles established by this Court's prece-

dents, the Sixth Circuit in SIJJA “dicagree(d]” with the

Second Circuit’s “literal approach to preemption,”

SITA, 2014 WL 3804355, at *7. The SIIA court, in line

with this Court’s rulings, acknowicdyed ERISA’s

principal concern with the financial solvency of plans,

and held that Congress did not intend ERISA’s re-

porting requirements to “preclude states from enact-

ing laws imposing administrative burdens — of any

kind — upon plan administrators and sponsors unre-

lated to the administration of the plans.” Jd. at *5.

Vermont's health care database — as the United

States observed in its filing below — is unrelated to

ERISA’s core concern with plan administrators’

fiduciary responsibilities to beneficiaries. “The focus

and purpose of Vermont’s data collection . . . are quite

different” from ERISA’s concerns. U.S. Ct. App. Br.

12. Vermont seeks claims data to improve health care

quality, affordability, and effectiveness, Vt. Stat. Ann.

tit. 18, § 9410(a) (App. 92), and seeks no information

whatsoever about plan funding or governance. By

contrast, a plan’s annual report to the Secretary of

Labor is “principally concerned with the financial

soundness of the plan.” U.S. Ct. App. Br. 12. The

Vermont law does not protect beneficiaries or provide

them with information; indeed, the law “does not

include disclosure requirements affecting the employer-

employee or plan-participant relationship.” U.S. Ct.

App. Br. 13. Given the sharp disconnect between

ERISA’s objectives and the purposes of Vermont’s

law, the dissent below aptly observed that the

“majority's argument misses the nuance of what

‘reporting’ means in the context of ERISA, and ig-

nores the case law’s focus on whether the administra-

tion of benefits to beneficiaries is impacted.” App. 32

(Straub, J., dissenting); see also SIJA, 2014 WL

3804355, at *7 (quoting same).

2. The lower court’s analysis also contravenes

this Court’s guidance about the types of state laws

preempted by ERISA. Together, Travelers, Dilling-

ham, and De Buono teach that ERISA’s central con-

cern is with state laws that dictate the types of

benefits provided by plans or the manner in which

plans administer those benefits. Travelers, 514 U.S.

at 657-58; Dillingham, 519 U.S. at 328, 333-34; De

Buono, 520 U.S. at 815. Vermont’s health care data-

base does not touch on these areas. The law “does not

meaningfully regulate plans’ benefit programs or

affect plans’ administration of benefits.” U.S. Ct. App.

Br. 14-15.

Instead of recognizing these limits on the scope of

ERISA preemption, the Second Circuit panel majority

mistakenly focused on the law’s supposed administra-

tive burdens. But ERISA does not preempt “‘myriad

state laws’ of general applicability that impose some

burdens on the administration of ERISA plans.” De

Buono, 520 U.S. at 815 (quoting Travelers, 514 U.S. at

668). Administrative cost or burden is relevant only if

the burden is “so acute ‘as to force an ERISA plan to

adopt a certain scheme of substantive coverage or

effectively restrict its choice of insurers.’” De Buono,

520 U.S. at 816 n.16 (quoting Travelers, 514 U.S. at

668). As the dissenting opinion concluded, there was

“no basis to find that the Vermont statute would

cause Liberty Mutual to increase its costs more than

a de minimus amount ... much less ... cause a

fiduciary to change a plan in any way.” App. 40-41

(Straub, J., dissenting).’

In short, the lower court's decision irreconcilably

conflicts with both the reasoning and the results

reached in this Court’s precedents. The Court has

* The majority's description of the supposed burdens is

factually unsupported and wrong. As the district court pointed

out, Liberty Mutual submitted no evidence of “any actual

burden.” App. 72-73 n.5. On appeal, Liberty Mutual merely

asserted that “all regulations have their costs” and claimed that

Vermont's law was “per se burdensome.” Liberty Mutual Ct. App.

Br. 28. The dissent highlighted Liberty Mutual's failure “to

provide any details or showing of the alleged burden,” and

sharply criticized the majority for engaging in “pure speculation”

on this point. App. 39, 46 (Straub, J., dissenting). As the dissent

noted, Vermont's law “asks for after-the-fact information which

plan administrators .. . already have” and “by all accounts [Blue

Cross] is happy to provide the data ... and .. . does so for other

clients.” App. 39 (Straub, J., dissenting). Moreover, while this

case was pending on appeal, the federal Centers for Medicare

and Medicaid Services (CMS) agreed to provide its claims data

to Vermont's database. See Data Use Agreement Between CMS

and Green Mountain Care Board (No. 25534), available at

http//gmcboard. vermont.gov/sites/gmcboard/files/CMS_DUA_%2

025534_SIGNED_Attachment_A_ExSum.pdf. That agreement

confirms the federal government's confidence in Vermont's

program, and undercuts any suggestion that the database

provides inadequate confidentiality protections. Protecting

personal privacy is critical to this program. There was “no

evidence” to support a contrary conclusion. App. 46 (Straub, J.,

dissenting).

repeatedly upheld state laws that challengers de-

scribed as imposing costs and burdens on ERISA

plans. In Mackey v. Lanier Collection Agency, 486

U.S. 825, 831 (1988), the plan administrators com-

plained of “substantial administrative burdens and

costs” caused by state-law garnishment proceedings.

The Court rejected the preemption claim. /d. at 832,

841. In Dillingham, the Court upheld a California

law regulating apprenticeship programs, even though

the law required a plan to either obtain state approv-

al for its program or pay a higher minimum wage to

apprentices. 519 U.S. at 319-21, 330-33.

And most relevant here, in De Buono the Court

held that New York could permissibly tax the gross

receipts of a hospital operated by an ERISA plan. 520

U.S. at 814-16. The generally applicable tax was not

preempted even though it “increase{d] the cost of

providing benefits” and had “some effect” on plan

administration. Jd. at 816. Taxation inevitably re-

quires “particular form[s) of record-keeping”; like-

wise, taxes are potentially “inconsistent” from state

to state. See App. 22-23. As the Sixth Circuit noted

in SIIA, although “neither Travelers nor De Buono

explicitly concerned reporting requirements regard-

ing the taxes ... those requirements were essential

parts of the tax schemes and drew no comment.”

SITA, 2014 WL 3804355, at *6. Moreover, the tax

upheld in De Buono directly depleted plan assets.

Given this controlling precedent, the Second

Circuit erred in holding that ERISA tolerates, at

most, only a “slight reporting burden” on plans. App.

24. State laws of all kinds, from employment, licens-

ing, and taxes to health and safety regulations,

require “record-keeping, and filing with a third

party.” App. 24. It cannot be that ERISA preempts

generally applicable state laws, unrelated to the

objectives of ERISA, merely because those laws

involve data collection or record-keeping.

3. The Second Circuit’s refusal to apply the

presumption against preemption also “flies in the face

of clear Supreme Court precedent.” App. 33 (Straub,

J., dissenting). In a footnote, the court held that

Vermont’s law is not an exercise of the “states’ histor-

ic police powers.” App. 18 n.8. “[CJollecting data,” the

majority opined, is not “historic” and “health data

collection laws do not regulate the safe and effective

provision of health care services.” Jd. This squarely

conflicts with De Buono. De Buono held that New

York’s tax “clearly operates in a field that has been

traditionally occupied by the States.” 520 U.S. at 814

(quotation omitted). That was true even though the

tax, first adopted in 1990, was a “revenue raising

measure, rather than a regulation of hospitals.” Jd. at

809, 814; see also id. at 814 n.10 (fact that tax targets

health care industry supports application of the

presumption).*

* The footnote concluded that “[ijn any event, the Supreme

Court has repeatedly found the presumption overcome if the

state laws ‘upset the deliberate balance central to ERISA,’ even

if those laws ‘implement policies and values lying within the

traditiona] domain of the States.’” App. 18-19 n.8 (quoting Boggs

(Continued on following page)

Given the “considerable burden of overcoming”

the presumption, De Buono, 520 U.S. at 814, Liberty

Mutual’s failure to prove any cost or administrative

burden should have ended the inquiry. See App. 72-73

n.5 (district court); App. 39-41, 44 (Straub, J., dissent-

ing). Yet the lower court assumed that Vermont's law

was “burdensome” and “obviously intolerable.” App.

25. Its judgment rested on speculation not just about

Vermont’s statute but about other states’ laws and

ways in which Vermont could change its program in

the future. App. 25, 27-29. Consistent with this

Court’s precedents, the Second Circuit should have

presumed the statute’s constitutionality, not the

opposite.

Il. The Second Circuit’s unduly broad

preemption holding treads on state and

federal interests and is an important issue

worthy of this Court’s immediate review.

The Second Circuit did not merely err in its

application of precedent. The lower court returned to

an expansive view of ERISA preemption that this

Court has disavowed. Its flawed analysis of burden

and cramped view of the states’ historic police powers

v. Boggs, 520 U.S. 833, 840, 854 (1997)). Nowhere in its analysis,

however, does the majority apply the presumption against

preemption or explain that the presumption is overcome. The

lower court’s holding, as the dissenting opinion recognizes, is

that the presumption does not apply. App. 33 (Straub, J.,

dissenting).

will sow confusion and uncertainty. That is especially

troubling in this context because, read literally,

ERISA’s preemption language suggests “a degree of

pre-emption that no sensible person could have

intended.” Dillingham, 519 U.S. at 335-36 (Scalia, J.,

concurring). This Court should grant review to correct

the Second Circuit’s broad and unjustified expansion

of ERISA preemption. And, as explained below, fur-

ther review should be immediate because the Second

Circuit’s holding poses a serious threat to important

state and federal interests.

A. The lower court’s unwarranted expan-

sion of ERISA preemption is a matter

of exceptional importance to state leg-

islators and regulators.

The Second Circuit’s ruling threatens to under-

mine efforts by at least sixteen States to create and

use databases similar to Vermont’s. The breadth of

the lower court’s decision also casts a shadow over

other state regulatory efforts in a field — health care —

that is traditionally and primarily the responsibility

of the States.

1. The Second Circuit’s decision in this case

undermines a widespread and crucial tool that States

use to inform health care policy. At least ten other

States have similar programs, known as all-payer

claims databases, already in place.’ Five other States

are creating databases,’ and many more are consider-

ing doing so. Jo Porter et al., APCD Council, The Ba-

sics of All-Payer Claims Databases 1 (January 2014).’

Claims databases are increasingly popular because

states need “robust information about the costs and

performance of their state’s health care delivery sys-

tem.” Patrick B. Miller et al, State Coverage Initia-

tives, All-Payer Claims Databases: An Overview for

Policymakers 2 (May 2010).° These databases “fill

critical information gaps” and allow states “to un-

derstand the cost, quality, and utilization of health

care for their citizens.” Jd.; Porter, supra, at 1. By

collecting accurate, complete information about the

provision of health care services, States are bringing

transparency to the health care market, collecting

* Colorado: Col. Rev. Stat. § 25.5-1-204; Kansas: Kan. Stat.

Ann. § 65-6804; Maine: Me. Rev. Stat. Ann. tit. 22, §§ 8703,

8704; Maryland: Md. Code Ann., Health-Gen. § 19-133; Massa-

chusetts: Mass. Gen. Laws Ann. ch. 12C, § 12; Minnesota: Minn.

Stat. Ann. § 623.321; New Hampshire: N.H. Rev. Stat. Ann.

§ 420-G:1l-a; Oregon: Or. Rev. Stat. § 442.466; Tennessee: Tenn.

Code Ann. § 56-2-125; Utah: Utah Code Ann. § 26-33a-106.1.

* Connecticut: Conn. Gen. Stat. § 38a-1091; New York: N-Y.

Pub. Health § 2816; Rhode Island: R.1. Gen. Laws § 23-17.17-10;

Virginia: Va. Code Ann. § 32.1-276.7:1; West Virginia: W. Va.

Code § 33-4A-2.

” Available at: http:/www.apedcouncil.org/sites/apedcouncil.org/

files/The%20Basics®200f ®20All-Payer%20Claims%20 Databases.

pdf.

* Available at: http://www.statecoverage.org/files/SCI_All_

Payer_Claims_ReportREV.pdf.

critical cost information, and improving the quality

of care.

Cost. It is impossible to overestimate the States

need for accurate and complete information about

health care spending. The “projected growth in

health-related costs” is the “primary driver of fiscal

challenges for the state and local government sector

in the long term.” U.S. Government Accountability

Office, State and Local Governments’ Fiscal Outlook

5 (April 2012 Update). Knowledge gaps “limit the

ability to identify opportunities to address rising

health care costs.” Miller, supra, at 2. A true all-

payers claims database provides this critical data.

States may use this information to inform budgeting,

rate-setting, and other policy decisions, and to

measure the impact of reforms and pilot projects.

See, e.g., Chris Kardish, More States Create All-

Payer Claims Databases, Governing (Feb. 4, 2014);"

Miller, supra, at 2, 5; Porter, supra, at 2.

* Available at: http://www.gao.gov/assets/590/589908. pdf.

National spending on health care reached $2.79 trillion in 2012,

more than double the level in 2000. Office of the Actuary,

Centers for Medicare & Medicaid Services, National Health

Expenditures Tables, Table 1, available at http://www.cms.

gov/Research-Statistics- Data-and-Systems/Statistics-Trends-and-

Reports/National HealthExpendData/Downloads/tables.pdf.

” Available at: http://www.governing.com/topics/health-

human-services/gov-states-serious-about-health-data. html.

Transparency. State health care databases are

bringing transparency to the health care market-

place. Lack of information about cost and quality is a

serious problem for consumers, who “generally learn

of their health care costs after receiving care, such

as when they receive a bill.” U.S. Government Ac-

countability Office, Health Care Price Transparency 2

(September 2011). Now, with a few keystrokes,

consumers in some states have access to information

that used to be burdensome or even impossible to

find. Both Maine and New Hampshire, for example,

have websites that allow consumers to compare costs

across providers.” Other States are planning similar

sites. See Christine Vestal, Can Claims Data Crack

the Health Care Cost Riddle? USA Today (June 17,

2014) (discussing Utah and Colorado).”

Quality of Care. An all-payer claims database

is a powerful public health tool. Policymakers can

evaluate access to necessary services. Researchers

can track chronic disease indicators, evaluate wheth-

er clinical care guidelines are met, and study specific

problems such as adverse drug reactions and emer-

gency room visits. Miller, supra, at 6-8. The data

allow States not just to pinpoint problems but to

" Available at: http://www.gao.gov/assets/590/585400. pdf.

“ See Maine HealthCost, https://mhdo.maine.gov/healthcost

2014/ (last visited Aug. 3, 2014); New Hampshire HealthCost,

http://www.nhhealthcost.org/ (last visited Aug. 3, 2014).

'* Available at: http://www.usatoday.com/story/news/nation/

2014/06/17/stateline-health-care-claims-data/10665577/.

assess whether proposed solutions are working. This

“rich and deep source of health care data”” is a criti-

cal resource that States use to protect and improve

the health and welfare of their citizens.

The Second Circuit’s decision threatens these

innovative programs. Self-insured ERISA plans, like

Liberty Mutual’s plan, provide coverage to millions of

Americans. Nationally, over 60% of workers who

receive health coverage through employment are in a

self-funded plan. See Kaiser Family Foundation,

Employer Health Benefits 2013 Annual Survey, at

176." As the United States explained below, exempt-

ing self-insured plans from the database “would leave

a large hole in the data collection the state has fash-

ioned to further its state healthcare policies” and

“seriously stymie Vermont’s efforts to improve medi-

cal outcomes for its residents.” U.S. Ct. App. Br. 10.

Nothing in ERISA suggests that Congress wanted to

create this kind of information vacuum.

This important question of ERISA preemption —

relevant to at least sixteen States — is worthy of this

Court’s immediate review. The decision below does

not address a new or emerging legal issue that needs

further consideration in the lower courts. Rather, the

“ Utah All Payer Claims Database: Description and

Background, http://health.utah.gov/hda/apd/about.php (last

visited Aug. 3, 2014).

* Available at: http://kff.org/private-insurance/report/2013-

employer-health-benefits/.

Second Circuit disregarded established precedent and

returned to an expansive view of ERISA preemption

that unacceptably limits state authority. Its decision

governs not just Vermont’s program, but also similar

databases under development in New York and

Connecticut. And all other States must administer (or

establish) their programs under the cloud of that

decision. The impact on these programs outweighs

any negligible benefit from allowing the issue to

develop further in the lower courts. Indeed, if this

Court denies review, other states may adhere to the

Second Circuit’s ruling rather than risk litigation —

reducing the likelihood any benefit will be gained

from percolation.

2. Review is also warranted because the Second

Circuit’s broad holding has repercussions beyond

these particular programs. As this Court recognized

almost two decades ago, nothing in ERISA “indicates

that Congress chose to displace general health care

regulation, which historically has been a matter of

local concern.” Travelers, 514 U.S. at 661. Yet the

Second Circuit essentially held that any state record-

keeping or information-gathering requirement in-

trudes on a “core” ERISA concern. App. 23-24. Many

ordinary state health-care regulations and other

health and safety standards require record-keeping

and reporting of information. The Sixth Circuit

correctly recognized, in SJJA, that such a broad view

of ERISA preemption of state reporting requirements

as extending to “paperwork” and record preservation

is unworkable, and that “ERISA does not reach so

far.” SIIA, 2014 WL 3804355, at *6. The Second

Circuit’s reasoning in this case creates uncertainty

across a wide swath of traditional state regulation.

Regulation of hospitals and other health

care services. As addressed in De Buono, ERISA

plans may operate their own hospitals and health

care centers. The provision of health care services is

closely regulated by state law and routinely requires

recordkeeping and reporting to state regulators. For

example, States commonly require hospitals to pro-

vide frequent reports on finances, patient census,

staffing levels and other quality and _ safety

measures.” Under the Second Circuit’s reasoning,

these frequent reports would be preempted unless the

State shows that the burdens imposed are “slight.”

App. 24.

Taxation. This Court held in De Buono that an

ERISA plan must pay a generally applicable state tax

on gross hospital receipts. 520 U.S. at 816. Courts

have rejected preemption challenges to other state

taxes, including a tax on covered health care claims.

In SIJA, the Sixth Circuit rejected an ERISA preemp-

tion challenge to Michigan’s tax on paid health care

"© See, e.g., Conn. Gen. Stat. § 19a-654 (data submission);

id. §§ 19a-644, 19a-649, § 19a-676 (hospital reports); 210 Ill.

Comp. Stat. 85/25 (Hospital Report Card Act); N.Y. Comp. Codes

R. & Regs, tit. 10, § 440.1 et seq. (hospital annual reports); Tex.

Code Ann. § 257.005 (hospital staffing reports); id. § 311.033

(financial and utilization data); Vt. Stat. Ann. tit. 18, §§ 1854,

9405b (hospital reports).

claims, because the state law did not alter which

benefits were offered, how they were calculated, or to

whom they were disbursed, and thus did not interfere

with plan administration. SIJA, 2014 WL 3804355, at

*3-4. The court also held that the state law reporting

and recordkeeping requirements at issue did not

create improper administrative burdens for ERISA

plans and thus did not conflict with ERISA’s report-

ing obligations. Jd. at *4-7."" See also Boyle v. Ander-

son, 68 F.3d 1093 (8th Cir. 1995) (rejecting ERISA

preemption challenge to provider tax); Thiokol Corp.

v. Roberts, 76 F.3d 751 (6th Cir. 1996) (rejecting

ERISA challenge to state business tax). Taxes neces-

sarily inveive frequent and state-specific recordkeep-

ing and reporting requirements — the same type of

requirements that the Second Circuit found unac-

ceptable in this case. The lower court’s ruling thus

creates uncertainty on an issue that was settled by

De Buono.

Licensing and safety standards. ERISA plans

may employ lawyers, to offer “prepaid legal services,”

and doctors, to offer medical and surgical care. 29

U.S.C. § 1002(1) (defining employee welfare plan).

" The Sixth Circuit’s suggestion that the Vermont database

law “actually affects the administration of plans,” SJJA, 2014

WL 3804355, at *7, is unsupported. Further, the Sixth Circuit,

like the Second Circuit, offered no support for its conclusion that

the creation of a database for the purposes of improving Ver-

monters’ health outcomes and controlling the rate of health care

cost growth is not an exercise of traditional state concern, and

thus not entitled to the presumption against preemption.

Doctors and lawyers must comply with state licensing

requirements, including reporting and recordkeeping

requirements for professional education and client

trust funds.” ERISA plans may operate day care

centers, id., which must be licensed and maintain

detailed records showing compliance with state

regulations.” Many ERISA plans run apprenticeship

programs, which must satisfy state-law safety stan-

dards. See, e.g., Wright Elec., Inc. v. Minn. State Bd.

of Elec., 322 F.3d 1025, 1031-32 (8th Cir. 2003) (re-

jecting ERISA preemption challenge to state regula-

tion mandating supervision of apprentices). The

Third Circuit, which recently rejected a preemption

challenge to a New Jersey prevailing wage law, noted

that the law “require{d] that every contractor and

subcontractor keep a record detailing the worker's

name, his or her craft or trade, and actual hourly rate

of wages paid to each worker.” N.J. Carpenters & Trs.

" For doctors, see, e.g., N.J. Stat. Ann. § 45:9-7.1; Conn. Gen.

Stat. § 20-10b; see also Medscape, State CME Requirements,

http://www.medscape.org/public/staterequirements (last visited

Aug. 3, 2014) (collecting requirements by state). For lawyers,

see, e.g., Cal. R. Prof. Conduct, Rule 4-100 (recordkeeping and

audit requirements for client trust funds); N.Y. R. Prof. Conduct,

Rule 1.15 (similar); Vt. R. Mandatory Continuing Legal Educ.,

§ 9 (reporting requirements for continuing legal education); see

also American Bar Association, Mandatory CLE, http//www.

americanbar.org/cle/mandatory_cle.htm! (last visited Aug. 3,

2014) (collecting education requirements by state).

See, e.g., Vermont Early Childhood Program Licensing

Regulations, § III(C) (Policies, Procedures, Records and Reports),

available at: http://dcf.vermont.gov/sites/dcf/files/pdf/cdd/care/

Early_Childhood_Program.pdf.

v. Tishman Constr. Corp., No. 13-3005, 2014 WL

3702591, at *2, 6 (3d Cir. July 28, 2014) (holding that

state-law claim under prevailing wage law was not

completely preempted by ERISA). Challenges to any

of these state laws could easily be recast as objections

to reporting or recordkeeping requirements.

The Sixth Circuit has observed that there is no

“state-law-free zone around everything that affects an

ERISA plan.” Assoc. Builders & Contractors v. Mich.

Dep't of Labor, 543 F.3d 275, 284 (6th Cir. 2008)

(discussing potential consequences of a broad view of

ERISA preemption). The Second Circuit’s reasoning,

however, risks just that result. And even if other

courts ultimately narrow or decline to follow the

Second Circuit’s approach in this case, the lower

court’s ruling may generate another “avalanche” of

ERISA litigation. Cf’ De Buono, 520 U.S. at 809 n.1.

The threat of litigation alone burdens States and

influences state policy choices. The decision below

thus has serious implications for state legislation and

regulation far beyond the context of all-payer data-

bases. It should not be allowed to stand.

B. The U.S. Department of Labor’s ap-

pearance as an amicus in the court of

appeals confirms that the scope of

ERISA preemption is a pressing and

important issue for the federal gov-

ernment.

The fact that the United States participated in

this case as amicus curiae and argued against

preemption confirms the importance of the issue. The

United States Department of Labor administers

ERISA, including the law’s reporting requirements.

The Department took the unusual step of appearing

as an amicus in the court of appeals to defend the

decision of the district court. The Department’s

amicus filing shows that the scope of ERISA preemp-

tion is an important issue for the federal government,

as well as the States.

The Second Circuit ignored the views of the

United States and applied ERISA preemption far

more broadly than the Department advocated. The

Department, through its Employee Benefit Security

Administration, creates and administers reporting

requirements for ERISA plans. The Department

explained to the court of appeals that Vermont’s law

does not conflict with ERISA’s reporting require-

ments; that the “focus and purpose of Vermont’s data

collection” are “quite different” from ERISA’s finan-

cial reporting and disclosure requirements; and thus

the database statute “is like any other ‘tenuous,

remote or peripheral’ law that requires information

from businesses or other entities for regulatory

purposes.” U.S. Ct. App. Br. 12 (quoting Travelers,

514 U.S. at 661). Despite the Department’s obvious

expertise and interest, the panel majority did not

even acknowledge the Department’s position.

As the Department’s amicus participation shows,

the decision below adversely affects federal as well as

state interests. The federal government has a sub-

stantial interest in the division of state and federal

regulatory authority in areas such as health care.

Collecting claims data is not something the Depart-

ment does and is not, in the Department’s view, a

matter with which ERISA is concerned. The federal

government is careful to guard those areas that

ERISA shields from state regulation, but it also

recognizes the States’ traditional authority over

“‘general health care regulation.’” U.S. Ct. App. Br.

10 (quoting Travelers, 514 U.S. at 661). By holding

Vermont’s law preempted, the Second Circuit has

effectively challenged the Department’s view of the

scope and purpose of ERISA’s reporting requirements.

The decision below broke sharply with this

Court’s controlling precedents, in a way that harms

state interests and creates uncertainty for States and

lower courts. Its sweeping expansion of ERISA

preemption calis for immediate review.

CONCLUSION

The petition for writ of certiorari should be

granted.

Respectfully submitted,

PETER K. STRIS

Stris & MAHER LLP

19210 S. Vermont Avenue,

Bldg. E

Gardena, California 90248

(424) 212-7090

peter.stris@strismaher.com

August 13, 2014

WILLIAM H. SORRELL

Attorney General

BRIDGET C. ASAY

Counsel of Record

Assistant Attorney General

OFFICE OF THE

ATTORNEY GENERAL

109 State Street

Montpelier, Vermont

05609-1001

(802) 828-5500

bridget.asay@state.vt.us

App. 1

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term, 2013

(Argued: November 18,2013 Decided: February 4, 2014)

Docket No. 12-4881-cv

LIBERTY MUTUAL

INSURANCE COMPANY,

iff-Appellant,

-V.-

SUSAN L. DONEGAN, IN HER CAPACITY

AS THE COMMISSIONER OF THE VERMONT

DEPARTMENT OF FINANCIAL REGULATION,

Defendant-Appellee.

Before: KEARSE, JACOBS, and STRAUB, Cir-

cuit Judges.

Liberty Mutual Insurance Co. appeals from a

judgment entered in the United States District Court

for the District of Vermont (Sessions, J.). The district

court concluded that the Employee Retirement In-

come Security Act of 1974 does not preempt a Ver-

mont statute and regulation requiring self-insured

employee health plans to report to the state, in speci-

fied format, claims data and “other information re-

lating to health care.” For the following reasons, we

App. 2

reverse and remand with instructions to enter judg-

ment for Liberty Mutual.

Judge STRAUB dissents in part and concurs in

part in a separate opinion.

NANCY G. ROSS, McDermott Will

& Emery LLP, Chicago, IL (John A.

Litwinski, McDermott Will & Emery

LLP, Chicago, IL; M. Miller Baker,

McDermott Will & Emery LLP,

Washington, DC, on the brief), for

Appellant.

BRIDGET C. ASAY, Assistant Attor-

ney General, Office of the Attorney

General, Montpelier, VT for William

H. Sorrell, Attorney General, State

of Vermont, for Appellee.

KATHRYN COMERFORD TODD,

National Chamber Litigation Center,

Washington, DC (Jane E. Holman,

National Chamber Litigation Cen-

ter, Washington, DC; Carol Connor

Cohen and Nancy S. Heermans,

Arent Fox LLP, Washington, DC, on

the brief), for amicus curiae Cham-

ber of Commerce of the United States

of America in support of Appellant.

MELISSA MOORE, U.S. Department

of Labor, Washington, DC (M. Patricia

Smith, Solicitor of Labor; Timothy

D. Hauser, Associate Solicitor; Na-

thaniel I. Spiller, Counsel for Appel-

late and Special Litigation, on the

App. 3

brief), for amicus curiae Acting Sec-

retary of the United States Depart-

ment of Labor in support of Appellee.

DENNIS JACOBS, Circuit Judge:

Liberty Mutual Insurance Co. operates a self-

insured employee health plan. A Vermont statute re-

quires all “health insurers” (including self-insured

plans) to file with the State reports containing claims

data and other “information relating to health care.”

A State regulation specifies how such information

must be recorded and transmitted.

When Vermont subpoenaed claims data from the

Liberty Mutual plan’s third-party administrator, this

suit was commenced in the United States District

Court for the District of Vermont (Sessions, -J.). Lib-

erty Mutual sought a declaration that the Employee

Retirement Income Security Act of 1974 (“ERISA”)

preempts the Vermont statute and regulation. The

district court granted summary judgment in favor of

Vermont.

The ERISA preemption clause is not self-reading

and ERISA preemption doctrine is not static. The

early judicial consensus, based on the broad wording

of the preemption clause (and legislative history),

was to construe preemption broadly. More recent

precedent has pulled back by setting a rebuttable

presumption against preemption of state health care

regulations. Two constants, however, remain: (1) recog-

nition that ERISA’s preemption clause is intended to

avoid a multiplicity of burdensome state requirements

App. 4

for ERISA plan administration; and (2) acknowledg-

ment that “reporting” is a core ERISA administrative

function. These two considerations lead us to con-

clude that the Vermont law, as applied to compel the

reporting of Liberty Mutual plan data, is preempted.

We therefore reverse and remand for entry of judg-

ment in favor of Liberty Mutual.

BACKGROUND

The Vermont statute establishes and provides for

the maintenance of “a unified health care database.”

Vt. Stat. Ann. tit. 18, §9410(aX1). The database

“enable[s]” the State’s Department of Banking, Insur-

ance, Securities and Health Care Administration

(“Department”)' “to carry out [its] duties ... , includ-

ing”:

(A) determining the capacity and distribu-

tion of existing resources;

(B) identifying health care needs and in-

forming health care policy;

vention programs on improving patient out-

comes;

' The Department is now called the Department of Finan-

cial Regulation. Many of the Department’s health care database

responsibilities were recently transferred to Vermont’s Green

Mountain Care Board. See id. § 9410.

App. 5

(D) comparing costs between various treat-

ment settings and approaches;

(E) providing information to consumers and

purchasers of health care; and

(F) improving the quality and affordability

of patient health care and health care cover-

age.

Id.

To populate the database, the statute requires

“(hjealth insurers, health care providers, health care

facilities, and governmental agencies” to “file reports,

data, schedules, statistics, or other information,” as

the Department deems necessary, at the time and

place and in the manner the Department requires. /d.

at § 9410(c)-(d). The statute authorizes the Depart-

ment to require the filing of “health insurance claims

and enrollment information used by health insurers”

and “any other information relating to health care

costs, prices, quality, utilization, or resources.” Jd. at

§ 9410(c).

Knowing and willful failure to comply is punish-

able by penalty of not more than $10,000 per viola-

tion. See id. at § 9410(g).

In 2008, the Department promulgated a regula-

tion to implement the statute and create the Vermont

Healthcare Claims Uniform Reporting and Evalua-

tion System (the “Reporting System”). See Regulation

H-2008-01, 21-040-021 Vt. Code R. § 1 (“Regulation

H-2008-01”). The regulation requires reporting of

App. 6

myriad categories of claims data. See infra 26-29.

“Health Insurers” are required to “regularly submit

medical claims data, pharmacy claims data, member

eligibility data, provider data, and other information

relating to health care provided to Vermont residents

and health care provided by Vermont health care

providers and facilities to both Vermont residents and

non-residents in specified electronic format to the

Department for each health line of business ... per

the data submission requirements contained in”

appendices to the regulation. Regulation H-2008-01

§ 4(D).

A “{hJjealth insurer” is defined broadly to include

“any health insurance company, ... third party ad-

ministrator, ... and any entity conducting adminis-

trative services for business or possessing claims

data, eligibility data, provider files, and other infor-

mation relating to health care provided to Vermont

residents or by Vermont health care providers and

facilities.” Jd. § 3(X).

Begging the preemption question, the term “(health

insurer” “may also include, to the extent permitted un-

der federal law, any administrator of an insured, self-

insured, or publicly funded health care benefit plan

offered by public and private entities.” Jd. (emphasis

added). A health insurer with 200 or more enrolled or

covered members in each month during a calendar

year is designated a “Mandated Reporter.” Jd. § 3(Ab).

All other entities are “Voluntary Reporter(s].” Id.

§ 3(As).

App. 7

The Department makes the collected data “avail-

able as a resource for insurers, employers, providers,

purchasers of health care, and state agencies to con-

tinuously review health care utilization, expenditures,

and performance in Vermont.” Vt. Stat. Ann. tit. 18,

§ 9410(hX3)(B). The Department decides “the extent”

of such disclosure “allowed by HIPAA,” the federal

Health Insurance Portability and Accountability Act

of 1996, id., and maintains the “confidentiality code”

by which filed information “is handled in an ethical

manner,” id. § 9410(f). “[D]irect personal] identifiers,”

such as name, address, and Social Security number,

may not be publicly disclosed. Jd. § 9410(h\(3)(D).

Sixteen other states collect health care data for

their own health care claims databases. J.A. 368-74

(State Health Reporting Laws Summary Table). Data

submission requirements vary. Some states provide

only for voluntary reporting. See id. Some expressly

exclude self-insured employee plan data from their

database reporting laws. See id. The majority, how-

ever, follow Vermont in requiring such plans to report

claims data. See id.

Liberty Mutual Insurance Co. is the administra-

tor and named fiduciary of a health plan (the “Plan”)

that provides benefits to 137 individuals in Vermont

and to over 80,000 individuals nationwide. The Plan

is “self-insured” or “self-funded,” i.e., health care

claims are paid from Liberty Mutual’s general assets.

App. 8

Plan documents provide that the “Plan has been

established for the exclusive benefit of Participants

and except as otherwise provided ... , all contribu-

tions under the Plan may be used only for such pur-

pose.” J.A. 39. The documents also represent that

medical records, such as those related to risk factor

screening, are kept “strictly confidential.” J.A. 71-72.

The Plan represents, however, that it “shall comply

with all other state and federal law to the extent not

preempted by ERISA and to the extent such laws

require compliance by the Plan.” J.A. 41.

Like many self-insured employer health plans,

the Plan uses a third-party administrator (“I'PA”).

Blue Cross Blue Shield of Massachusetts, Inc. (“Blue

Cross”), as the Plan’s TPA for Vermont participants,

does claims-handling: processing, review, and pay-

ment. Under its contract with Liberty Mutual, any

information transferred to Blue Cross must be used

solely for the purpose of administering the Plan, and

Blue Cross auditors must guard against unauthorized

disclosure of health care information. See J.A. 57-58.

Liberty Mutual itself is a Voluntary Reporter because

it has fewer than 200 covered members in Vermont

(and has presumably decided not to volunteer); but

because Blue Cross qualifies as a Mandated Reporter

and possesses the Plan’s claims data, the reporting of

its data is mandatory.

In August 2011, Vermont issued a subpoena de-

manding that Blue Cross supply the Plan’s “[elligi-

bility files,” “[mJedical claims files,” and “[p]harmacy

claims files” and threatened that noncompliance

App. 9

might result in fines and a suspension of Blue Cross’s

authority to do business. J.A. 24-25. Liberty Mutual

instructed Blue Cross not to comply and filed this

suit, seeking (1) a declaration that ERISA preempts

the Vermont statute and regulation; and (2) an in-

junction blocking enforcement of the subpoena.

Vermont agreed to stay enforcement of the subpoena

pending judicial resolution of the ERISA preemption

question.

In dueling motions, Vermont sought to dismiss

the complaint for lack of standing and for failure to

state a claim, and Liberty Mutual moved for sum-

mary judgment. With the consent of the parties, the

district court treated the motions as cross-motions for

summary judgment. See Liberty Mut. Ins. Co. v.

Kimbell, No. 2:11-cv-204, 2012 WL 5471225, at *1 (D.

Vt. Nov. 9, 2012).

The court concluded that Liberty Mutual had

Article III standing but that ERISA did not preempt

the Vermont statute and regulation and that Vermont

was therefore entitled to summary judgment. See id.

DISCUSSION

We agree with the district court that Liberty

Mutual has standing to challenge the subpoena

App. 10

issued to Blue Cross.’ Liberty Mutual has demon-

strated “the irreducible constitutional minimum of

standing”: (1) “an invasion of a legally protected in-

terest which is (a) concrete and particularized; and

(b) actual or imminent, not conjectural or hypothet-

ical”; (2) “a causal connection between the injury and

the conduct complained of”; and (3) that the injury

will likely be redressed by a favorable decision. Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)

(footnote, citations, and internal quotation marks

omitted).

It is of no moment that the subpoena was issued

to Blue Cross and not directly to Liberty Mutual. The

TPA agreement provides that Liberty Mutual will

hold Blue Cross harmless for any financial charges

“arising from or in connection with” the Plan. J.A. 54-

55. Liberty Mutual therefore faces a choice between

(1) allowing Blue Cross to turn over the Plan’s data in

what Liberty Mutual considers a violation of its du-

ties as Plan administrator and fiduciary; or (2) direct-

ing non-compliance, and indemnifying Blue Cross for

the ensuing civil penalties. Either way, under Lujan,

Liberty Mutual suffers a redressable injury-in-fact as

a direct result of Vermont’s threatened, imminent

action.

* The parties have not briefed the standing issue on appeal,

but Article III standing “is the threshold question in every fed-

eral case, determining the power of the court to entertain the

suit.” Warth v. Seldin, 422 U.S. 490, 498 (1975).

App. 11

We review de novo the grant of summary judg-

ment on the preemption question. See, e.g., Wrobel v.

Cnty. of Erie, 692 F.3d 22, 27 (2d Cir. 2012). Summary

judgment is appropriate if the record shows “there is

no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). “[WJe may reverse the grant of

summary judgment and order judgment for the non-

moving party if we find undisputed support in the

record entitling the non-moving party to judgment as

a matter of law.” New England Health Care Emps.

Union v. Mount Sinai Hosp., 65 F.3d 1024, 1030 (2d

Cir. 1995).

ERISA’s comprehensive regulatory scheme gov-

erns most employee benefit plans, including self-

insured health plans. See 29 U.S.C. § 1003. ERISA

requires plan administrators to file annually with the

Department of Labor reports detailing financial and

actuarial information. See id. §§ 1021-1024. The De-

partment of Labor is authorized “to undertake re-

search and surveys and in connection therewith to

collect, compile, analyze and publish data, infor-

mation, and statistics relating to employee benefit

plans.” Jd. § 1143. ERISA broadly preempts “any and

all State laws insofar as they may now or hereafter

relate to any employee benefit plan.” Id. § 1144(a) (em-

phasis added). With remarkable consistency, the

App. 12

legislative history reflects that this broad wording

was purposeful: it was intended to eliminate the

threat of a multiplicity of conflicting or inconsistent

state laws,’ and to achieve broad preemptive effect

in the areas of record-keeping, reporting, and disclo-

sure.*

Vermont argues — and the district court agreed —

that Congress could not have intended broad preemp-

tion of state reporting laws because the same Con-

gress also passed the National Health Planning and

* See 120 Cong. Rec. 29197 (1974) (Statement of Rep. Dent)

(“I wish to make note of what is to many the crowning achieve-

ment of this legislation, the reservation to Federal authority the

sole power to regulate the field of employee benefit plans. With

the preemption of the field, we round out the protection afforded

participants by eliminating the threat of conflicting and incon-

sistent State and local regulation.”); id. at 29933 (Statement of

Sen. Williams) (discussing “inten[t) to preempt the field for Fed-

eral regulations, thus eliminating the threat of conflicting or in-

consistent State and local regulation of employee benefit plans”

and stating that “[t)his principle is intended to apply in its broadest

sense to all actions of State or local governments, or any instru-

mentality thereof, which have the force or effect of law”).

* See S. Rep. No. 93-127, at 35 (1973), reprinted in 1974

U.S.S.C.A.N. 4838, 4871 (“Because of the interstate character of

employee benefit plans, the Committee believes it essential to

provide for a uniform source of law in the areas of vesting, fund-

ing, insurance and portability standards, for evaluating fidu-

ciary conduct, and for creating a single reporting and disclosure

system in lieu of burdensome multiple reports.” (emphasis

added)); H.R. Rep. No. 93-533, at 17 (1973), reprinted in 1974

U.S.S.C.A.N. 4639, 4655 (virtually the same); see also 120 Cong.

Rec. 29942 (1974) (Statement of Sen. Javits) (“In view of Federal

preemption, State laws compelling disclosure from private wel-

fare or pension plans .. . will be superseded.”).

App. 13

Resources Development Act of 1974 (“NHPRDA”).

The NHPRDA provided for the establishment of state

health planning agencies and authorized these agencies

to “assemble and analyze data concerning” health;

health care delivery, resources, and use; and related

environmental factors. See Pub. L. No. 93-641, 88

Stat. 2225, at § 1513(b) (1975). The Supreme Court

consulted the NHPRDA to decide ERISA preemption

in a case in which the NHPRDA expressly contem-

plated a state regulatory measure. See N.Y. State

Conference of Blue Cross & Blue Shield Plans uv.

Travelers Ins. Co., 514 U.S. 645, 665-67 (1995). Here,

however, the NHPRDA is not similarly indicative.”

And if there were tension between NHPRDA and

ERISA, it was relieved in 1986 when the NHPRDA

was repealed.

The Supreme Court, and this Court, initially

applied ERISA preemption as broadly as the statu-

tory phrase (“relate to any employee benefit plan”)

seemed to require.

* The NHPRDA’s encouragement of state data collection is

not necessarily inconsistent with ERISA’s preemptive reach. A

lot of data can be collected from health care providers, and from

health care payers other than ERISA plans. Nothing in the

NHPRDA compels the conclusion that, contrary to every indica-

tion in ERISA’s text and history, Congress intended to allow a

multiplicity of state record-keeping and reporting requirements

for self-insured employee plans.

App. 14

As explained in Shaw v. Delta Air Lines, Inc., the

“breadth of [ERISA’s] pre-emptive reach is apparent

from that section’s language.” 463 U.S. 85, 96 (1983);

see id. at 98 (“Congress used the words ‘relate to’...

in their broad sense.”).° Shaw formulated the modern

ERISA preemption test: a state law is preempted if “it

{1] has a connection with or [2] reference to [an

ERISA] plan.” Jd. at 96-97 (emphases added). The

Court treated as obvious that ERISA preempted

“state laws dealing with the subject matters covered

by ERISA — reporting, disclosure, fiduciary responsi-

bility, and the like.” Jd. at 98 (emphases added). The

open question was whether preemption went beyond

these core areas, and the Court held it did. See id. at

96-97. The one note of caution in Shaw was consigned

to a footnote:

Some state actions may affect employee ben-

efits plans in too tenuous, remote, or pe-

ripheral a manner to warrant a finding that

the law “relates to” the plan. Cf. Am. Tel. &

Tel. Co. v. Merry, 592 F.2d 118, 121 (CA2

1979) (state garnishment of a spouse’s pen-

sion income to enforce alimony and support

orders is not pre-empted). The present litiga-

tion plainly does not present a border-line

question, and we express no views about

* That interpretation was supported by ERISA’s exemption

for generally applicable state criminal statutes, an exemption

that would be unnecessary if preemption “applied only to state

laws dealing specifically with ERISA plans.” Shaw, 463 U.S. at

98 (discussing 29 U.S.C. § 1144(bX4)).

App. 15

where it would be appropriate to draw the

line.

Id. at 100 n.21.

For another decade, the Supreme Court and this

Court followed Shaw and repeatedly emphasized the

broad reach of ERISA preemption. See, e.g., FMC

Corp. v. Holliday, 498 U.S. 52, 58 (1990) (“The pre-

emption clause is conspicuous for its breadth.”); Gen.

Elec. Co. v. N.Y. State Dep’t of Labor, 891 F.2d 25, 29

(2d Cir. 1989) (“ERISA was intended to have a ‘sweep-

ing preemptive effect in the employee benefit plan

field.’ Congress intended ERISA to occupy and reg-

ulate the field of employee benefit plans.” (citation

omitted)). The threat of conflicting state and local reg-

ulation was consistently cited as a paramount reason

for preemption: Preemption “was intended to ensure

that plans and plan sponsors would be subject to a

uniform body of benefits law; the goal was to mini-

mize the administrative and financial burden of com-

plying with conflicting directives among States or

between States and the Federal Government.” /nger-

soll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990);

see Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 10

(1987) (“We have not hesitated to enforce ERISA’s

pre-emption provision where state law created the

prospect that an employer’s administrative scheme

would be subject to conflicting requirements. . . . Such

a situation would produce considerable inefficiencies,

which the employer might choose to offset by lowering

benefit levels.”); Howard v. Gleason Corp., 901 F.2d

1154, 1157 (2d Cir. 1990) (“[TJhe express pre-emption

App. 16

provisions of ERISA are deliberately expansive, and

designed to establish pension plan regulation as ex-

clusively a federal concern in order to afford employ-

ers the advantages of a uniform set of administrative

procedures governed by a single set of regulations.”

(citations and internal quotation marks omitted)).

These cases specifically re-emphasized that “re-

porting” and “disclosure” are core ERISA functions

subject to a uniform federal standard. See Ingersoll-

Rand, 498 U.S. at 137 (“[ERISA) sets various uniform

standards, including rules concerning reporting, dis-

closure, and fiduciary responsibility... .”); FMC

Corp., 498 U.S. at 58 (listing “reporting” and “disclo-

sure” as “subject matters covered by ERISA”).

The Supreme Court has explained the impor-

tance of having uniform federal record-keeping and

reporting requirements:

{The legislative history] reflect[s] recognition

of the administrative realities of employee

benefit plans. An employer that makes a

commitment systematically to pay certain ben-

efits undertakes a host of obligations, such

as determining the eligibility of claimants,

calculating benefit levels, making disburse-

ments, monitoring the availability of funds

for benefit payments, and keeping appropri-

ate records in order to comply with applicable

reporting requirements. The most efficient

way to meet these responsibilities is to estab-

lish a uniform administrative scheme, which

provides a set of standard procedures to

guide processing of claims and disbursement

App. 17

of benefits. Such a system is difficult to

achieve, however, if a benefit plan is subject to

differing regulatory requirements in differing

States. A plan would be required to keep cer-

tain records in some States but not in others;

to make certain benefits available in some

States but not in others; to process claims

in a certain way in some States but not in

others; and to comply with certain fiduciary

standards in some States but not in others.

Fort Halifax, 482 U.S. at 9 (emphases added).

Liberty Mutual places great weight on the Su-

preme Court’s summary affirmance of one of these

early preemption cases, Standard Oil Co. v. Agsalud,

633 F.2d 760, 763 (9th Cir. 1980). We need not rest

our ruling on that case or on so perfunctory a disposi-

tion as summary affirmance.’ At the same time, it is

* The district court in Agsalud held that a Hawaii law (1)

requiring workers to be covered by a comprehensive prepaid

health care plan and (2) imposing “certain reporting require-

ments which differ{ed) from those of ERISA,” was preempted.

442 F.Supp. 695, 696, 706-07 (N.D. Cal. 1977). Though the

ruling rested mainly on the state’s comprehensive prepaid plan

requirement, the court added that the ERISA preemption clause

“was intended at the very least to preempt state laws regulating

disclosure [and] reporting.” Jd. at 706 n.11. The Ninth Circuit

agreed with the district court, 633 F.2d 760, 763 (9th Cir. 1980),

and the Supreme Court summarily affirmed, Agsalud v. Standard

Oil Co., 454 U.S. 801 (1981). However, “the precedential effect of a

summary affirmance extends no further than the precise issues

presented and necessarily decided by those actions.” Anderson v.

Celebrezze, 460 U.S. 780, 784 n.5 (1983) (internal quotation

marks omitted).

App. 18

telling that when Congress amended ERISA in 1983

“to exempt from pre-emption certain provisions of the

Hawaii Act,” it “did not exempt from pre-emption

those portions of the law dealing with reporting, dis-

closure, and fiduciary requirements.” Fort Halifax,

482 U.S. at 13 n.7; see H.R. Rep. No. 97-984, at 18

(Dec. 21, 1982) (Conf. Rep.) (“The provision continues

Federal preemption of State law with respect to mat-

ters governed by the reporting and disclosure and the

fiduciary responsibility provisions of ERISA. . . .”).

The Supreme Court’s 1995 decision in New York

State Conference of Blue Cross & Blue Shield Plans

v. Travelers Insurance Co. marked something of a

pivot in ERISA preemption. See 514 U.S. 645 (1995).

The Court began “with the starting presumption that

Congress does not intend to supplant state law,”

especially if the “state action foccurs] in fields of

traditional state regulation,” like health care." Jd. at

* The dissent relies on this presumption. See Dissenting Op.

at 4-5. We acknowledge that the presumption applies when the

state law “operates in a field that has been traditionally occu-

pied by the States,” and that “the historic police powers of the

State include the regulation of matters of health and safety.” De

Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806,

814 (1997) (internal quotation marks omitted). However, state

health data collection laws do not regulate the safe and effective

provision of health care services, which is among the states’ his-

toric police powers. And collecting data can hardly be deemed

“historic” — most such laws were enacted only within the last ten

years. See J.A. 368-74. In any event, the Supreme Court has

(Continued on following page)

App. 19

654-55. To preempt, a “clear and manifest purpose” by

Congress is required. Jd. at 655. Following on this

presumption, the Court pulled back on its broad,

literal reading of “relate to”: if the phrase “were taken

to extend to the furthest stretch of its indeterminacy,

then for all practical purposes pre-emption would

never run its course.” Jd.

Applying the two-part Shaw test in light of these

new principles, the Court concluded that a state

statute requiring hospitals to collect a surcharge from

patients covered by commercial insurers was not

preempted. See id. at 656. The Court explained that

state law is preempted if it “mandate[s] employee

benefit structures or their administration” or “pro-

vidies] alternative enforcement mechanisms.” Jd. at

658. The state surcharge law withstood preemption in

Travelers because it had no more than an “indirect

economic influence” on ERISA plans, it did “not bind

plan administrators to any particular choice and thus

function as a regulation of an ERISA plan itself,” and

it did not “preclude uniform administrative practice

or the provision of a uniform interstate benefit pack-

age if a plan wishes to provide one.” Jd. at 659-60.

The Court again recognized the central roles of

reporting and disclosure: ERISA “controls the admin-

istration of benefit plans, as by imposing reporting

repeatedly found the presumption overcome if the state laws “up-

set{ ] the deliberate balance central to ERISA,” even if those laws

“implement policies and values lying within the traditional do-

main of the States.” Boggs v. Boggs, 520 U.S. 833, 840, 854 (1997).

App. 20

and disclosure mandates.” Id. at 651 (emphasis

added) (citation omitted). “Congress’s extension of

pre-emption to all state laws relating to benefit plans

was meant to sweep more broadly than state laws

dealing with the subject matters covered by ERISA,

reporting, disclosure, fiduciary responsibility, and the

like.” Jd. at 661 (emphases added) (internal quotation

marks and brackets omitted).

Applying Travelers, cases conclude that state laws

having only an “indirect economic effect on ERISA

plans” lack sufficient “connection with” or “reference

to” an ERISA plan to “trigger ERISA preemption.”

New England Health Care Emps. Union v. Mount

Sinai Hosp., 65 F.3d 1024, 1030-33 (2d Cir. 1995); see

also De Buono v. NYSA-ILA Med. & Clinical Servs.

Fund, 520 U.S. 806, 809 (1997) (state hospital tax not

preempted); NYS Health Maint. Org. Conference uv.

Curiale, 64 F.3d 794, 801-03 (2d Cir. 1995) (“[O]nly

link [state surcharge law] has with ERISA plans is its

indirect effect on rate diversification among insur-

ers.”). Nevertheless, the Supreme Court teaches that

Travelers and its progeny do not disturb the long-

standing principle that “state statutes that mandate[]

employee benefit structures or their administration”

have a “connection with” ERISA plans and are there-

fore preempted. Cal. Div. of Labor Standards En-

forcement v. Dillingham Constr., 519 U.S. 316, 328

(1997) (emphasis added) (internal quotation marks

omitted). Like Travelers itself, later cases reiterate

that “ERISA is expressly concerned” with “reporting,

disclosure, fiduciary responsibility, and the like.” Jd.

App. 21

at 330 (internal quotation marks omitted); sce also

Boggs v. Boggs, 520 U.S. 833, 841 (1997); Plumbing

Indus. Bd. v. E.W. Howell Co., 126 F.3d 61, 66 (2d Cir.

1997).

The use of preemption to avoid proliferation of

state administrative regimes also remains a vital fea-

ture of the law. “[D]iffering state regulations affecting

an ERISA plan’s system for processing claims and

paying benefits impose precisely the burden that

ERISA pre-emption was intended to avoid.” Egelhoff

v. Egelhoff, 532 U.S. 141, 150 (2001) (emphasis add-

ed) (internal quotation marks omitted); see Romney v.

Lin, 94 F.3d 74, 80 (2d Cir. 1996) (“basic purpose” of

ERISA preemption is to “avoid a multiplicity of reg-

ulation in order to permit the nationally uniform ad-

ministration of employee benefit plans”).

It is true that this Court’s three most recent

cases focus primarily on “the relationships among the

core ERISA entities,” and caution against preemption

of generally applicable state laws. See Stevenson v.

Bank of N.Y. Co., 609 F.3d 56, 61 (2d Cir. 2010);

Hattem v. Schwarzenegger, 449 F.3d 423, 429-31 (2d

Cir. 2006); Gerosa v. Savasta & Co., 329 F.3d 317, 324

(2d Cir. 2003). But these cases involve either a state

income tax with only indirect economic effects (the

kind of law Travelers expressly permits), see Hattem,

449 F.3d at 425, or state law causes of action that

have “little to do with the conduct of the plan,”

Gerosa, 329 F.3d at 328; see also Stevenson, 609 F.3d

at 61 (noting that state law suit did not implicate

“actual administration” of the plan). They do not

App. 22

purport to save state laws that subject plans to “sets

of inconsistent state obligations” or that “tend to con-

trol or supersede central ERISA functions.” Gerosa,

329 F.3d at 324, 328.

When this Court has allowed a state reporting

requirement to withstand preemption, as it has in

two post-Travelers cases, the requirement:

(1) imposed no “particular form” of record-

keeping and created burdens “so slight” as to

“create[] no impediment to an employer’s

adoption of a uniform benefit administration

scheme,” Burgio & Campofelice, Inc. v. NYS

Dep't of Labor, 107 F.3d 1000, 1009 (2d Cir.

1997) (internal quotation marks omitted); or

(2) “sought information readily obtain-

able from an employer” without specifying

“a particular form of record-keeping,” HMI

Mech. Sys., Inc. v. McGowan, 266 F.3d 142,

150-51 (2d Cir. 2001).

In effect, these cases adhere to the intact pre-

Travelers principle against preemption of laws “cre-

atling] no impediment to an employer’s adoption of a

uniform benefit administration scheme,” Fort Hali-

fax, 482 U.S. at 14, and with “too tenuous, remote, or

peripheral” an effect on employee benefit plans,

Shaw, 463 U.S. at 100 n.21. Thus HMI (which Ver-

mont relies on heavily) cautioned that state subpoe-

nas would indeed be “overbroad to the extent that

they seek the amount of benefits that employees

receive” or “examin(e] employer contributions on a

benefit by benefit basis.” HMI, 266 F.3d at 151.

App. 23

We hold that the reporting requirements of the

Vermont statute and regulation have a “connection

with” ERISA plans (though no “reference to” them”)

and are therefore preempted as applied. Our holding

is supported by the principle (undisturbed in Travel-

ers) that “reporting” is a core ERISA function shielded

from potentially inconsistent and burdensome state

regulation.”

ERISA preempts “state laws dealing with the

subject matters covered by ERISA — reporting, disclo-

sure, fiduciary responsibility, and the like.” Shaw, 463

U.S. at 98 (emphases added). “[Rjeporting” is neces-

sarily a function distinct from the disclosure that ad-

ministrators provide beneficiaries; otherwise “reporting”

* The Vermont statute and regulation lack “reference to” an

ERISA plan because they apply to all health care payers and do

not act “exclusively upon ERISA plans.” Dillingham, 519 U.S. at

325; Travelers, 514 U.S. at 656. A “connection with” an ERISA

plan is sufficient, however, for preemption. Shaw, 463 U.S. at

96-97 (setting out disjunctive test).

It is of no moment that the law is being applied to, and

the subpoena targeted at, Liberty Mutual’s TPA rather than

Liberty Mutual itself. See Pharm. Care Mgmt. Ass'n v. Dist. of

Columbia, 613 F.3d 179, 182 (D.C. Cir. 2010) (holding ERISA

preempts state law provisions “insofar as they apply to a phar-

maceutical benefits manager .. . under contract with an employee

benefit plan (EBP) because they ‘relate to’ an EBP”). We agree

with the D.C. Circuit that “the objective of uniformity in plan

administration” is not “for some reason inapplicable simply be-

cause a plan has contracted with a third party to provide ad-

ministrative services.” Jd. at 185.

App. 24

would be subsumed by “disclosure” and rendered su-

perfluous. Rather, “reporting” entails what Vermont

requires be done: plan record-keeping, and filing with

a third-party.

But whatever the scope of plan “reporting,” Ver-

mont cannot deny that that is what it is seeking. The

relevant database is called the “Vermont Healthcare

Claims Uniform Reporting and Evaluation System”

and the operative section of the regulation is titled

“Reporting Requirements.”"' Regulation H-2008-01

§§ 3(Ar), 4 (emphases added).

Not every state law imposing a reporting require-

ment is preempted. Burgio and HMI allow a slight

reporting burden to be laid on plans, consistent with

the preemption rule tolerating laws that “create[ | no

impediment to an employer’s adoption of a uniform

benefit administration scheme,” Fort Halifax, 482

U.S. at 14, and with “too tenuous, remote, or periph-

eral” an effect on employee benefit plans, Shaw, 463

U.S. at 100 n.21.

" The dissent argues that the “reporting requirement im-

posed by the Vermont statute differs in kind from the ‘reporting’

that is required by ERISA and therefore was not the kind of

state law Congress intended to preempt.” Dissenting Op. at 1.

But the conclusion does not follow from the premise. To the con-

trary: A hodge-podge of state reporting laws, each more onerous

than ERISA’s uniform federal reporting regime, and seeking

different and additional data, is exactly the threat that moti-

vates ERISA preemption.

App. 25

But the reporting mandated by the Vermont stat-

ute and regulation is burdensome, time-consuming,

and risky. Even considered alone, the Vermont scheme

triggers preemption; considered as one of several or a

score of uncoordinated state reporting regimes, it is

obviously intolerable.

A quick overview of the Reporting System is

telling:

Plans must periodically report:

(1) “medical claims data” “composed of ser-

vice level remittance information for all non-

denied adjudicated claims for each billed

service including, but not limited to member

demographics, provider information, charge/

payment information, and clinical diagnosis

and procedure codes, and ... includ[ing)

all claims related to behavioral or mental

health”;

(2) “pharmacy claims data” “containing ser-

vice level remittance information from all

non-denied adjudicated claims for each pre-

scription including, but not limited to: mem-

ber demographics|,] provider information|,|

charge/payment information[,} and national

drug codes”;

(2) “member eligibility data” “containing

demographic information for each individual

member eligible for medica) or pharmacy

benefits for one or more days of coverage at

any time during the reporting month’;

App. 26

(4) and any “other information relating to

health care provided to Vermont residents

and health care provided by Vermont health

care providers and facilities to both Vermont

residents and non-residents ... for each

health line of business.” Regulation H-2008-

01 §§ 3-4.

Plans must report their data frequently.

Thus plans with 500 to 1,999 covered mem-

bers must report quarterly and plans with

2,000 or more covered members must report

monthly. See id. §6(1). Compare this to

ERISA, which requires a single report annu-

ally. See 29 U.S.C. § 1021.

Data must be coded under the appropriate

source code system. See Regulation H-2008-

01 § 5(AX5)(a). Sixteen source code systems

are provided, including the “Admission

Source Code” (“[a} variety of codes explaining

who recommended admission to a medical

facility”) and the “International Classifica-

tion of Diseases, 9th Revision, Clinical Modi-

fication” code (“describes the classification of

morbidity and mortality information for sta-

tistical purposes and for the indexing of hos-

pital records by disease and operations”). Jd.

Appendix A.

“Individual data elements, data types, field

lengths, field description/code assignments,

and mapping locators” for each file must con-

form to specified requirements. Id. § 5(B).

Fields include “Admission Hour” and “Dis-

charge Hour,” thirteen “Diagnosis” fields,

App. 27

three “Procedure” fields, and the “Drug

Name” and “Quantity Dispensed”. Jd. Ap-

pendices C-1-E-2.

¢ “(Tjhe social security number of the mem-

ber/subscriber and the subscriber and mem-

ber names” must be encrypted prior to

submission by “utilizing a standard encryp-

tion methodology provided.” Id. § 5(A)(5)(b).

(Encryption is not required for other data

fields.)

And nothing prevents the Department from changing

these myriad requirements from time to time, so long

as the Department complies with the broad mandate

of the statute.

The confidentiality provisions of the Vermont

scheme are complex but loose, and impair or (at least)

reassign the obligation in the Plan documents to keep

medical records strictly confidential, as well as the

undertaking by Blue Cross as TPA to use information

solely for Plan administration purposes and to pre-

vent unauthorized disclosure.” The regulation specif-

ically contemplates “access to health care claims data

sets and related information” by “persons other than

‘* Whether disclosure to Vermont is authorized under the

Plan documents may turn on whether Vermont law creates au-

thorization, because the Plan undertakes to comply with state

law; but compliance is allowed only “to the extent not preempted

by ERISA,” a limitation that leaves the Plan and the TPA in a

complex and expensive legal muddle.

App. 28

the Department.” Jd. § 8. Each data field is classified

into one of three “use and release” categories:

(1) “Unavailable Data Elements”: not

available for general use and release.

(2) “Restricted Data Elements”: only

available for use and release as part of a

“Limited Use Research Health Care Claims

Data Set” approved by the Department. These

elements, and information that can be de-

rived from these elements, include the mem-

ber’s city and zip code, the admission and

discharge dates and hours, and the service

provider and pharmacy names.

(3) “Unrestricted Data Elements”: “avail-

able for general use and public release... .

upon written request.” These publicly avail-

able elements, and information that can be

derived from these elements, include the

member’s gender, age, medical coverage, pre-

scription drug coverage, and diagnosis; the

type of procedure; the service provider’s spe-

ciality and zip code; and the name and price

of any drugs prescribed.

Id. § 8 & Appendices J-1-J-14. Specific as these cate-

gories are, they may be illusory, because the Depart-

ment can ease public release restrictions on data that

is currently restricted or unavailable, so long as “di-

rect” personal identifiers are not published and the

data is (in the Department’s opinion) handled in an

“ethical manner.” Vt. Stat. Ann. tit. 18, § 9410(e)-(f),

(hX3XD).

App. 29

Since other states can impose their own regimes

for reporting — and many do — these burdens and

risks must be multiplied.

The trend toward narrowing ERISA preemption

does not allow one of ERISA’s core functions — report-

ing — to be laden with burdens, subjected to incompat-

ible, multiple and variable demands, and freighted

with risk of fines, breach of duty, and legal expense.”

* The dissent draws a “distinction between general admin-

istration and administration of plans, claims, and benefits” and

concludes that ERISA preemption doctrine does not reach state

reporting laws that implicate the former. Dissenting Op. at 14.

Essentially, the dissent would preempt state reporting laws only

if they require plans to submit financial statements. The dis-

sent’s view of ERISA plan “administration” and “reporting” is

unduly narrow.

The overview of requirements (set out above) makes clear

that Vermont requires ERISA plans to record, in specified for-

mat, massive amounts of claims information and to report that

information to third parties, creating significant (and obvious)

privacy risks and financial burdens that will be passed from the

TPA to the Plan and from the Plan to the beneficiaries. That is not

a proper allocation of plan assets. See 29 U.S.C. § 1104(a\(1XA)

(“[A] fiduciary shall discharge his duties with respect to a plan

solely in the interest of the participants and beneficiaries and

... for the exclusive purpose of... providing benefits to partici-

pants and their beneficiaries; and ... defraying reasonable ex-

penses of administering the plan[.]”). Modest financial burdens

may be tolerable when the state laws imposing them do not di-

rectly implicate an ERISA core administrative concern. But the

statute and regulation here require reporting of health claims,

pharmacy claims, etc., information about the essential function-

ing of employee health plans.

App. 30

CONCLUSION

For the foregoing reasons, we reverse and re-

mand with instructions to enter judgment for Liberty

Mutual.

—_——-—- --+

STRAUB, Circuit Judge, dissenting in part and con-

curring in part:

I respectfully dissent in part and concur in part.

I concur with part I of the discussion section of

the majority opinion finding that Liberty Mutual has

standing. For the reasons that follow, I dissent from

the majority’s holding that the Vermont statute is

preempted by ERISA.

The majority finds that the burden imposed by

the Vermont reporting requirement warrants preemp-

tion of the statute. This conclusion falters for two

primary reasons. First, the reporting requirement

imposed by the Vermont statute differs in kind from

the “reporting” that is required by ERISA and there-

fore was not the kind of state law Congress intended

to preempt. Second, Liberty Mutual has failed to show

any actual burden, much less a burden that triggers

ERISA preemption. Rather, the Vermont statute, like

others we have previously upheld, does not interfere

with an ERISA plan’s administration of benefits. For

these reasons, our precedent and that of the Supreme

Court do not support the conclusion that the Vermont

statute’s reporting requirements pose the sort of

threat to “the nationally uniform administration of

App. 31

employee benefit plans” that would trigger preemp-

tion. N.Y. State Conference of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 657

(1995) (hereinafter “Travelers “).

Looking at the objectives of ERISA and the im-

pact of the Vermont statute on ERISA plans, as we

must in order to determine whether the statute has

an improper “connection with” ERISA plans, I con-

clude that this is not the type of statute that Con-

gress intended to preempt.

ANALYSIS

The preemption clause of the ERISA statute

provides that, with certain exceptions not relevant

here, ERISA “shall supersede any and all State laws

insofar as they may now or hereafter relate to any

employee benefit plan.” 29 U.S.C. § 1144(a). The Su-

preme Court has stated that the “basic thrust of the

preemption clause ... was to avoid a multiplicity of

regulation in order to permit the nationally uniform

administration of employee benefit plans.” Travelers,

514 U.S. at 657. “Pre-emption does not occur, how-

ever, if the state law has only a ‘tenuous, remote, or

peripheral’ connection with covered plans, as is the

case with many laws of general applicability.” Burgio

& Campofelice, Inc. v. N.Y. State Dep’t of Labor, 107

F.3d 1000, 1008 (2d Cir. 1997) (internal quotations

marks omitted) (quoting Shaw v. Delta Air Lines,

Inc., 463 U.S. 85, 100 n.21 (1983)).

App. 32

“Two kinds of state laws relate to ERISA for

purposes of preemption: those that mandate em-

ployee benefit structures or their administration, and

those that provide alternative enforcement mecha-

nisms.” HMI Mech. Sys., Inc. v. McGowan, 266 F.3d

142, 149 (2d Cir. 2001) (internal quotation marks and

brackets omitted). The Vermont statute does neither.

We have noted that courts are “reluctant to find that

Congress intended to preempt state laws that do not

affect the relationships among” “the core ERISA en-

tities: beneficiaries, participants, administrators, em-

ployers, trustees and other fiduciaries, and the plan

itself.” Gerosa v. Savasta & Co., 329 F.3d 317, 324 (2d

Cir. 2003). The Vermont statute does not even argu-

ably regulate these relationships. Moreover, the Ver-

mont statute does not impose regulations on how

plans are to be run or how benefits are to be adminis-

tered.

Yet the majority takes up Liberty Mutual’s in-

vitation to give the term “reporting” its broadest

meaning, and finds the statute is preempted because

“reporting” is a “core ERISA function shielded from

potentially inconsistent and burdensome state regu-

lation.” (Maj. Op. at 24-25) While it is certainly true

that ERISA’s core areas include “reporting, disclo-

sure, [and] fiduciary responsibility,” Shaw, 463 U.S.

at 98, and that “state laws that would tend to control

or supersede central ERISA functions ... have typi-

cally been found to be preempted,” Gerosa, 329 F.3d

at 324, the majority’s argument misses the nuance of

what “reporting” means in the context of ERISA, and

App. 33

ignores the case law’s focus on whether the admin-

istration of benefits to beneficiaries is impacted, an

issue on which there is no showing.

A. Traditional State Regulation of Health Care

and the Presumption Against Preemption

The majority’s finding, hidden in a footnote, that

the presumption against preemption does not apply

here, flies in the face of clear Supreme Court prece-

dent instructing us to begin with the “presumption

that Congress does not intend to supplant state law.”

Travelers, 514 U.S. at 654-55. “[I]n cases like this one

where federal law is said to bar state action in fields

of traditional state regulation, we have worked on the

assumption that the historic police powers of the

States were not to be superseded by the Federal Act

unless that was the clear and manifest purpose of

Congress.” Jd. at 655 (internal citations and quotation

marks omitted). This is because “nothing in the lan-

guage of [ERISA] or the context of its passage indi-

cates that Congress chose to displace general health

care regulation, which historically has been a matter

of local concern.” Jd. at 661.

The majority nonetheless holds that the pre-

sumption against preemption does not apply here

because “state health data collection laws do not reg-

ulate the safe and effective provision of health care

services.” (Maj. Op. at 19 n.8) This contradicts the

very Supreme Court precedent the majority relies

upon: DeBuono v. NYSA-ILA Medical and Clinical

App. 34

Services Fund, 520 U.S. 806 (1997). In that case, New

York imposed a tax on patient services at various

health care providers. 520 U.S. at 808. The Court

applied the presumption, reasoning that although the

New York law was “a revenue raising measure, rather

than a regulation of hospitals, it clearly operates in a

field that ‘has been traditionally occupied by the

States.’” Jd. at 814. The Court further stated that the

fact that the challenged law “targets only the health

care industry ... supports the application of the

‘starting presumption’ against pre-emption,” because

“the historic police powers of the State include the

regulation of matters of health and safety.” Jd. at 814

& n.10. DeBuono is indistinguishable from the case at

hand. Here, the Vermont statute “targets only the

health care industry” and, even if it is not a regula-

tion of health care entities, it certainly “operates in

[the] field” of health and safety. Indeed, the stated

purpose of the Vermont statute is to help improve

health care quality. See Vt. Stat. Ann. tit. 18 § 9410(aX1)

(listing purposes, including “improving the quality

and affordability of patient health care”). There

should be no question, therefore, that the pre-

sumption applies here.

B. There is No Improper “Connection With”

ERISA Plans

When analyzing whether ERISA preempts a

state law, we apply the two-pronged Shaw test, as

narrowed by Travelers’ presumption against preemp-

tion. Under that test, we analyze whether a state law

App. 35

has an impermissible “connection with” or “reference

to” an ERISA plan. See, e.g., Hattem v. Schwarzenegger,

449 F.3d 423, 428 (2d Cir. 2006). Despite paying lip

service to the Shaw test, the majority eschews a full

analysis in favor of a talismanic recitation of the word

“reporting.”

I agree with the majority that because the Ver-

mont statute requires data collection from entities

other than ERISA plans, such as hospitals, health in-

surers, and pharmacy benefit managers, it “functions

irrespective of the existence of an ERISA plan” and

therefore does not make an improper “reference to”

ERISA plans. See Cal. Div. of Labor Standards En-

forcement v. Dillingham Constr., N.A., Inc., 519 U.S.

316, 328 (1997) (internal quotation marks and ellipsis

omitted). The “connection with” prong, on which the

majority hangs its hat, instructs us to examine both

“the objectives of the ERISA statute as a guide to the

scope of the state law that Congress understood

would survive” and the “effect of the state law on

ERISA plans.” See Egelhoff v. Egelhoff ex rel. Breiner,

532 U.S. 141, 147 (2001) (internal quotation marks

omitted); see also HMI, 266 F.3d at 148 (“Analyzing a

state law’s ‘connection’ with ERISA plans requires the

courts to consider ERISA’s objectives and the effect of

the state law on ERISA plans.”). This analysis leads

to the conclusion that the Vermont statute is not pre-

empted.

App. 36

1. Objectives of ERISA

The objectives of the ERISA statute are not in

dispute. Congress “enacted ERISA in 1974 to respond

to growing concerns about the risk of employers de-

faulting on pension plans, which were increasingly

widespread but little regulated.” See Mallory Jensen,

Is ERISA Preemption Superfluous In the New Age

of Health Care Reform?, 2011 Colum. Bus. L. Rev.

464, 472 (2011) (internal footnotes omitted); see also

Brendan S. Maher and Peter K. Stris, ERISA and

Uncertainty, 88 Wash. U. L. Rev. 433, 440 n.29 (2010)

(“Few dispute that the statute was passed, in part, as

a response to several high-profile pension defaults

that arose from company failures that devastated the

pensions of many workers.”) (citing J.A. Wooten, The

Most Glorious Story of Failure in the Business: The

Studebaker-Packard Corp. & the Origins of ERISA,

49 Buff. L. Rev. 683, 683-84 (2001)). Indeed, the stat-

ute itself declares that, in passing ERISA, Congress

sought to

protect interstate commerce and the inter-

ests of participants in employee benefit plans

and their beneficiaries, by requiring the dis-

closure and reporting to participants and

beneficiaries of financial and other infor-

mation with respect thereto, by establish-

ing standards of conduct, responsibility, and

obligation for fiduciaries of employee bene-

fit plans, and by providing for appropriate

App. 37

remedies, sanctions, and ready access to the

Federal courts.

29 U.S.C. § 1001(b).’

These objectives are reflected in the ERISA re-

porting and disclosure requirements, which are con-

cerned with the mismanagement of funds and failure

to pay employee benefits, and seek information on

plan assets or allocation. See 29 U.S.C. § 1023 (re-

quiring publication of annual report to include a fi-

nancial statement of assets and liabilities, changes in

fund balance, disclosures about changes made in the

plan, and financial commitments, including loans,

leases, and transactions, and an actuarial statement).

The plain language of the ERISA reporting require-

ments shows that they are limited to the furnishing

of a summary plan description to plan participants

and an annual report to the Secretary. See 29 U.S.C.

§§ 1021-30. The former is essentially a plain-English

summary of key plan terms, id. §§ 1021-22, while the

' The Supreme Court has also noted that Representative

Dent, the House sponsor of the legislation, “represented that

ERISA’s fiduciary standards ‘will prevent abuses of the special

responsibilities borne by those dealing with plans,’” and that the

“disclosure and reporting requirements ‘will enable both partici-

pants and the Federal Government to monitor the plans’ opera-

tions.’” Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 15 (1987)

(quoting 120 Cong. Rec. 29197 and 29935 (1974)). “Senator Williams,

the Senate sponsor, stated that these fiduciary standards would

safeguard employees from ‘such abuses as self-dealing, impru-

dent investing, and misappropriation of plan funds.’” Id. (quot-

ing 120 Cong. Rec. 29932).

App. 38

latter is concerned with the financial soundness of

the plan, id. § 1023. Thus, under ERISA, plans must

report information that goes to the financial integrity

of the plan.

It is important to recognize that, as Liberty Mu-

tual conceded at oral argument (Tr. at 9), the “report-

ing” required by ERISA is wholly distinct from the

reporting sought by Vermont. As the majority de-

scribes in some depth, the Vermont statute seeks

information on medical claims data, the services that

have been provided to beneficiaries, charges and pay-

ments for those services, and demographic infor-

mation about those receiving the coverage. (Maj. Op.

at 26-29) At bottom, the state seeks to collect the

information it needs to fulfill its role of providing

health care to its citizens. Vermont does not seek in-

formation on plan assets, and does not review the

allocation or denial of benefits, see Reg. H-2008-01,

21-040-021 Vt. Code R. § 5A(8) (“Denied claims shall

be excluded from all medical and pharmacy claims

file submissions”), the topics on which ERISA re-

quires reports. Indeed, the Secretary of Labor, who

oversees the reporting requirements and is responsi-

ble for enforcing and administering Title I of ERISA,

has advised us that the focus and purpose of Ver-

mont’s data collection is different from the reporting

requirements in ERISA. See Amicus Secretary of

Labor Br. at 12.

This contrast between the objectives and report-

ing requirements of ERISA and those of the Vermont

App. 39

statute suggests that the Vermont statute is not of

the type that Congress intended to preempt.

2. Effect of the Vermont Statute on ERISA

Plans

We look next to the effect of the Vermont stat-

ute on ERISA plans. The Vermont statute asks for

after-the-fact information which plan administrators,

such as Blue Cross Blue Shield of Massachusetts

(“BCBSMA”), already have in their possession. See Tr.

at 7-8. Indeed, by all accounts BCBSMA is happy to

provide the data Vermont has asked for, and it does

so for other clients. Because Liberty Mutual possesses

all the information Vermont seeks, the only alleged

burden here is providing the data to Vermont in the

requested format.

The majority finds that there is an obvious

burden connected with the formats and requirements

specified by Vermont, although it does not explain

exactly how that burden manifests itself. Perhaps

this is because Liberty Mutual has failed to provide

any details or showing of the alleged burden, arguing

only that “all regulations have their costs.” Appel-

lant’s Br. at 28. See also Br. for Amicus Chamber of

Commerce at 9 (increased steps required by a TPA to

fulfill requirements) and 10 (arguing generally that

additional requirements will “cost additional money”).

In as much as this burden is a financial one, as

Liberty Mutual suggests, we have stated clearly, as

has the Supreme Court, that indirect financial costs

App. 40

from a state law are not a concern unless they “pre-

clude uniform administration practice or the pro-

vision of a uniform interstate benefit package.”

Travelers, 514 U.S. at 660. Indeed, our case law

addressing statutes which impose added costs on

ERISA plans states clearly that an indirect economic

impact is sufficient to trigger preemption only if it

“produce[s] such acute, albeit indirect, economic

effects as to force an ERISA plan to adopt a certain

scheme of substantive coverage or effectively restrict

its choice of insurers.” Travelers, 514 U.S. at 668; see

also Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 147

(2d Cir. 1989) (noting that “indirect economic and

administrative effects are not substantial enough ...

to persuade us that this is the type of law Con-

gress intended to preempt” and upholding Connecti-

cut escheat law requiring Aetna to pay all unclaimed

benefits to the State after three years, even though

this would cause, inter alia, an increase in premiums

to employers, lower benefits for employees, and lower

profits for Aetna).’ On the record before us, there is no

basis to find that the Vermont statute would cause

Liberty Mutual to increase its costs more than a

de minimus amount to cover the cost of sending

* The majority claims that “modest financial burdens” are

only “tolerable when the state laws imposing them do not di-

rectly implicate an ERISA core concern,” (Maj. Op. at 31 n.13)

without citing to any authority. This statement is directly

contradicted by Borges, where financial burdens were acceptable

despite implicating one of the most central ERISA concerns: the

payment of benefits.

App. 41

information to the state, much less that it would

cause a fiduciary to change a plan in any way. See

DeBuono, 520 U.S. at 815 (noting that many state

laws of “general applicability” will “impose some

burdens on the administration of ERISA plans, but

nevertheless do not ‘relate to’ them within the mean-

ing of” ERISA).

The majority also suggests the Vermont statute is

inconsistent with ERISA because of its supposed

inconsistencies with other state reporting regimes. To

reach this conclusion, the majority relies on language

from Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

(1987), suggesting that ERISA preempts laws which

create conflicting state record-keeping requirements.

(Maj. Op. at 17-18) Fort Halifax involved a preemp-

tion challenge to a Maine statute requiring an em-

ployer to provide a one-time severance payment to

employees under certain circumstances. 482 U.S. at

3. The Supreme Court found that the statute regu-

lated employee benefits but did not regulate or estab-

lish an employee benefit “plan,” and thus was not

preempted by ERISA. /d. at 6-8.

The dicta in Fort Halifax on which the majority

relies does not bear the weight the majority places

upon it. To the extent Fort Halifax suggests that a

state law may not require an ERISA plan to keep

records it would not otherwise keep, that concern is

not implicated here. The Vermont statute does not

require plan administrators to keep any new records,

it merely seeks access to the records that are already

App. 42

kept. Fort Halifax does not say anything about when

or how a state may demand access to existent records.

Moreover, the language in Fort Halifax describ-

ing the “administrative realities of employment

benefit plans,” does not relate to all administrative

concerns, but rather to the repeatedly articulated

concern that there be “nationally uniform administra-

tion of employee benefit plans.” Travelers, 514 U.S. at

657 (emphasis added). See Fort Halifax, 482 U.S. at 9

(suggesting it is most efficient for plans to have “a

uniform administrative scheme, which provides a set

of standard procedures to guide processing of claims

and disbursement of benefits.” (emphasis added)).

The distinction between general administration

and administration of plans, claims, and benefits is

important. Many state laws may have an impact on

the administration of an ERISA plan — for example, a

work-place safety law, a prevailing wage law, or a

law that requires companies to report employment

data. Such laws may impose additional costs, or

require additional administrative resources. But none

of these laws impact how benefits are administered to

beneficiaries and, therefore, they are not preempted

by ERISA. See, e.g., Dillingham, 519 U.S. at 319

(upholding California prevailing wage law); HMI, 266

F.3d at 144 (upholding New York prevailing wage

law); Burgio, 107 F.3d at 1003 (same). The reason for

our focus on whether a state statute affects the rela-

tionships among “the core ERISA entities: beneficiar-

ies, participants, administrators, employers, trustees

and other fiduciaries,” see Gerosa, 329 F.3d at 324, is

App. 43

because the concern is about whether the administra-

tion of benefits to beneficiaries is affected. The majority

ignores this distinction and treats all administrative

burdens as weighing in favor of preemption.

The importance of separating any impact on the

administration of benefits from general impact upon

any administrative concern is clearly articulated in

Egelhoff v. Egelhoff ex rel. Breiner, which involved a

Washington state statute providing that “the designa-

tion of a spouse as the beneficiary of a nonprobate as-

set is revoked automatically upon divorce.” 532 U.S.

at 143. There, the Supreme Court stated that while

“all state laws create some potential for a lack of uni-

formity,” the concern was specifically whether “differ-

ing state regulations affect{ ] an ERISA plan’s ‘system

for processing claims and paying benefits.’” Jd. at 150

(quoting Fort Halifax, 482 U.S. at 10). The Court

noted that the Washington statute at issue “inter-

fere{d] with nationally uniform plan administration,”

as administrators could not “make payments simply

by identifying the beneficiary specified by the plan

documents” but instead had to “familiarize them-

selves with state statutes so that they clould] deter-

mine whether the named beneficiary’s status has

been ‘revoked’ by operation of law.” Jd. at 148-49. In

clear contrast to Egelhoff, there is no argument here

that the Vermont statute affects Liberty Mutual’s

“system for processing claims and paying benefits.”

Id. at 150 (internal quotation marks omitted).

It follows from these precedents that in order to

show that the Vermont statute has a legally relevant

App. 44

effect on ERISA plans, there must be evidence of a

burden on the system for processing claims. No such

evidence has been provided, and the majority points

to none. The only possible conclusion on the record

before us is that, other than through potential inci-

dental costs, the Vermont statute does not hinder the

national administration of employment benefit plans

in any way. No new records need be kept, no distinc-

tion in benefits between Vermont and any other state

need be made. This ends the inquiry.’

C. Reporting Requirements Upheld in HMI and

Burgio

Using this same analysis, we twice concluded

that ERISA did not preempt the reporting require-

ments in New York’s prevailing wage law. See HMI,

266 F.3d 142; Burgio, 107 F.3d 1000. In both cases,

the New York statute at issue required contractors

and subcontractors to produce records showing their

* Any support that the majority draws from Standard Oil

Co. v. Agsalud, 633 F.2d 760, 763 (9th Cir. 1980), is misplaced.

See Maj. Op. at 18-19. The Ninth Circuit opinion, which the

Supreme Court summarily affirmed, does not even mention the

reporting requirement in the Hawaii Prepaid Care Act. The

Hawaii statute was found to be preempted because it directly

and expressly regulated employers and the benefits they pro-

vided. The reporting requirement fell along with the rest of the

statute without discussion. The fact that Congress did not

amend ERISA to except reporting or disclosure requirements

says nothing about whether a court asked to evaluate such re-

quirements would find them to be preempted.

App. 45

compliance with the prevailing wage rate and sup-

plements. See Burgio, 107 F.3d at 1009; HMI, 266

F.3d at 151; N.Y. Lab. Law § 220. In HMI, we noted

that although there were indirect effects on ERISA

plans, such as “eliminating incentives for them to

pool supplement contributions,” the state’s inquiry

did not “mandat(e] a particular benefit structure for

ERISA plans,” “require employers or ERISA plans to

provide specific benefits,” or delve into the internal

allocations of benefits within the plan. 266 F.3d at

150-51; see also Burgio, 107 F.3d at 1009 (finding no

preemption where law did not “regulate . . . the terms

and conditions of employee benefit plans”, “prescribe

[]... the type and amount of an employer’s contribu-

tion to a plan”, or the “nature and amount of the

benefits provided”). Rather, we said that “information

such as a list of plan participants, payroll lists, the

amount of an employer’s contributions and the names

of people for whom the employer made contributions

are appropriate areas of inquiry” for the state. HMI,

266 F.3d at 151. Both opinions make clear that a

state may properly seek information from ERISA

plans for its own purposes without triggering

preemption so long as the request for information

“creates no impediment to an employer’s adoption of a

uniform benefit administration scheme,” Burgio, 107

F.3d at 1009. As discussed above, the Vermont statute

creates no such impediment, and therefore survives

under the same analysis.

The majority attempts to distinguish these cases

based on the manner in which Vermont asks to be

App. 46

provided information. But the fact that a particular

format is required, without more, is meaningless. The

record contains-no evidence that the burden of provid-

ing data to Vermont (and other states which may ask

for it) would keep plans from administering their

benefits uniformly and therefore trigger ERISA pre-

emption. Likewise, the majority’s statement that the

reporting requirement is “time-consuming and risky”

(Maj. Op. at 26) — even if considered relevant under

our precedent — is nothing more than pure specula-

tion. There is no evidence to support such a finding.

CONCLUSION

Returning, then, to the language that must guide

our inquiry, our decision depends on the objectives of

the ERISA statute and the effect of the state law on

ERISA plans. Although Congress intended to estab-

lish the regulation of employee benefit plans as an

exclusively federal concern, it did not intend for

health care to become the exclusive purview of the

Federal Government. Rather, it anticipated that the

States would continue to be involved in providing

health care services to their citizens.

Liberty Mutual fails to overcome the presump-

tion against preemption. The Vermont statute regu-

lates health care within that state, while imposing a

purely clerical burden on ERISA plans. I acknowledge

that because Vermont may not be the only state with

this type of law, plans governed by ERISA may need

to provide their records in different formats. But our

App. 47

case law does not support a finding that this war-

rants preemption. Indeed, it says uniformly that an

economic burden imposed by a statute of general

applicability, which does not affect the benefits that

beneficiaries receive or how they receive them, is

permissible.

Because the Vermont statute does not have an

impermissible “connection with” ERISA plans, I re-

spectfully dissent.

App. 48

UNITED STATES DISTRICT COURT

FOR THE

DISTRICT OF VERMONT

LIBERTY MUTUAL

INSURANCE COMPANY,

Plaintiff,

STEPHEN W. KIMBELL, in: Case No. 2:11-cv-204

his capacity as the Vermont .

Commissioner of Banking,

Insurance, Securitiesand_.

Health Care Administration, .

Defendant.

OPINION and ORDER

(Filed Nov. 9, 2012)

Plaintiff Liberty Mutual Insurance Company

(“Liberty Mutual”) seeks a declaration that Section

502(a) of the Employee Retirement Income Security

Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a), preempts

Vermont’s statute and regulation requiring it to

provide information for the State’s health care data-

base, see Vt. Stat. Ann. tit. 18, § 9410 (2000 & Supp.

2011); Reg. H-2008-01, and to enjoin the enforcement

of a subpoena directing the production of eligibility,

medical claims and pharmacy claims files. Defendant

Stephen W. Kimbell, in his official capacity as Com-

missioner of the Vermont Department of Banking,

App. 49

Insurance, Securities and Health Care Administra-

tion (“BISHCA” or “Department”),’ moved to dismiss

the complaint for lack of standing and for failure to

state a claim upon which relief can be granted. See

Fed. R. Civ. P. 12(b\(1), 12(b\6). Liberty Mutual

moved for summary judgment. See Fed. R. Civ. P.

56(a). At oral argument on the motions, with the par-

ties’ concurrence, the Court converted the Department’s

Rule 12(b\(6) motion to one for summary judgment

under Rule 56(a), in order to consider materials sub-

mitted outside the pleadings. See Fed. R. Civ. P. 12(d).

For the reasons that follow, the Court concludes that

Liberty Mutual has standing to bring this suit for

declaratory and injunctive relief, but that the De-

partment’s motion for summary judgment is granted

because ERISA does not preempt section 9410. Ac-

cordingly, the Department’s Motion to Dismiss, ECF

No. 15, is granted in part and denied in part. The

motion is denied with respect to standing and granted

with respect to ERISA preemption. Liberty Mutual’s

Motion for Summary Judgment, ECF No. 35, is de-

nied. Liberty Mutual’s Motion for Leave to Respond

to Defendant’s Notice of Supplemental Authority,

ECF No. 52, is granted.

' BISHCA has been renamed, and is now the Department of

Financial Regulation (“DFR”).

App. 50

Background’

Liberty Mutual is an insurance company orga-

nized under the laws of the Commonwealth of Massa-

chusetts. It is a wholly owned subsidiary of Liberty

Mutual Group Inc. Liberty Mutual has employees

and offices in Vermont and conducts business within

the state.

Liberty Mutual established the Liberty Mutual

Medical Plan (“Plan”) for the benefit of company

employees. As of June 30, 2011, the Plan provided

medical benefits to 84,711 persons throughout the

United States, including 32,933 employees of Liberty

Mutual Group, Inc. and its subsidiaries, plus employ-

ees’ families and company retirees. As of that date,

137 plan participants or beneficiaries resided in

Vermont.

As an employee welfare benefit plan, the Plan is

governed by ERISA. Liberty Mutual is the “named

fiduciary” and “plan administrator” of the Plan within

the meaning of Section 3 of ERISA, 29 U.S.C. § 1002.

The Plan is self-funded, or self-insured, meaning that

Liberty Mutual Group, Inc. pays all benefits provided

under the Plan from its own general assets. The Plan

contracts with Blue Cross Blue Shield of Massachusetts,

Inc. (“BCBSMA”) as the third-party administrator

(“TPA”) of the Plan. As such, BCBSMA processes medi-

cal claims for Plan participants, receives participants’

* The facts set forth in this section are undisputed.

App. 51

confidential medical records and generates claims

data. The Administrative Services Agreement (“Agree-

ment”) between BCBSMA and Liberty Mutual pro-

vides that any information Liberty Mutual makes

available must be used solely for the purpose of

administering BCBSMA’s health care plans, and that

its auditors must have procedures in place to guard

against unauthorized disclosure of health care infor-

mation. See Agreement §§ 5, 6; ECF No. 22-4.

In Liberty Mutual’s summary plan description

(“SPD”), provided to participants, Liberty Mutual

informs participants that information they provide in

connection with screening for risk factors will be kept

strictly confidential, and that if they participate in

genetic testing the test is confidential. See SPD “Well-

Baby Programs” at B-28, “Personalized Medicine

Program” at B-46; ECF No. 22-5.

Liberty Mutual’s Plan specifies that it “has been

established for the exclusive benefit of Partici-

pants....” See Plan §9.1; ECF No. 22-2. It also

provides that the Plan “shall comply with all other

state and federal law to the extent not preempted by

ERISA and to the extent such laws require compli-

ance by the Plan.” Jd. § 9.9.

Liberty Mutual’s Plan is subject to federal report-

ing and disclosure requirements set forth in ERISA

Sections 101 through 110 and associated regulations.

See 29 U.S.C. §§ 1021-1031; 29 C.F.R. §§ 2520.101-1

to 2520.107-1. In addition, Section 513 of ERISA

authorizes the Secretary of Labor to “undertake

App. 52

research and surveys and in connection therewith to

collect, compile, analyze and publish data, infor-

mation, and statistics relating to employee benefit

plans... .” 29 U.S.C. § 1143(a).

Vermont has enacted legislation to create a

unified health care database. See Vt. Stat. Ann. tit.

18, § 9410 (2000 & Supp. 2011). The database, estab-

lished and maintained by the Department, is de-

signed to enable the Department to determine the

capacity of existing resources, identify health care

needs, evaluate effectiveness, compare costs, provide

information to consumers and purchasers of health

care, and improve the quality and affordability of

patient health care and health care coverage. See

§ 9410(a)( 1 A)-(F).

Section 9410 requires “health insurers,” which

includes “any ... entity with claims data ... and

other information relating to health care provided to

Vermont resident({s],” § 9410(jX1)(B), to “file reports,

data, schedules, statistics, or other information

determined by [the Department] to be necessary to

carry out the purposes of” the statute. § 9410(c). The

statute mandates the adoption of rules to carry out

its purposes, § 9410(a)(2)(D), and provides for admin-

istrative penalties for knowing and for willful failure

to comply with the statute or rules. § 9410(g).

Pursuant to the statute, the Department promul-

gated Regulation H-2008-01 to implement the crea-

tion of the unified health care database. It states:

App. 53

The purpose of this rule is to set forth the

requirements for the submission of health

care claims data, member eligibility data,

and other information relating to health care

provided to Vermont residents ... by health

insurers,.... third party administrators, . . .

and others to the [DFR] and conditions for

the use and dissemination of such claims da-

ta, all as required by and consistent with the

purposes of... § 9410.

Reg. H-2008-01, § 1. The Vermont Healthcare Claims

Uniform Reporting and Evaluation System

(“VHCURES”) is the Department’s system for the

collection, management and reporting of this data.

See id. § 3Ar.

The regulation tracks the statute in defining

“health insurer” to include entities defined in

§ 9410(j(1), including

any third party administrator ... and any

entity ... possessing claims data, eligibility

data, provider files, and other information

relating to health care provided to Vermont

residents or by Vermont health care provid-

ers and facilities. The term may also include,

to the extent permitted under federal law,

any administrator of an insured, self-

insured, or publicly funded health care bene-

fit plan offered by public and private entities.

Id. § 3X.

App. 54

The parties do not dispute that Liberty Mutual

and BCBSMA fall within the regulation’s definition of

“health insurer.”

The regulation requires health insurers to regis-

ter with the Department, and to identify whether

health care claims are being paid for members who

are Vermont residents or for non-residents who are

receiving covered services from Vermont health care

providers or facilities. See id. § 4A. Health insurers

must “regularly submit medical claims data, pharma-

cy claims data, member eligibility data, provider

data, and other information relating to health care

provided to Vermont residents and health care pro-

vided by Vermont health care providers and facilities

to both Vermont residents and non-residents in

specified electronic format.” Jd. § 4D. The regulation

sets a threshold for “mandated reporters,” those

health insurers with two hundred or more enrolled or

covered members. Jd. § 3Ab. All other health insurers

are considered “voluntary reporters.” Jd. § 3As. Vol-

untary reporters may, but are not required to, partic-

ipate in VHCURES. See id. § 4E.

The statute and regulation include various

measures designed to protect confidential material.

See §§ 9410(aX2)(D) (“The rules shall permit health

insurers to use security measures designed to allow

subscribers access to price and other information

without disclosing trade secrets to individuals and

entities who are not subscribers.”); (e) (“Records or

information protected by the provisions of the physi-

cian-patient privilege ... or otherwise required by

App. 55

law to be held confidential, shal] be filed in manner

that does not disclose the identity of the protected

person.”); (f) (The commissioner shall adopt a confi-

dentiality code to ensure that information obtained

under this section is handled in an ethical manner.”);

(g) (“[A]Jny person who knowingly fails to comply with

the confidentiality requirements of this section or

confidentiality rules adopted pursuant to this section

and uses, sells, or transfers the data or information

for commercial advantage, pecuniary gain, personal

gain, or malicious harm shall be subject to an admin-

istrative penalty of not more than $50,000.00 per

violation.”); (hX2D) (“Notwithstanding [the Health

Insurance Portability and Accountability Act (“HIPAA”)]

or any other provision of law, the comprehensive

health care information system shall not publicly

disclose any data that contains direct persona! identi-

fiers. .. .”); see also Reg. H-2008-01 §§ 5(AX5) (setting

forth code and encryption requirements); 7(A)(5)

(“Files submitted shall not contain direct personal

identifiers.”); 8(A) (classifying data elements as

“unrestricted” and available for general use and

public release; “restricted” and available for limited

approved research uses; or “unavailable”).

Subject to these strictures and the requirements

of HIPAA, the statute and regulation allow the De-

partment to make the data it collects “available as a

resource for insurers, employers, providers, purchas-

ers of health care, and state agencies to continuously

review health care utilization, expenditures, and

performance in Vermont.” § 9410(h)(3)B).

App. 56

On August 5, 2011, the Department issued a

subpoena to BCBSMA seeking eligibility, medical

claims and pharmacy claims files for certain months.

Liberty Mutual instructed BCBSMA not to report the

information for Plan participants and beneficiaries,

and filed this action seeking declaratory and injunc-

tive relief. BCBSMA has complied with the subpoena

with the exception of providing the data collected on

the Vermont participants in Liberty Mutual’s Plan,

and has indicated that it will comply fully with the

subpoena absent injunctive relief from this Court. See

Verified Compl. J 39, ECF No. 1.

The subpoena served on BCBSMA states that

[pjursuant to 8 V.S.A. § 13(b), a person who

fails or refuses to produce papers or records

for examination before the Commissioner,

upon properly being ordered to do so, may

be assessed an administrative penalty of

the Commissioner of not more that [sic]

$2,000.00 for each day of noncompliance and

proceeded against as provided in the Admin-

istrative Procedure Act, and that person’s

authority to do business may be suspended

for not more than six months.

Subpoena, ECF No. 1-1.

Discussion

I. Standing

The Department challenges Liberty Mutual’s

Article III standing. Standing, a “threshold question

App. 57

in every federal case, determinles] the power of the

court to entertain the suit.” Warth v. Seldin, 422 U.S.

490, 498 (1975). The “irreducible constitutional

minimum of standing” requires a plaintiff to show (1)

that it has “suffered an injury in fact — an invasion of

a legally protected interest which is (a) concrete and

particularized, and (b) actual or imminent, not con-

jectural or hypothetical; [(2)] a causal connection

between the injury and the conduct complained of;

[and (3) that it is] likely, as opposed to merely specu-

lative, that the injury will be redressed by a favorable

decision.” Lujan v. Defenders of Wildlife, 504 U.S.

555, 560 (1992) (citations and internal quotation

marks omitted); accord Carver v. City of New York,

621 F.3d 221, 225 (2d Cir. 2010).

Because Liberty Mutual’s standing is challenged

by a Rule 12(bX1) motion to dismiss, the Court ac-

cepts as true all material allegations of the complaint,

and construes the complaint in Liberty Mutual’s

favor. Jd. The Court also accepts the sworn declara-

tion of Mary Connolly, ECF No. 22-1, with its at-

tached exhibits, including copies of the Plan, the

Summary Plan Description, and the Administrative

Services Agreement between Liberty Mutual and

BCBSMA. See Warth, 422 U.S. at 501.

The Department contends that Liberty Mutual

cannot establish the first or second elements of Arti-

cle III standing: concrete injury or causal connection.

The Department points out that the subpoena is

directed toward BCBSMA, not Liberty Mutual, and

that it does not seek data from Liberty Mutual.

App. 58

Therefore, it reasons, Liberty Mutual can suffer no

injury if BCBSMA complies with the subpoena.

Liberty Mutual responds that it has standing because

it is the Plan fiduciary, and providing the data to the

Department, or allowing the data to be provided,

could constitute a violation of its fiduciary duties. It

also asserts that the Plan owns the data demanded

by the Department. See Verified Compl. ¥ 35.

Liberty Mutual is the Plan Administrator, and

has control over the operation and administration of

the Plan. Plan §§ 7.1-7.2. It is a fiduciary with respect

to the Plan, given that it “exercises .. . discretionary

authority or discretionary control respecting man-

agement” of the Plan. 29 U.S.C. § 1002(21)(A); see

Fin. Insts. Ret. Fund v. Office of Thrift Supervision,

964 F.2d 142, 148 (2d Cir. 1992). Either by virtue of

its plan administrator responsibilities or its fiduciary

responsibilities, it has the authority to direct

BCBSMA to refuse to provide Plan data to the De-

partment.

It is undisputed that, as a voluntary reporter,

Liberty Mutual itself may not be compelled to provide

data to VHCURES. BCBSMA however is a mandated

reporter, and is subject to section 9410’s reporting

requirements with respect to Liberty Mutual’s Plan’s

data along with the data it acquires from other

sources. When a plaintiff’s asserted injury arises

from the allegedly unlawful regulation of a third

party, the plaintiff must “adduce facts” showing

that the third party will act in such a fashion “as to

App. 59

produce causation and permit redressability of inju-

ry.” Lujan, 504 U.S. at 562.

According to the terms of the contract between

BCBSMA and Liberty Mutual, Liberty Mutual agrees

to hold BCBSMA harmless for any financial charges

that may result at any time arising from or in connec-

tion with its self-insured ERISA health benefit plan.

Agreement § 2. Liberty Mutual will therefore be

responsible for any civil penalties assessed against

BCBSMA because of BCBSMA’s refusal to comply

with the subpoena. The Department does not indicate

that it will forbear enforcement of the subpoena

directed to BCBSMA, and there is no suggestion that

the threat of civil penalties is remote or speculative.

The Department’s issuance of a subpoena to

BCBSMaA leaves two options open to Liberty Mutual.

Liberty Mutual may allow BCBSMA to comply with

the subpoena, allegedly in violation of ERISA and

Liberty Mutual’s fiduciary and administrative re-

sponsibilities to the Plan. Or Liberty Mutual may

demand that BCBSMA refuse to comply with the

subpoena, in which case it must indemnify BCBSMA

if BCBSMA incurs civil penalties for its refusal, or

sue BCBSMA if BCBSMA complies with the subpoe-

na. As long as Liberty Mutual employs a mandated

reporter to process its claims, and the Department

insists on requiring that mandated reporter to report

data obtained from voluntary reporters, Liberty

Mutual is subject to regulation through the Depart-

ment’s regulation of BCBSMA.

App. 60

An injury-in-fact “must be actual or imminent to

ensure that the court avoids deciding a purely hypo-

thetical case in which the projected harm may ulti-

mately fail to occur.” Baur v. Veneman, 352 F.3d 625,

632 (2d Cir. 2003). “‘One does not have to await the

consummation of threatened injury to obtain preven-

tive relief. If the injury is certainly impending, that is

enough.’” Babbitt v. United Farm Workers Nat'l

Union, 442 U.S. 289, 298 (1979) (quoting Pennsylva-

nia v. West Virginia, 262 U.S. 553, 593 (1923)). Under

the circumstances presented here, Liberty Mutual

has adequately alleged injury-in-fact. See Davis v.

Fed. Election Comm’n, 554 U.S. 724, 733 (2008)

(holding that a candidate for Congressional seat had

standing to challenge election law disclosure re-

quirements due to an imminent threat that he would

have to make disclosure or face enforcement action).

With respect to the second element of constitu-

tional standing, a causal connection, there can be no

serious dispute that the forced reporting of its Plan’s

data is “fairly traceable to the challenged action” of

the Department. Lujan, 504 U.S. at 560. The De-

partment argues that BCBSMA would be the cause of

any alleged injury to Liberty Mutual should BCBSMA

comply with the subpoena, and that Liberty Mutual’s

injury is therefore caused by the independent action

of “a third party not before the court.” Mot. to Dismiss

5 (citing Lujan, 504 U.S. at 560). The Department

fails to acknowledge that BCBSMA would not be

inflicting an alleged injury upon Liberty Mutual were

it not for the Department’s subpoena and threatened

App. 61

enforcement. The Department’s actions need not be

“the very last step in the chain of causation,” Bennett

v. Spear, 520 U.S. 154, 169 (1997); it will suffice if

Liberty Mutual’s injury is produced by the Depart-

ment’s “coercive effect upon the action of someone

else,” id., in this case BCBSMA.

The Department suggests — although it has not

briefed the issue — that Liberty Mutual also cannot

satisfy the redressability element of constitutional

standing. Mot. to Dismiss 6. On the contrary, a favor-

able decision from this Court would allow Liberty

Mutual to avoid providing its health care data to the

Department, exactly the harm of which Liberty

Mutual complains. See Sprint Commce’ns Co., L.P. v.

APCC Servs., Inc., 554 U.S. 269, 287 (2008) (reiterat-

ing that the redressability inquiry focuses on whether

the particular injury alleged is likely to be redressed

through the litigation).

Liberty Mutual has adequately alleged constitu-

tional standing.

Il. Preemption

Both parties seek summary judgment on the

claim that ERISA preempts section 9410 and its

accompanying regulation. Summary judgment is

appropriate if the moving party “shows that there is

no genuine dispute as to any material fact and [it] is

entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a).

App. 62

Under Rule 56[(a)] the moving party has the

burden of showing the absence of any genu-

ine issue of material fact. A fact is material

when its resolution would affect the outcome

of the suit under the governing law, and a

dispute about a material fact is genuine if

the evidence is such that a reasonable jury

could return a verdict for the nonmoving par-

ty.

Gen. Elec. Co. v. New York State Dep’t of Labor, 936

F.3d 1448, 1452 (2d Cir. 1991) (citations and quota-

tion marks omitted). “Where ... there are cross-

motions for summary judgment, each party’s motion

must be examined on its own merits, and in each case

all reasonable inferences must be drawn against

the party whose motion is under consideration.”

Lumbermens Mut. Cas. Co. v. RGIS Inventory Spe-

cialists, LLC, 628 F.3d 46, 51 (2d Cir. 2010) (quotation

marks and citation omitted).

The parties do not dispute that ERISA regulates

Liberty Mutual’s Plan. See N.Y. State Conference of

Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,

514 U.S. 645, 656 (1995) (“ERISA’s comprehensive

regulation of employee welfare and pension benefit

plans extends to those that provide ‘medical, surgical,

or hospital care or benefits’ for plan participants or

their beneficiaries ‘through the purchase of insurance

or otherwise.’”) (quoting 29 U.S.C. § 1002(1)); see also

Boggs v. Boggs, 520 U.S. 833, 839, 841 (1997)

(“ERISA is designed to ensure the proper administra-

tion of pension and welfare plans.... All employee

App. 63

benefit plans must conform to various reporting,

disclosure, and fiduciary requirements.”).

ERISA Section 514(a) provides that, subject to

certain exceptions, the provisions of Title I and Title

IV of ERISA “shall supersede any and all State laws

insofar as they may now or hereafter relate to any

employee benefit plan” described in section 4(a) and

not exempt under section 4(b) of ERISA. 29 U.S.C.

§ 1144(a). State law “includes all laws, decisions,

rules, regulations or other State action having the

effect of law.” Jd. § 1144(c)(1).

The Supreme Court originally gave this express

preemption provision sweeping scope. In Shaw uv.

Delta Air Lines, Inc., the Court stated “[t]he breadth

of § 514(a)’s pre-emptive reach is apparent from that

section’s language.” 463 U.S. 85, 96 (1983). It held

_ that “[a) law ‘relates to’ an employee benefit plan, in

the normal sense of the phrase, if it has a connection

with or reference to such a plan.” Jd. at 96-97.

By the mid-1990’s, however, the Court found

ERISA’s broad language “opaque,” De Buono v.

NYSA-ILA Med. & Clinical Serv. Fund, 520 U.S. 806,

809 (1997), and “unhelpful,” Travelers, 514 U.S. at

656, remarking that “[iJf ‘relate to’ were taken to

extend to the furthest stretch of its indeterminacy,

then for all practical purposes pre-emption would

never run its course, for really, universally, relations

stop nowhere.” Id. at 655; accord Calif. Div. of Labor

Standards Enforcement v. Dillingham Const., N.A.,

Inc., 519 U.S. 316, 335 (1997) (Scalia, J. concurring)

App. 64

(“since ... everything is related to everything else”,

suggesting that applying “relate to” literally had

failed).

In Travelers, the Court placed ERISA preemption

on the same footing as its other preemption cases,

beginning with the presumption that Congress does

not intend to supplant state law, particularly in areas

of traditional state

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