Amicus Curiae Brief — Gobeille v. Liberty Mut. Ins. Co., 135 S. Ct. 885 (2014) (No. 14-181)

No. 14-181

In the Supreme Court of the United States

ALFRED GOBEILLE, IN HIS OFFICIAL CAPACITY AS

CHAIR OF THE VERMONT GREEN MOUNTAIN CARE

BOARD,

Petitioner,

V.

LIBERTY MUTUAL INSURANCE COMPANY,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals for the Second Circuit

BRIEF OF AMICI CURIAE AMERICAN MEDICAL

ASSOCIATION AND VERMONT MEDICAL SOCIETY IN

SUPPORT OF PETITIONER

Mark E. Rust

Counsel of Record

BARNES & THORNBURG LLP

One N. Wacker Drive, Suite 4400

Chicago, IL 6060

(312) 357-1313

Brian E. Casey

100 North Michigan St., Suite 700

South Bend, IN 46601

(574) 233-1171

Counsel for Amici Curiae

(i)

QUESTION PRESENTED

Whether ERISA’s preemption provision, 29 U.S.C.

§1144(a), preempts application of a state health-care

data collection statute to a self-funded ERISA welfare

benefit plan when the law does not regulate the

financial disclosures required by ERISA, and, more

generally, whether this Court should modify its

analysis for determining whether state laws “relate

to” employee benefit plans under Section 1144(a).

(ii)

TABLE OF CONTENTS

Page

EERE a ene rane a mE i

yg EE ii

TABLE OF CITED AUTHORITIES .......................... iv

INTEREST OF AMICI CURTAE...............:000cccceeeeeeeeee l

SUMMARY OF ARGUMENT. .................c.ccccsecscccseesees 5

yA ERIE SS EERE EN nO Soe eS 9

I. Independently Created And

Maintained Medical Claims

Databases Serve Important Health

EET )

A. The APCD Statute’s Text And

Purpose Demonstrate It

Regulates Health Care. ...................... g

B. State Medical Data Collection

Efforts Are General Health

i ccenninion 13

C. Independent Medical Claims

Databases Are Particularly

Important For Health Care

Pricing Transparency ....................... 15

II. ERISA Does Not Preempt The

Vermont Statute Because It Does

Not “Relate To” Employee Benefit

Plans Under ERISA §514(a).................... 19

ili

A. The Vermont Statute Regulates

Health Care, A Traditional

ES 20

B. The Vermont Statute Does Not

“Relate To” ERISA Plans.................. 21

III. ERISA §514(a) Preemption Should

RETA SES ir ea coe 28

A. ERISA Regulates Employee

Benefit Plans And

Relationships Between Plans

And Other ERISA-Regulated

ER LER TANOC TE En eae oe eae 30

B. The Scope Of ERISA §514(a)

“Relate To” Field Preemption

Should Coincide With ERISA’s

GEE ces I dos Ff a 33

C. State Laws Regulating Health

Care Are Outside ERISA’s

Domain And So Outside The

Field ERISA §514(a) Preempts. ....... 36

IUD sniceccscssinsnaienistisineuninhedeitvunnlamaninentiin’ 37

Page(s)

CASES

Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co.,

662 F.3d 376 (5th Cir. 2011), reinstated en banc,

bs -. | Tok | | . een 32

American Med. Ass’n v. United HealthCare,

588 F.Supp.2d 432 (S.D.N.Y. 2008)...........0000..... 16

Blue Cross of Cal. v. Anesthesia Care Assocs. Med.

Group, Inc.,

187 F.3d 1045 (9th Cir. 1999) ..0.00.0...ccccccc eee eeeeee 32

Boggs v. Boggs,

rs 24, 25

Bullock v. Equitable Life Assur. Soc. of U.S.,

BD Fe Ge Gee Gs BD nccciccccccccticccecvesonsnscces 31

California Div. of Labor Standards Enforcement v.

Dillingham Constr., N.A., Inc.,

I el passim

DeBuono v. NYSA-ILA Med. & Clinical Servs. Fund,

I a seseieesaunian passim

Egelhoff v. Egelhoff,

Be Es le ID seiceiicccccccccesiecnesinisesesees 23, 25, 34

FMC Corp. v. Holliday,

a eepaiines 27

.

Fort Halifax Packing Co. v. Coyne,

SEE TE el Oe 25, 36

Gerosa v. Savasta & Co.,

329 F.3d 317 (2d Cir. 2003) oo... cccececeeceeeeeeeeeee 32

Gibbons v. Ogden,

BB UB. 1 CUGBA) ...ccccccccccccccccccccccccscccccsscscccccccccss os 14

Hattem v. Schwarzenegger,

449 F.3d 423 (2d Cir. 2006) ..............c.ccceeeeeeeees 31

Hillsborough Cty. v. Automated Med. Labs., Inc.,

NN IE sccseddaciasaiiindcbiseiticicniinicciniicienionn 20

Ingersoll-Rand Co. v. McClendon,

| ee 6

Liberty Mutual Ins. Co. v. Donegan,

746 F.3d 497 (2d Cir. 2014) .000...00cccccccecee. passim

Lordmann Enterp., Inc. v. Equicor, Inc.,

32 F.3d 1529 (11th Cir. 1994) oo... eee es 32

Mackey v. Lanier Collection Agency & Serv., Inc.,

I MD beccccacccecerviitosscceicsiaisinarevnsweususes 35

Marx v. General Revenue Corp.,

Ee nD 11

Massachusetts v. Morash,

LSE ee eee ae 23

Metropolitan Life Ins. Co. v. Massachusetts,

a ssiedemouinnions 11, 28

Morstein v. National Insurance Services, Inc.,

OB P.B TUG Ci Reis Cle. BODE ncccccecoscvscncncssssscoscces 32

New York State Conf Of Blue Cross & Blue Shield

Plans v. Travelers Ins. Co.,

ORG Te Be ciiciccicinccnserntetiiiteetnanen passim

Pegram v. Herdrich,

4 5 i. RRS enenen ere Soe passim

Penny/OhImann/Nieman, Inc. v. Miami Valley

Pension Corp.,

399 F.3d 692 (6th Cir. 2005) 20.00.00... ceeeeeeeeeee 32

Rush Prudential HMO, Inc. v. Moran,

fo | eT eeerenameet 21, 28

Self-Insurance Institute of America, Inc. v. Snyder,

761 F.3d 631 (6th Cir. 2014) woes 24

Shaw v. Delta Air Lines, Inc.,

I Te, I icra bihrcitecnsindeis Sle encenieedncaaee 21

Stevenson v. Bank of N_Y. Co.,

609 F.3d 56 (2d Cir. 2010) .............................0.00 31

UNUM Life Ins. Co. v. Ward,

IG I icc enicrcvenictaienisteesieaniiecmadaten 34

STATUTES

SD OA Be Be OE BD: sictertciicinitanactinclaeent passim

PURE PII cnc ecko 6

a saeetioes 30, 31, 33

| 22, 26

EE 22, 26

A passim

TE 7, 24

SE 31

A ee 32

ces 32

me 32

SP RMN s HII OD cc cccccccccvcecscccccsccoconcccsecccscocecs 31, 32

Is 33

29 U.S.C. § 1102Ca)(1) nn... cece ccccccccecsscecscsceeee 30

RE 30

i ciesttinmauncemmens 32

a 32

ET 32

a 32

a siissesmeeumees 32

ee 32

SEE a 30

SE 31

a eee 33

ET 31

Ese ee 33

IRE ESSE ln oi Se! 30, 31

ee Oe Oi ccbeictniterinrncsinincsennsitinnaiinnmsccnciiien passim

29 U.S.C. § 1144(DM2)MA)........eeeececccesesccecensenee passim

i |g LESTER ene aint wana 5

2 ee eee 10

nT iis bi niiccanadicecedonieaies 10

Vt. Stat. Ann. tit. 18, §9401(a) ......0..0 ee. 9, 10, 12

Vt. Stat. Ann. tit. 18, §9410(a)(2MA) ooo... cece 3

Vt. Stat. Ann. tit. 18, §9410(c).....00... ce. 11, 20, 22

Vt. Stat. Ann. tit. 18, §9410(h)(1)(C)........ oe... 11, 20

Vt. Stat. Ann. tit. 18, §9410(h)(3)(B)..............0.0000002. 10

Vt. Stat. Ann. tit. 18, §9410G)(1)......0..0.. ce. 10, 22

REGULATIONS

| STEERS SER EES SIS Ne 30

ST RC SE wees ee ee 7

| | SES Seeeaenaanae von nec 7

29 C.P.R. $BEBO.104-446aL) .............ccceccercsscssccscesseees 7

29 C.F.R. §2520.104-44(b)(1) ....................ccecceccecceseeeees 7

Regulation H-2008-01, §3(X). ...........ccccccccceeeseeeeeeees 10

LEGISLATIVE HISTORY

Deceptive Health Insurance Industry Practices- Are

Consumers Getting What They Paid For? — Part I Be-

fore the S. Comm. on Commerce, Science, and Trans-

portation, 111th Cong. (March 26, 2009).......... passim

ix

OTHER AUTHORITIES

Mark R. Chassin, MD, et al, How Coronary Angi-

ography Is Used: Clinical Determinants of Appropri-

ateness, 258 Journal of the American Medical Ass’n

* F | § 5 Seo 13

Employee Benefit Research Institute, Se/f-Jnsured

Health Plans: State Variation and Recent Trends by

I I i cineliienenaiaaa ialeticbiianeaeniiandials 5

National Ass’n of Health Data Organizations, Key

State Health Care Databases for Improving Health

Care Delivery (February 2011) ..........ccccccccccceeeeeeeeees 12

Sean Nicholson, Research Opportunities of a New

Private Health Insurance Claims Data Set............. 19

Office of the Attorney General, State of New York,

Health Care Report — The Consumer Reimbursement

System is Code Blue (January 13, 2009)......16, 17, 18

Wendy E. Parmet, Hea/th Care and the Constitution:

Public Health and the Role of the State in the Fram-

ing Era, 20 HASTINGS CONST. L.Q. 267 (1993)......... 14

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

Payer Claims Databases: A Primer for States (Janu-

I ic 11

Edward P. Richards, The Police Power and the Regu-

lation of Medical Practice: A Historical Review and

Guide for Medical Licensing Board Regulation of

Physicians in ERISA-Qualified Managed Care Organ-

izations, 8 ANNALS OF HEALTH LAW 201 (1999)....... 14

Staff Report for Chairman Rockefeller, Underpay-

ments to Consumers By The Health Insurance Indus-

try, S. Comm. on Commerce, Science, and Transpor-

x

tation, Office of Oversight and Investigations (June

Ne mai 17, 18

U.S. Gov’t Accountability Office, Health Care Price

Transparency: Meaningful Price Information Is Diffi-

cult for Consumers to Obtain Prior to Receiving Care,

GAO-11-791 (September 2011) ..............ccccccccceeeeeeeee 12

Ariel L. Zimmerman, Evidence-Based Medicine: A

Short History of a Modern Medical Movement, AMA

Journal of Ethics vol. 15, No. 1 January 2013) ).... 12

INTEREST OF AMICT CURIAE

The American Medical Association (“AMA”) and

the Vermont Medical Society (“VMS”) submit this

brief as amici curiae in support of Petitioner Alfred

Gobeille, in his official capacity as Chair of the Ver-

mont Green Mountain Care Board (“Board”).!

The AMA is the largest professional association of

physicians, residents, and medical students in the

United States. Through state and specialty medical

societies and other physician groups in the AMA’s

House of Delegates, substantially all United States

physicians, residents, and medical students are rep-

resented in the AMA's policy-making process. The

AMA promotes the science and art of medicine and

the betterment of public health. AMA members prac-

tice in every medical specialty in all fifty states.

For over a decade, the AMA has litigated to ad-

dress and correct the flawed databases used by the

insurance industry to determine the amounts pa-

tients are reimbursed when they obtain medical care

from providers outside their health benefit plan’s

! Pursuant to Rule 37.6, amici state that no counsel for a party

authored this brief in whole or in part. Amicus AMA joins this

brief on its own behalf and as a representative of the Litigation

Center of the AMA and the State Medical Societies (“Litigation

Center”). No entity or person, other than amici, its members,

and the Litigation Center made a monetary contribution to the

preparation of this brief. Pursuant to Rule 37.3, the parties

have consented to the filing of this brief. The parties’ letters of

consent have been lodged with the Court.

2

network. These efforts have led to, inter alia, inves”

tigations by the Attorney General for the State of

New York and the United States Senate, substantial

reform in insurers’ out-of-network reimbursement

practices, and hundreds of millions of dollars in set-

tlements from the insurance industry.

More generally, the AMA works for its members to

establish equitable procedures and relationships with

the nation’s health insurers and third-party adminis-

trators regarding issues affecting the economic as-

pects of health care and the practice of medicine.

VMS is a professional association representing

over 2,000 physicians, residents, and medical stu-

dents in Vermont. Founded over 200 years ago, VMS

is dedicated to advancing the practice of medicine by

advocating for Vermont’s doctors and their patients

and communities. VMS’ mission is to serve the public

by facilitating and enhancing physicians’ individual

and collective commitments, capabilities, and efforts

to improve the quality of life for Vermonters by

providing accessible, appropriate health care services.

VMS physicians represent every medical specialty in

every practice setting.

The Litigation Center, which the AMA and VMS

represent here, expresses the viewpoint of organized

medicine in the courts consistent with the AMA’s pol-

icies and objectives.

eke

Historically, States have regulated both the clini-

cal and economic aspects of the provision of health

care, which are often “inextricably mixed.” Pegram v.

Herdrich, 530 U.S. 211, 229 (2000). The Employee

Retirement Income Security Act of 1974, 29 U.S.C.

3

§§1001 et seg. (“ERISA”), on the other hand, does not

regulate health care, including the practice of medi-

cine. Therefore, insofar as ERISA preempts state

regulation in this area, a regulatory void inevitably is

created. Where to draw the line between areas of

traditional state regulation, like health care, and the

exclusive federal regulation of employee benefit plans

has bedeviled lower courts and even this Court seem-

ingly since ERISA’s enactment.

This case presents another instance of this conun-

drum. It examines whether Vermont’s effort to cre-

ate an all-payer claims database (“APCD”) to compile

and analyze medical claims information from all

health-care payers and providers within the State

“relates to” ERISA-regulated employee benefit plans.

Amici believe, under this Court’s current jurispru-

dence, Vermont’s statute does not “relate to” employ-

ee benefit plans. APCDs, like Vermont’s, and other

independent databases of medical claims information,

provide important information to consumers, provid-

ers, and policymakers about health care options, out-

comes and costs that enable these stakeholders to

make more informed decisions about obtaining and

paying for medical treatment. See Vt. Stat. Ann. tit.

18, §9410(a)(2)(A) (statute provides “transparent

health care price information, quality information,”

and other information to “empower” individuals to

“make economically sound and medically appropriate

decisions”). As such, statutes creating these data-

bases fall within the ambit of “general health care

regulation, which historically has been a matter of

local concern.” New York State Conf. Of Blue Cross

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

645, 661 (1995) (“Travelers’). Therefore, under this

4

Court’s ERISA preemption analysis, Vermont’s stat-

ute should not be preempted by ERISA.

This case also highlights the difficulty lower

courts, state legislatures, and practitioners have had

with ERISA’s preemptive scope since its enactment in

1974, even after the Court’s effort to re-frame that

inquiry twenty years ago in Travelers. This case pro-

vides the chance to underscore that “[nlothing in the

language of [ERISA] or the context of its passage in-

dicates that Congress chose to displace general

health care regulation.” /d; De Buono v. NYSA-ILA

Med. & Clinical Servs. Fund, 520 U.S. 806, 814

(1997) (“historic police powers of the State include the

regulation of matters of health and safety”).

Cases like this are particularly important to phy-

sicians and other medical providers because their

profession stands at the intersection of the traditional

exercise of a State’s police power to regulate medicine

and contractual relationships and the increasing

dominance of the economics of medicine by health

benefit plans which often are regulated by ERISA.

The interplay between these regulatory regimes, and

particularly ERISA preemption, can have profound

economic consequences on the medical profession,

particularly as the proportion of workers with health

coverage through self-insured (or self-funded) plans

increases.”

2 The percentage of private-sector employees in self-insured

plans has increased from 40.9% in 1998 to 58.2% in 2013. Most

of that increase has been private sector employees in firms of

1,000 employees or more. In 1998, 57% of those employees had

health coverage through self-insured plans. In 2013, that figure

5

Amici suggest that this case allows the Court to

re-examine Section 514(a) and articulate that ERISA

§514(a) is really another manifestation of traditional

field preemption which simply provides that ERISA

supersedes state laws to the extent they “relate to”

covered employee benefit plans. Doing so could avoid

unnecessary regulatory gaps like the one created by

the Second Circuit’s decision.

Amici believe ERISA §514 should be reexamined

to establish properly the line between regulation of

health care (and other traditional state regulatory

areas) and the exclusively federal regulation of em-

ployee benefit plans. Amuci propose that the Court

refine what it means for a state law to “relate to” an

employee benefit plan. 29 U.S.C. §1144(a). Amici

suggest an analysis that will provide clearer guidance

for lower courts faced with ERISA §514(a) preemp-

tion issues and will properly restrict field preemption

to the area of ERISA’s regulatory concerns.

SUMMARY OF ARGUMENT

This case highlights the need to closely examine

ERISA’s text along with its underlying structure and

objectives when deciding whether a state law “re-

late[s] to” an employee benefit plan. Congress’ goal

rose to 85.6%. See Employee Benefit Research Institute, Se/f

Insured Health Plans: State Variation and Recent Trends by

Firm Size, 1996-2013, at 7-8. As discussed infra at fn.11, while

insured plans remain subject to state insurance regulation

through ERISA’s “insurance savings clause,” 29 U.S.C.

§1144(b)(2)(A), self-funded plans are not if that regulation “re-

lates to” employee benefit plans because of ERISA’s “deemer

clause.” 29 U.S.C. §1144(b)(2)(B).

6

in enacting ERISA was to provide: (1) disclosure and

other safeguards for establishing, operating, and ad-

ministering employee benefit plans; and (2) minimum

standards to ensure the equitable character of such

plans and their financial soundness. 29 U.S.C.

§1001(a).

ERISA’s preemption provision, ERISA §514(a),

states that ERISA “shall supersede any and all State

laws insofar as they ... relate to any employee benefit

plan.” 29 U.S.C. §1144(a). With this provision, Con-

gress intended “to ensure that plans and plan spon-

sors would be subject to a uniform body of benefits

law,” “minimize the administrative and financial

burden of complying with conflicting directives

among States or between States and the Federal

Government,” and prevent “the potential for conflict

in substantive law ... requiring the tailoring of plans

and employer conduct to the peculiarities of the law

of each jurisdiction.” Travelers, 514 U.S. at 656-57

(citing Ingersoll-Rand Co. v. McClendon, 498 U.S.

133, 142 (1990)).

The Second Circuit held, 2-1, that ERISA

preempts application of Vermont’s APCD statute to

Liberty Mutual’s self-funded health benefit plan, as

administered by Blue Cross Blue Shield of Massachu-

setts (“Blue Cross”). Liberty Mutual Ins. Co. v. Don-

egan, 746 F.3d 497, 500 (2d Cir. 2014). It concluded

that the statute did not regulate “health care” but in-

stead required reporting by various health care-

related entities, including third-party administrators

(“TPAs”) of self-funded ERISA plans, like Blue Cross,

which, according to the court, intruded on “one of

ERISA’s core functions.” Jd. at 506, n.6, 510. Be-

cause of the administrative “burdens” the majority

7

surmised the statute imposed, which presumably

created “financial burdens that will be passed from

the TPA to the Plan and from the Plan to the benefi-

ciaries,” zd. at 510, n.10, the majority concluded that

the APCD statute was preempted, as applied to

ERISA-regulated self-funded plans. Jd. at 500.

In dissent, Judge Straub concluded that the court

should have applied the Travelers presumption

against preemption. Donegan, 746 F.3d at 512-13

(Straub, J., dissenting). He then explained that the

majority “misseld] the nuance of what ‘reporting’

means in the context of ERISA, and ignoreld] the

case law’s focus on whether the administration of

benefits to beneficiaries is impacted,” which Liberty

Mutual failed to show. Jd. at 512. The “reporting”

Vermont’s statute required is “wholly distinct” from

ERISA’s reporting requirements in 29 U.S.C. §§1020-

30, which focus on the financial soundness of ERISA

plans. Jd. at 514.3 By contrast, Vermont sought “af-

ter-the-fact information which plan administrators

3 Furthermore, the Secretary of Labor has exempted welfare

benefit plans from the reporting requirements at issue if the

plan pays benefits from the plan sponsor's general assets (as

most do). See 29 U.S.C. §1024(a)(3) (“The Secretary may by

regulation exempt any welfare benefit plan from all or part of

the reporting and disclosure requirements of this subchapter.”):

29 C.F.R. §2520.104-44(a)(1), (b)(1) (exemption where plan bene-

fits are paid “solely from the general assets of the employer”):

id., §2520.103-1 (annual report requirement exemption); id,

§2520.104-20 (same). Liberty Mutual’s Plan is self-funded, and

its “health care claims are paid from Liberty Mutual's general

assets.” Donegan, 746 F.3d at 501. Therefore, the Plan is gen-

erally exempt from the reporting obligations that required

preemption.

8

[like Blue Cross] already have in their possession”

and which Blue Cross was not only “happy to pro-

vide” but which it did provide for other clients. Jd. at

515. Any administrative or financial burdens im-

posed on the Plan’s TPA, or derivatively on the Plan

(because an ERISA plan and its insurer or TPA are

distinct), were simply “indirect economic effects” that

do not “preclude uniform administration practice or

the provision of a uniform interstate benefit pack-

age.” Id. (quoting Travelers, 514 U.S. at 660). Be-

cause the APCD statute “regulates health care within

that state, while imposing a purely clerical burden on

ERISA plans,” the dissent concluded that Vermont’s

statute was not preempted. Jd. at 518.

The dissent’s view follows this Court’s jurispru-

dence, particularly since Travelers. The statute is

simply a “general health care regulation” that regu-

lates numerous participants in the health care indus-

try, including physicians (and other health care pro-

fessionals) and “health insurers” as defined by the

Vermont legislature. The Vermont statute has, at

most, the “indirect” effect on employee benefit plans

this Court has held does not require ERISA §514(a)

preemption. 7ravelers, 514 U.S. at 659.

For these reasons, amici urge this Court to reverse

the Second Circuit’s judgment. Amuci also suggest

that this Court re-articulate, and perhaps reformu-

late, its interpretation of ERISA §514(a) preemption

to correspond more closely to traditional field

preemption. Adopting such a methodology will fulfill

ERISA’s regulatory concerns while better allowing

states to regulate traditional areas of state concern,

including health care and avoid creating regulatory

gaps where Congress did not intend to create them.

9

ARGUMENT

5 Independently Created And Maintained

Medical Claims Databases Serve Important

Health Care Functions.

According to the majority, Vermont’s APCD stat>

ute “doles] not regulate the safe and effective provi-

sion of health care services, which is among the

states’ historic police powers.” Donegan, 746 F.3d at

506, n.8. This conclusion served as a springboard for

the majority's conclusion that the statute was

preempted. Jd. That view of the statute, however,

glosses over the statutory language, the Vermont leg-

islature’s purpose, and the legal environment in

which these databases were created. From these per-

spectives, the APCD statute serves multiple im-

portant health care functions and fits squarely within

the State’s “historic police powers” to regulate “mat-

ters of health and safety.” De Buono, 520 U.S. at 814.

A. The APCD Statute’s Text And Purpose

Demonstrate It Regulates Health Care.

Title 18 of Vermont’s statutes is entitled “Health.”

Vt. Stat. Ann. tit. 18. According to Vermont’s legisla-

ture, “[it] is the policy of the state of Vermont that

health care is a public good for all Vermonters and to

ensure that all residents have access to quality

health services at costs that are affordable.” /d.,

§9401(a). The legislature identified numerous over-

arching principles regarding health care in Vermont,

including: (1) “[elvery Vermonter should be able to

choose his or her health care providers”; (2) health

care costs should be “transparent and easy to under-

stand”; (3) “(t]he financing of health care in Vermont

10

must be sufficient, fair, predictable, transparent, sus-

tainable, and shared equitably”; and (4) “[t]he system

must consider the effects of payment reform on indi-

viduals and on health care professionals.” /d.,

§§9371(5), (6), (11), and (12).

Pursuant to tBese policy goals, the legislature cre-

ated the Board to improve citizens’ health, control

health care costs, “enhance[] the patient and health

care professional experience of care,” retain health

care professionals, and simplify health care financing

and delivery. Jd., §9372. The Board’s responsibilities

include “establishling] and maintainling] a unified

health care database” to assist the Board and Peti-

tioner in “improving the quality and affordability of

patient health care and health care coverage,” “im-

proving patient outcomes,” and “providing infor-

mation to consumers and purchasers of health care.”

Id., §9410(a)(1)(C)(F). The database is a “resource

for insurers, employers, providers, purchasers of

health care, and state agencies to continuously re-

view health care utilization, expenditures, and per-

formance in Vermont.” /d., §9410(h)(3)(B).

The APCD statute requires “[hlealth insurers,

health care providers, health care facilities, and gov-

ernmental agencies”‘ to electronically submit “health

4 “Health insurer” includes “any third party administrator, any

pharmacy benefit manager, any entity conducting administra-

tive services for business, and any other similar entity with

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

mation relating to health care provided to Vermont resident|(s].”

Td., §9410G)(1)(B). The statute imposes no obligation directly on

employee benefit plans. Regulation H-2008-01, §3(X). The

Court has distinguished repeatedly between regulating plans

11

insurance claims and enrollment information used by

health insurers” for services provided to Vermont res-

idents; “other information relating to health care

costs, prices, quality, utilization or resources”; and

“member, subscriber, or policyholder information

necessary to determine third party liability for bene-

fits provided.” Jd., §§9410(c)(1), (3); §9410(h)(1)(C).

It is difficult to square the majority's conclusion

that the statute “doles] not regulate the safe and ef-

fective provision of health care services,” Donegan,

746 F.3d at 506, n.8, with the Vermont legislature’s

expressed explanation of the APCD statute’s purpose

within its text, along with the overall statutory

framework regulating health care. Marx v. Genera/

Revenue Corp., 133 S. Ct. 1166, 1173 (2013) (“As in

all statutory construction cases, we assume that the

ordinary meaning of the statutory language accurate-

ly expresses the legislative purpose.”) (internal alter-

ations omitted).

Other States’ experiences creating APCDs confirm

that they improve health care. They “fill critical in-

formation gaps,” “support health care and payment

reform initiatives,” and “address the need for trans-

parency in health care” to help consumers, providers,

and policymakers make better decisions. Jd. APCDs

and regulating entities, like insurers or service providers, for

plans. See, e.g., Metropolitan Life Ins. Co. v. Massachusetts,

471 U.S. 724, 747 (1985); see also infra, fn. 11.

5 Jo Porter, et al, APCD Council, The Basics of All-Payer Claims

Databases: A Primer for States, at 1 (January 2014). Maine im-

plemented the first APCD in 2003. By 2010, nine more states,

including Vermont, did. /d.

12

are a “rapidly emerging ... essential source of infor-

mation about outpatient services and healthcare

payments.” National Ass’n of Health Data Organiza-

tions, Key State Health Care Databases for Improv-

ing Health Care Delivery, at 2 (February 2011). They

“describe the health care use of the insured popula-

tion” and “provide information about actual payments

— both patient liability and provider payment.” /d.

According to experts, APCDs help “capture” infor-

mation which States use to “(mleasurle] and im-

provie] health system performance, both clinical and

financial, and controll] costs. /d. at 4.

The information APCDs compile also provides im-

portant data for the evidence-based medicine meth-

odology providers use to help “improve[] patient out-

comes.” Vt. Stat. Ann. tit. 18, §9401(a)(1)(C); Ariel L.

Zimmerman, Evidence-Based Medicine: A Short His-

tory of a Modern Medical Movement, 15 AMA Journal

of Ethics, No. 1: 71-76 (January 2013) (describing im-

portance of quantification and statistics). For exam-

ple, such evidence helps compare how particular med-

ical procedures are used in different populations or

geographic areas, which helps practitioners choose

appropriate courses of treatment for their patients.

See Mark R. Chassin, MD, et al, How Coronary An-

giography Is Used: Clinical Determinants of Appro-

priateness, 258 Journal of the American Medical

Ass’n No. 18, 2543 (Nov. 13, 1987).

APCDs also help consumers and providers address

the opacity surrounding payment for health care.

Amici, and the federal government, have long assert-

ed that increasing pricing transparency enables more

efficient delivery of health care. See U.S. Gov't Ac

countability Office, Health Care Price Transparency:

13

Meaningful Price Information Is Difficult for Con-

sumers to Obtain Prior to Receiving Care, GAQ-11-

791, at 28 (September 2011) (“Transparent health

care price information — especially estimates of con-

sumers’ complete costs — can be difficult for consum-

ers to obtain prior to receiving care.”).

B. State Medical Data Collection Efforts

Are General Health Care Regulation.

To support its position that ERISA preempted the

APCD statute, the majority stated, without citation,

that “state health data collection laws do not regulate

the safe and effective provision of health care ser-

vices,” and “collecting data can hardly be deemed ‘his-

toric” because APCD laws were only recently adopt-

ed. Donegan, 746 F.3d at 506, n.8. This focuses the

inquiry too narrowly. Even the majority recognized

that, when state law “operates in a field that has

been traditionally occupied by the States,” or when

the State employs its “historic police powers” to regu-

late “matters of health and safety,” id. (quoting De

Buono, 520 U.S. at 814), state law presumptively is

not preempted. The majority simply believed "state

health data collection laws,” which require collecting

data about medical conditions, practices, and out-

comes, did not qualify.

In actuality, health care regulation sweeps more

broadly than simply “regulatling] the safe and effec-

tive provision of health care services.” Donegan, 746

F.3d at 506, n.8. Title 18, in its entirety, is Vermont’s

effort to regulate health care within its borders. Its

provisions contain everything from public health reg-

ulation, to the Board’s responsibilities, to health facil-

14

ity planning, to hospital budget review. See Vt. Stat.

Ann. tit. 18.

As the dissent explained, the APCD statute “oper-

ates in [the] field” of health and safety at least as

much as “a revenue raising measure” directed at pa-

tient services by certain health care providers. Done-

gan, 746 F.3d at 512-13 (quoting De Buono, 520 U.S.

at 814). The same logic applies for the unpreempted

statute in Travelers which made health insurance

from Blue Cross entities more cost-effective and the

entities more financially viable. Travelers, 514 U.S.

at 659. Both these statutes are “general health care

regulation” Congress did not intend ERISA to dis-

place. /d. at 661.

However, even on its own terms, the majority’s ra-

tionale conflicts with the historical record. States

(and colonies) regulated health care and the medical

profession according to their police power since before

the Revolution. See Edward P. Richards, The Police

Power and the Regulation of Medical Practice: A His-

torical Review and Guide for Medical Licensing

Board Regulation of Physicians in ERISA-Qualified

Managed Care Organizations, 8 ANNALS OF HEALTH

LAW 201, 202-03 (1999); Gibbons v. Ogden, 22 U.S. 1,

205 (1824) (“quarantine and health laws ... are con-

sidered as flowing from the acknowledged power of a

State, to provide for the health of its citizens.”). Even

before the Constitution, state and local regulation of

health care included gathering information about cit-

izens’ medical conditions to protect and improve pub-

lic health, such as to determine the need for quaran-

tines, and the efficacy of certain medical treatments,

like inoculation. See Wendy E. Parmet, Health Care

and the Constitution: Public Health and the Role of

15

the State in the Framing Era, 20 HASTINGS CONST.

L.Q. 267, 287-92 (1993). Historically, then, collecting

health care data falls within even a narrow view of

“general health care regulation.”

C. Independent Medical Claims Databases

Are Particularly Important For Health

Care Pricing Transparency

Independently created and maintained medical

claims databases, like Vermont’s APCD, also increase

transparency for health care costs which benefits

both health care consumers and providers. Amic/s

litigation experience demonstrates the need for such

independently maintained databases. Indeed, amic/s

experience, along with the 2008 New York Attorney

General’s Office’s “industry-wide investigation” into

health insurance industry practices concluding that

the health insurance industry systematically under-

paid benefits to “over 100 million Americans” who re-

ceived out-of-network medical care, potentially

spurred the subsequent proliferation of APCD stat-

utes like Vermont’s. Deceptive Health Insurance In-

dustry Practices: Are Consumers Getting What They

Paid For? — Part I Before the S. Comm. on Commerce,

Science, and Transportation, 111th Cong. 4-5 (March

26, 2009) (“Deceptive Practices, Pt. [’) (statement of

Linda A. Lacewell, Counsel, Office of the New York

Attorney General).

In 2000, amicus AMA and others filed a class-

action against United HealthCare (“UHC”), the na-

tion’s second largest health insurer, and its wholly-

owned subsidiary, Ingenix, asserting that insurers

systematically relied on skewed data, created and

maintained in an Ingenix database, to determine out-

16

of-network payment rates to patients or their provid-

ers. See Deceptive Practices, Pt. I, supra, at 6, 13

(statement of Dr. Nancy H. Nielsen, President, AMA);

American Med. Ass’n v. United HealthCare, 588

F.Supp.2d 432 (S.D.N.Y. 2008). When consumers are

reimbursed, or providers are paid, for out-of-network

services, insurers (or plans) pay them a percentage of

the usual, customary, and reasonable (“UCR”) rate

providers charge when they have not negotiated a

lower in-network rate. Deceptive Practices, Pt. I, su-

pra, at 5, 7. The consumer then typically remains re-

sponsible for the balance of the bill. Jd. at 7.

At the time, this database was essentially the only

national database of information about medical

claims and charges. Insurers provided data for the

database which was then used by the insurance in-

dustry to determine the UCR rates on which insurers

would base their provider payments. Plaintiffs al-

leged that this data was inaccurate and manipulated

to artificially reduce rates insurers paid by deleting

high charges, using outdated data, and co-mingling

retail charges with lower, negotiated rates. /d. at 13.

The AMA’s litigation prompted investigations by

the New York Attorney General’s office in 2008 and a

United States Senate subcommittee in 2009. Each

reached scathing conclusions about the health insur-

ance industry’s use of the flawed database. See Office

of the Attorney General, State of New York, Hea/th

6 In 2009, 70% of insured Americans had a health benefit plan

that allowed them to choose an out-of-network doctor, paid for

with higher premiums and usually higher co-pays or co-

insurance. /d. at 5.

17

Care Report — The Consumer Reimbursement System

is Code Blue (January 13, 2009);7 Staff Report for

Chairman Rockefeller, Underpayments to Consumers

By The Health Insurance Industry, S. Comm. on

Commerce, Science, and Transportation, Office of

Oversight and Investigations (June 24, 2009) (“Sen-

ate Report’).

The New York Attorney General found that the

health insurance “industry useld] a conflict-laden da-

tabase riddled with errors at the expense of the con-

sumer.” AG Report, supra, at 6. The database creat-

ed an “industry-wide problem” and a “rigged system”

that was “fraudulent” and “critically ill.” /d. at 6, 22.

In essence, insurers’ use of the database to determine

UCR amounts was “unreliable, inadequate, and

wrong — often forcing consumers to bear an even

greater burden of the cost of care.” Deceptive Prac-

tices, Pt. I, supra, at 8.

The Attorney General’s report concluded that in-

surers’ use of the data the industry compiled and

maintained to calculate UCR rates created “conflicts

of interest from top to bottom” because every insurer

“had a financial incentive to manipulate the data

they provided” “so that the pooled data would skew

reimbursement rates downward.” /d. at 8. The re

port ultimately found that this system resulted in,

“insurers systematically under-reimbursling] New

Yorkers” up to 20%. Jd.

The Senate Report reached similar conclusions,

finding that the industry’s database was used “to un-

7 http://www.ag.ny.gov/health-care/report (“AG Report’).

18

der-pay millions of valid insurance claims” “without

providing even the most basic information about [it]

to consumers or health care providers.” Senate Re-

port, supra, at i. Because of the data inaccuracies,

the database “consistently skewed reimbursement

rates downwards — in a direction that allowed insur-

ers to reduce their claims payments” by “as much as

30% lower” than market rates. /d. at ii.

Ultimately, insurers settled with the Attorney

General and amicus AMA for over $450 million col-

lectively. Deceptive Practices, Pt. I, supra, at 9, 13,

25. The Attorney General also required two struc

tural reforms. “First, the [UCR] rates for health care

charges should be determined by an independent

third party free of conflicts of interest, using a fair,

objective, and reliable database. ... Second, before

consumers choose an out-of-network doctor, they

should have a range or estimate of what it will cost

them. ... A website tool available to the public, show-

ing at least common health care services and the

market rates in relevant geographic areas, would

help transparency in health care.” AG Report, supra,

at 3.

The Attorney General therefore required the da-

tabase to be transferred to an independent non-profit,

FAIR Health, Inc., which would develop a “conflict-

free, robust, trusted and transparent source of data to

support the adjudication of healthcare claims and to

promote sound decision-making by all participants in

the healthcare industry.”® FAIR Health has now cre-

8 http://www fairhealthus.org/About- FH.

19

ated the National Private Insurance Claims Data-

base, the nation’s largest independent private claims

collection. See Sean Nicholson, Research Opportuni-

ties of a New Private Health Insurance Claims Data

Set. But even that only includes approximately

23.4% of national payments for privately insured pa-

tients by their insurers, to say nothing of patients in-

sured by non-private insurance or government pro-

grams, like Medicare or Medicaid. Jd. Because this

new database collects only some of the existing medi-

cal claims data nationwide, state-wide efforts, lke

Vermont’s, are more important than ever.

Il. ERISA Does Not Preempt The Vermont

Statute Because It Does Not “Relate To”

Employee Benefit Plans Under ERISA §514(a).

This Court established twenty years ago that the

“starting presumption” for ERISA §514(a)’s preemp-

tion analysis is that “Congress does not intend to

supplant state law,” especially when the “state action

[occurs] in fields of traditional state regulation,” like

health care. Travelers, 514 U.S. at 654-55. Section

514 did not “alter [the] ordinary assumption that the

historic police powers of the States were not to be su-

perseded by [ERISA],” California Div. of Labor Stds.

Enforcement v. Dillingham Constr, 519 U.S. 316, 331

(1997), absent the “clear and manifest purpose of

Congress.” Travelers, 514 U.S. at 655. Therefore,

“relates to” does not “extend to the furthest stretch of

indeterminacy.” /d.

With this starting point, the Vermont statute does

not “relate to” employee benefit plans so it is not

preempted. 29 U.S.C. §1144(a). Instead, the state

statute regulates health care — a traditional area of

20

state concern. The Vermont statute lies far afield

from ERISA’s regulatory scope and concerns.

A. The Vermont Statute Regulates Health

Care, A Traditional State Concern.

Vermont's APCD statute requires numerous par-

ticipants that provide and pay for medical care, in-

cluding “health insurers,” to submit electronically

“health insurance claims and enrollment information

used by health insurers,” information about “health

care costs, prices, quality, utilization or resources,”

and information needed to “determine third party li-

ability for benefits provided.” Vt. Stat. Ann. tit. 18,

§§9410(c)(1), (3); §9410(h)(1)(C).

As enacted, Vermont’s APCD statute falls square-

ly within the realm of “general health care regula-

tion” that remains viable despite ERISA §514(a).

This Court has explained repeatedly that “[nJothing

in the language of [ERISA] or the context of its pas-

sage indicates that Congress chose to displace gen-

eral health care regulation, which historically has

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

at 661; Pegram, 530 U.S. at 237 (“in the field of

health care, ... there is no ERISA preemption without

[a] clear manifestation of congressional purpose.”);

Hillsborough Cty. v. Automated Med. Labs., Inc., 471

U.S. 707, 719 (1985) (regulating health and safety “is

primarily, and historically, a matter of local con-

cern.”); De Buono, 520 U.S. at 808 (“hospitals operat-

ed by ERISA plans are subject to the same laws as

other hospitals.”).

This Court also has held that the economic regula-

tion of health care does not “relate to” employee bene-

fit plans pursuant to ERISA § 514(a), although such

21

regulation may have an indirect, or even direct, eco-

nomic effect on ERISA plans. Travelers, 514 U.S. at

659 (“indirect economic effect” of hospital bill sur-

charges does not “relate to” ERISA plan); De Buono,

520 U.S. at 815-16 (tax on hospital run by ERISA

plan does not “relate to” plan despite direct impact on

plan). “[Clost uniformity was almost certainly not an

object of pre-emption.” Travelers, 514 U.S. at 662.

Like the state laws in Travelers and De Buono,

the Vermont statute is another health care regulation

that at most (and only hypothetically) “increasels] the

cost of providing benefits to covered employees [and

so] will have some effect on the administration of

ERISA plans.” De Buono, 520 U.S. at 816. However,

that effect alone “simply cannot mean” that the stat-

ute “relatels] to” ERISA plans and is preempted by

ERISA §514(a). Jd. Even if “added compliance cost

... may ultimately be passed on to the ERISA plan, ...

such ‘indirect economic effects,’ are not enough to

preempt state regulation even outside of the insur-

ance context.” Rush Prudential HMO, Inc. v. Moran,

536 U.S. 355, 399, n.11 (2002) (quoting Travelers, 514

U.S. at 659).

B. The Vermont Statute Does Not “Relate

To” ERISA Plans.

“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.” Travelers, 514 U.S. at

656 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S.

85, 96-97 (1983)). “[Rleference to” only applies if a

statute “acts immediately and exclusively upon

ERISA plans” or “the existence of ERISA plans is es-

sential to the law’s operation.” Dillingham, 519 U.S.

22

at 325. Vermont’s statute applies to health care pro-

viders, government agencies, and other entities other

than health insurers (including, but not limited to

TPAs for self-funded plans like Liberty Mutual’s). Vt.

Stat. Ann. tit. 18, §§9410(c), (j)(1).° Therefore, the

statute has no impermissible “reference to” employee

benefit plans.

The question, therefore, is whether the statute

has an impermissible “connection with” such plans.

The majority concluded that the APCD statute does,

as applied to Blue Cross’ administration of Liberty

Mutual’s self-funded ERISA plan, because the statute

intruded on a “core ERISA function,” 1e., “reporting,”

which is “shielded from potentially inconsistent and

burdensome state regulation.” Donegan, 746 F.3d at

508.

The majority, however, misperceived the appro-

priate ERISA §514(a) inquiry. This Court examines

both “the objectives of the ERISA statute as a guide

to the scope of the state law that Congress under-

® Since Blue Cross provides administrative services to plans ex-

empt from ERISA (like government or church plans), those

plans are still subject to the statute. See 29 U.S.C. §§1003(b)(1),

(2). For Blue Cross’ insured plans, the APCD statute presuma-

bly is saved from preemption by the insurance savings clause.

29 U.S.C. §1144(b)(2)(A). So, multiple categories of employee

benefit plans remain subject to the APCD statute. As the record

reflects, other self-insured ERISA plans Blue Cross administers

abide by the statute voluntarily. Donegan, 746 F.3d at 515.

This further suggests that any “burden” on Blue Cross, or the

plan derivatively, is largely theoretical. It also highlights the

difference between the employee benefit plan and the TPA or

insurer that provides services or insurance to the plan.

23

stood would survive,” and “the nature of the effect of

the state law on ERISA plans,” to “determine wheth-

er [the] state law has the forbidden connection” with

ERISA plans. Egelhoff v. Egelhoff, 532 U.S. 141, 147

(2001) (quoting Dillingham, 519 U.S. at 325). Exam-

ining ERISA’s objectives and the “effect of the state

law on ERISA plans,” id, demonstrates that §514

does not preempt the APCD statute’s application to

self-insured plans.

“(In enacting ERISA, Congress’ primary concern

was with the mismanagement of funds accumulated

to finance employee benefits and the failure to pay

employee benefits from accumulated funds.” Drylling-

ham, 519 U.S. at 326-27 (quoting Massachusetts v.

Morash, 490 U.S. 107, 115 (1989)). Therefore, Con-

gress “established extensive reporting, disclosure,

and fiduciary duty requirements to insure against the

possibility that the employee’s expectation of the ben-

efit would be defeated through poor management by

the plan administrator.” Jd. (quotation omitted).

ERISA’s preemption provision addresses this pri-

mary concern by preempting several types of state

regulation, particularly state laws that “mandate[]

employee benefit structures or their administration,”

Travelers, 514 U.S. at 658, “providle] alternative en-

forcement mechanisms” for procuring plan benefits,

id., or “requirel] employers to provide certain bene-

fits” or govern the calculation of benefits. De Buono,

520 U.S. at 815. The APCD statute mandates noth-

ing like these prohibited activities.

Focusing on ERISA’s reporting requirement leads

to the same conclusion. As the dissent explained,

“under ERISA, plans must report information that

goes to the financial integrity of the plan.” Donegan,

24

746 F.3d at 514. Even this requirement is typically

“limited to the furnishing of a summary plan descrip-

tion to plan participants and an annual report to the

Secretary.” /d. (citing 29 U.S.C. §§1021-30).

The APCD statute neither addresses nor impinges

on these obligations, particularly for self-funded

plans. As an initial matter, the Secretary of Labor

has exempted Liberty Mutual’s Plan (and other wel-

fare benefit plans that pay benefits from the plan

sponsor’s general assets) from these reporting re-

quirements. See 29 U.S.C. §1024(a)(3); see also supra

at fn.3. But assuming arguendo that these reporting

requirements governed the Liberty Mutual Plan, they

are far afield from the statute’s requirement that

health insurers, including TPAs, provide “after-the-

fact information” which they “already have in their

possession.” Donegan, 746 F.3d at 515. Vermont’s

APCD statute does not ask for information about the

plan’s “financial integrity,” id. at 514, and ERISA’s

reporting requirements do not address anything like

the topics sought pursuant to the APCD statute. See

Self-Insurance Institute of America, Inc. v. Snyder,

761 F.3d 631, 638 (6th Cir. 2014) (ERISA only

preempts “state laws requiring ERISA entities to file

reports related to the plans’ financial stability”).

Therefore, there should be no preemption where

there simply is no overlap, let alone conflict,!° be-

© The lack of conflict between the APCD statute and ERISA

demonstrates that traditional conflict preemption does not ap-

ply, and the majority’s reliance on Boggs v. Boggs, 520 US. 833,

840 (1997), is misplaced. Donegan, 746 F.3d at 506, n.8 (citing

Boggs). This Court decided Boggs using conflict preemption

principles and did not “inquire whether the statutory phrase

25

tween the state and federal requirements which do

not even address the same types of information. Fort

Halifax Packing Co. v. Coyne, 482 U.S. 1, 16 (1987)

(“It would make no sense for pre-emption to clear the

way for exclusive federal regulation, for there would

be nothing to regulate.”).

Examining the “effect of the state law on ERISA

plans,” Egelhoff, 532 U.S. at 147, compels the same

conclusion. The “basic thrust of the preemption

clause ... was to avoid a multiplicity of regulation in

order to permit the nationally uniform administra-

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

at 657 The APCD statute does not impair the na-

tionally uniform administration of employee benefit

plans. As the dissent noted, “(t]he distinction be-

tween general administration and administration of

plans, claims, and benefits is important.” Donegan,

746 F.3d 516. “Many state laws may have an impact

on the administration of an ERISA plan — for exam-

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

or a law that requires companies to report employ-

ment data.” Jd. Even though “[sluch laws may im-

pose additional costs, or require additional adminis-

trative resources,” “none of these laws impact Aow

benefits are administered to beneficiaries and, there-

fore, they are not preempted by ERISA.” /d. (citing

Dillingham, 519 U.S. at 319).

Having “some effect on the administration of

ERISA plans” does not require preemption, De Buo-

‘relate to’ provides further and additional support for the pre-

emption claim.” Boggs, 520 U.S. at 841.

26

no, 520 U.S. at 816, particularly when the law simply

“alters the incentives, but does not dictate the choic-

es, facing ERISA plans.” Dillingham, 519 U.S. at

334. This is particularly so for economic “burdens.”

As discussed in Travelers, imposing indirect economic

costs on ERISA plans does not merit preemption.

Only if the “state law might produce such acute, albe-

it indirect, economic effects, by intent or otherwise, as

to force an ERISA plan to adopt a certain scheme of

substantive coverage or effectively restrict its choice

of insurers,” would the state law be pre-empted.

Travelers, 514 U.S. at 668.

Here, there is no evidence, except rhetorical, of

burden, let alone evidence that the APCD statute

“force[s] an ERISA plan to adopt a certain scheme or

substantive coverage,” id., or “dictate[s] the choices”

of ERISA plans. Dillingham, 519 U.S. at 334.

To the contrary, the evidence showed that Blue

Cross (and other similarly-situated TPAs) “already

have in their possession” the required information.

Donegan, 746 F.3d at 515 (Straub, J., dissenting).

Indeed, Blue Cross is “happy to provide the data

Vermont has asked for, and it does so for other cli-

ents.” Id. Blue Cross also presumably provides the

same type of information for its insured plans (be-

cause of ERISA’s insurance savings clause, 29 U.S.C.

§1144(b)(2)(A)), or for plans exempt from ERISA, like

church plans or governmental plans. 29 U.S.C.

§§1003(b)(1), (2). Thus, it would plausibly create

more “burden” on a TPA/insurer like Blue Cross to

exempt the self-insured plans it administers from the

statute’s requirements while requiring those same

obligations for its insured and ERISA-exempt plans.

27

It is also important to understand modern-day

commercial realities. The unsubstantiated “burden”

about which Liberty Mutual complains (since Blue

Cross does not complain about it) does not involve col-

lecting new information, creating new records, or

amassing, compiling, and retaining piles of paper

documents that would not otherwise be generated.

Rather, it involves simply uploading digital docu-

ments that health care providers and insurers (or

plan TPAs) already have to the Vermont database’s

website. Donegan, 746 F.3d at 515. Health provid:

ers and insurers perform virtually the same tasks,

with these same records, countless times daily as

providers submit claims for payment electronically to

health insurer/TPAs and insurer/TPAs communicate

with providers regarding these claims and/or elec:

tronically remit payment for them.

Because Vermont’s statute does not “relate to”

employee benefit plans under this Court’s jurispru-

dence, particularly post-7ravelers, the Second Cir-

cuit’s analysis should be reversed. !!

11 Though appropriately interpreting “relates to” makes a sav-

ings clause analysis unnecessary, another basis for reversing

the majority’s decision is that it is saved from preemption by the

insurance savings clause. 29 U.S.C. §1144(b)(2)(A). The APCD

statute does not attempt to regulate self-funded ERISA plans:

instead, it regulates, inter alia, insurers and TPAs, like Blue

Shield, who process claims for self-funded ERISA plans. This

Court has distinguished between permissible regulation of ser

vice providers to self-funded plans and impermissible direct

regulation of ERISA plans themselves. See FMC Corp. v. Hol-

liday, 498 U.S. 52, 65 (1990) (discussing “Congress’ clear intent

to exempt from direct state insurance regulation ERISA em-

28

Ill. ERISA §514(a) Preemption Should Be

Clarified.

Despite this Court’s statements since Travelers,

the Second Circuit held that the Vermont statute “re-

late[s] to” employee benefit plans. This and similar

holdings in the lower courts highlight the persistent

lack of clarity concerning the scope of “relate to”

preemption under ERISA §514(a). Preemption under

§514(a) operates as field preemption, with the States

ousted of all regulatory authority over matters that

“relate to” ERISA plans. Section 514(a) preemption

therefore potentially creates regulatory voids. This is

not a problem where Congress intended to create a

regulatory gap, such as leaving unregulated employer

decisions whether to offer benefit plans. However, it

is a problem when there is no indication that Con-

gress intended to preclude States from regulating ar-

eas like health care and the practice of medicine.

There is a strong need, therefore, to better define the

scope of “relate to” preemption and thereby specify

the boundary of the preempted field.

This Court has expressed concern that the bound-

aries of ERISA §514(a) “relate to” preemption are dif-

ficult to discern. Travelers, 514 U.S. at 655 (“we have

to recognize that our prior attempt to construe the

ployee benefit plans.”). Insured plans, and TPAs for self-insured

plans, remain “open to indirect regulation” by insurance regula-

tions, because of the interplay between the savings clause and

the deemer clause. Metropolitan Life,471 U.S. at 747; Rush

Prudential, 536 U.S. at 371 (nothing “stand[s] in the way of ap-

plying the savings clause ... [to] a contractor that provides only

administrative services for a self-funded plan.”).

29

phrase ‘relate to’ does not give us much help drawing

the line here.”) (internal citation omitted); De Buono,

520 U.S. at 813. It has also grappled repeatedly with

how to derive substance from the limiting phrase “re-

late to” and thereby set meaningful boundaries to the

scope of §514(a). Travelers, 514 U.S. at 655 (“if] ‘re-

late to’ were taken to extend to the furthest stretch of

its indeterminacy, then for all practical purposes

preemption would never run its course, for ‘really,

universally, relations stop nowhere.”) (internal cita-

tion omitted); Dillingham, 519 U.S. at 329 (“if ERISA

were concerned with any state action — such as medi-

cal-care quality standards or hospital workplace

regulations — that increased costs of providing certain

benefits, and thereby potentially affected the choices

made by ERISA plans, we could scarcely see the end

of ERISA’s pre-emptive reach, and the words ‘relate

to’ would limit nothing.”).

Amici therefore propose refining ERISA §514(a)’s

preemption analysis to more clearly separate the are-

as occupied by ERISA’s exclusive federal regulation

from other areas of state regulation, like health care

and the practice of medicine. The basics of this ap-

proach are straightforward. First, the scope of

ERISA’s regulatory domain should be identified

based upon the structure and content of ERISA as a

whole. Second, the scope of field preemption under

ERISA §514(a) should be congruent with ERISA’s

regulatory domain. This approach gives meaningful

content to §514(a)’s language. It preempts state laws

where it makes substantive sense to do so. It also

maintains the Court’s traditional “starting presump-

tion” that “Congress does not intend to supplant state

law,” particularly in areas of “traditional state regu-

lation.” Travelers, 514 U.S. at 654-55. Therefore, it

30

respects “the separate spheres of governmental au-

thority preserved in our federalist system,” Fort Halr-

fax, 482 U.S. at 19, and avoids the “unsettling” possi-

bility that ERISA §514(a) “results in the pre-emption

of traditionally state-regulated substantive law in

those areas where ERISA has nothing to say.” Dil-

lingham, 519 U.S. at 330.

A. ERISA Regulates Employee Benefit

Plans And Relationships Between Plans

And Other ERISA-Regulated Entities.

ERISA’s core focus is upon the establishment, con-

tent and operation of the “employee benefit plan.” An

employee benefit plan is the formal mechanism

through which a plan sponsor (usually the employer)

provides benefits to employees and related plan bene-

ficiaries. 29 U.S.C. §§1002(1)(A), 1002(3).

An ERISA plan is “established and maintained

pursuant to a written instrument.” Jd., §1102(a)(1).

That instrument must identify at least one named

fiduciary with authority to control and manage the

plan’s operation and administration, including the

responsibility to deny benefit claims. Jd., §1102(a)(1),

§1133(2). Every employee benefit plan must also es-

tablish procedures for funding and amending the

plan, allocating responsibility for operating the plan,

and specifying how payments are made to and from

the plan. /d., §1102(b).

A plan must provide a summary plan description

(“SPD”) to plan participants and beneficiaries, writ-

ten in plain English, which summarizes the plan. /d.,

§1122; 29 C.F.R. §2520.102-3 (SPD contents). An

employee benefit plan must afford plan beneficiaries

a process for reviewing benefit denials. 29 U.S.C.

31

§1133(2). It is also a distinct legal entity that “may

sue or be sued” for plan benefits and other purposes.

Td., §1132(d)(1).

ERISA regulates the administration of employee

benefit plans by imposing reporting and disclosure

requirements regarding the plan’s financial integrity,

id., §§1021-31 (except for exempted welfare benefit

plans), participation and vesting requirements (ex-

cept for welfare benefit plans), id., §§1051-61, funding

obligations (except for welfare benefit plans), id.,

§§1081-86, and administrative provisions and civil

and criminal enforcement provisions. /d., §§1131-45.

ERISA regulates more than the plan itself. It also

regulates the relationships between plans and other

specified entities and individuals. Principally, these

other entities and individuals are the “employer” or

“plan sponsor,” sd., §1002(5), §1002(16)(B), the plan

“participant” or “beneficiary,” id., §1002(7) and (8),

the plan “administrator,” jd., §1002(16)(A), and plan

“fiduciarlies].” Jd., §1002(21)(A).

Some courts have called these entities the “tradi-

tional ERISA entities,” Bullock v. Equitable Life As-

sur. Soc. of U.S., 259 F.3d. 395, 399 (5th Cir. 2001),

and limited ERISA preemption to addressing “the re-

lationships among the core ERISA entities.” Done-

gan, 746 F.3d at 507 (quoting Stevenson v. Bank of

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

Schwarzenegger, 449 F.3d 423, 429-32 (2d Cir. 2006);

32

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

2003).12

ERISA imposes comprehensive decision-making

duties on plan fiduciaries, 29 U.S.C. §1104, imposes

liability to the plan for breaching those duties, id.,

§$1105, 1109, and prohibits certain transactions be-

tween a plan and a plan fiduciary. Jd., §1106(b)

ERISA imposes obligations on the employer or spon-

sor to fund the plan and maintain records, id,

§§1059, 1082, 1083, prohibits the employer from us-

ing plan assets for its own benefit, id., §1103(c), and

restricts the plan’s ability to purchase the employer's

securities. Jd., §1107. The plan administrator, who

may be the plan sponsor, has various disclosure obli-

gations, including the duty to file annual and other

reports for the plan, id., §§1021, 1023-24, along with

notices of significant reductions in benefit accruals.

Td., §1054(h). Regarding plan participants and bene-

ficiaries, ERISA prescribes the plan’s obligations to

participants for the accrual and payment of plan ben-

efits, 7d., §§1054, 1056, creates a private right of ac-

12 See also Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co.,

662 F.3d 376 (5th Cir. 2011), reinstated en banc, 698 F.3d 229

(5th Cir. 2012) (‘whether the claims affect an aspect of a re/la-

tionship that is comprehensively regulated by ERISA” deter-

mines preemption); Penny/Ohimann/Nieman, Inc. v. Miami Val-

ley Pension Corp., 399 F.3d 692, 698 (6th Cir. 2005) (same); Blue

Cross of Cal. v. Anesthesia Care Assocs. Med. Group, Inc., 187

F.3d 1045, 1053 (9th Cir. 1999) (same); Morstein v. National

Insurance Services, Inc., 93 F.3d 715, 722 (11th Cir. 1996)

(“when a state law claim brought against a non-ERISA entity

does not affect relations among principal ERISA entities as

such,” no preemption); Lordmann Enterp., Inc. v. Equicor, Inc.,

32 F.3d 1529, 1533 (11th Cir. 1994) (same).

33

tion against the plan, id, §1132(a), and provides a

participant with a right to a notice of denial benefits

claimed under the plan. Jd, §1133.

To a much lesser extent, ERISA addresses the re-

lationship between plans and insurance companies.

(Though insurer/TPAs often muddy this distinction to

benefit from preemption, it should go without saying

that the plan and the insurer or TPA are separate en-

tities). ERISA acknowledges that plans may provide

welfare benefits to plan participants “through the

purchase of insurance or otherwise.” /d., §1002(1).

ERISA obligates an insurer that provides plan bene-

fits or holds plan assets to provide information to the

plan administrator for the plan’s annual report. /d.,

§1023(a)(2)(A). It establishes requirements for ensur-

ing the adequacy of an insurer’s assets when an in-

surance policy has been purchased for the benefit of

participants in an employee pension benefit plan. /d.,

§1101(b), (c). However, ERISA does not presume that

a relationship between an employee benefit plan and

an insurer necessarily exists. Moreover, if that rela-

tionship exists, ERISA does not comprehensively

regulate it. Rather, ERISA cedes to the states almost

all the regulation of the insurer-plan relationship via

the insurance savings provision. 29 U.S.C.

§1144(b)(2)(A). Finally, ERISA does not directly reg-

ulate medical providers, or other third-party service

providers (like TPAs), at all.

B. The Scope Of ERISA §514(a) “Relate To”

Field Preemption Should Coincide With

ERISA’s Domain.

ERISA §514(a)’s “relate to” provision should

preempt a field co-extensive with ERISA’s regulatory

34

domain — that is, ERISA §514(a) should only preempt

state laws that primarily regulate emplovee benefit

plans (including their establishment, content, or ad-

ministration) or the relationships between plans and

other entities and individuals that ERISA regulates.

This construction gives meaning to the statutory

term “relate to,” because the preempted field should

encompass more than state laws regulating the plan

itself. It also gives meaning to ERISA §514(a)’s

preemption provision as a whole, because the result

is field preemption (rather than merely conflict

preemption based upon specific statutory provisions).

Cf. Dillingham, 519 U.S. at 335-36 (Scalia, J., concur-

ring) (“it accurately describes our current ERISA ju-

risprudence to say that we apply ordinary field pre-

emption, and, of course, ordinary conflict pre-

emption”); Egelhoff 532 U.S. at 152-53 (Scalia, J.,

concurring); id. at 153-54 (Breyer, J., dissenting).

For example, ERISA does not require employers to

have employee benefit plans or “mandate what kinds

of benefits employers must provide if they choose to

have [an employee benefit] plan.” Pegram, 530 U.S.

at 226-27. Nevertheless, because ERISA §514(a)

preempts the field encompassed by ERISA’s regulato-

ry domain (which begins with the employee benefit

plan itself), States may not mandate the benefits

such plans must provide. Dillingham, 519 U.S. at

328. Similarly, because ERISA’s domain encom-

passes the relationship between the plan and plan

administrator, a state law that dictates aspects of

that relationship “relate[s] to” the plan — regardless

of whether ERISA addresses that aspect of the rela-

tionship. See UNUM Life Ins. Co. of America v.

Ward, 526 U.S. 358, 378-79 (1999) (state law making

the “policyholder-employer the agent of the insurer.”).

35

This reading of “relates to” reinforces ERISA’s

overarching statutory objectives. It preserves for ex-

clusive federal regulation those areas that ERISA

regulates but does not potentially create regulatory

voids beyond ERISA’s regulatory scope. This analysis

also helps clarify the scope of ERISA §514(a)’s field

preemption. The boundaries of the preempted field

are delimited by ERISA’s regulatory scope.

At the same time, statutes that regulate relation-

ships between ERISA plans and parties not regulated

by ERISA fall outside the scope of ERISA field

preemption under amic?/s proposed construction of

§514(a). See Mackey v. Lanier Collection Agency &

Serv., Inc., 486 U.S. 825, 833 (1988) (lawsuits

against ERISA plans for run-of-the-mill state-law

claims such as unpaid rent, failure to pay creditors,

or even torts committed by an ERISA plan” are not

preempted). Likewise, laws of general application

that do not regulate employee benefit plans but may

have some economic or other “effect” on them are not

within the field preempted by §514(a). See Travelers,

514 U.S. at 659; Dillingham, 519 U.S. ai 334; De

Buono, 520 U.S. at 815-16. Areas that States histori-

cally regulate, like medicine, are even further afield

from ERISA’s regulatory domain and are not

preempted, consistent with the Court’s traditional

presumption against preemption. Pegram, 530 U.S.

at 236-37 (mixed eligibility and medical treatment

decisions are outside ERISA’s domain); Travelers,

514 U.S. at 654-55.

Focusing the ERISA §514(a) analysis, therefore,

on whether the state law primarily regulates the es-

tablishment, content or administration of an employ-

ee benefit plan or its relationships with other ERISA-

36

regulated entities gives meaningful content to

§514(a). It also defines the scope of ERISA field

preemption in ways that coincide with the statute as

a whole, while leaving States able to regulate within

their traditional “separate spherel[] of governmental

authority.” Fort Halifax, 482 U.S. at 19. By more

clearly defining the field preempted by §514(a)’s “re-

late to” provision, the areas of state law that lie out-

side the preempted field, including health care and

the practice of medicine, are more easily identifiable.

C. State Laws Regulating Health Care Are

Outside ERISA’s Domain And So

Outside The Field ERISA §514(a)

Preempts.

Vermont's APCD statute is not preempted by

ERISA §514(a) under the construction amici advo-

cate. First, the APCD statute does not regulate em-

ployee benefit plans. As discussed in Part IA, supra,

it regulates various actors that provide and pay for

health care, including health care providers and in-

surers (including TPAs for self-insured plans). Sec-

ond, it does not regulate the relationship between

ERISA’s “core,” “principal,” or “traditional” entities.

Rather, it operates independently of any connection

to an ERISA plan, is directed at entities ERISA does

not directly regulate, and does not regulate ERISA

relationships in any meaningful way.

For these reasons, the Vermont statute does not

“relate to” employee benefit plans under ERISA

§514(a). It directly and primarily regulates a sphere

not governed by ERISA and entities not regulated by

ERISA. The statute therefore does not relate to em-

37

ployee benefit plans and is not within the field

preempted by ERISA §514(a).

CONCLUSION

Applying the Court’s Travelers analysis, Ver-

mont’s APCD statute does not “relate to” employee

benefit plans. It is simply “general health care regu-

lation” reserved to the States and undisturbed by

ERISA. This case also suggests that refocusing the

ERISA §514(a) preemption analysis on the “employee

benefit plan” and the plan’s relationships with other

ERISA-regulated entities will provide the Court with

a more useful way to analyze “relate to” preemption.

Amicis proposed analysis adheres to the statutory

text and the objectives of both ERISA’s substantive

provisions and preemption provision. Under this

analysis, Vermont’s APCD statute clearly is outside

the field preempted by ERISA §514(a).

The judgment below should be reversed.

September 4, 2015

38

Respectfully submitted,

Mark E. Rust

Counsel of Record

BARNES & THORNBURG LLP

One N. Wacker Drive, Suite 4400

Chicago, IL 6060

(312) 357-1313

mark.rust@btlaw.com

Brian E. Casey

BARNES & THORNBURG LLP

100 North Michigan St., Suite 700

South Bend, IN 46601

(574) 233-1171

Attorneys for Amici Curiae