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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2014

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0342%3A15. Public record. Not legal advice.