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 Anited States

ALFRED GOBEILLE, IN HIS OFFICIAL CAPACI.

TY AS CHAIR OF THE VERMONT GREEN

MOUNTAIN CARE BOARD,

Petitioner,

Vv.

LIBERTY MUTUAL INSURANCE COMPANY,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF OF AMICUS CURIAE BLUE CROSS

AND BLUE SHIELD ASSOCIATION

IN SUPPORT OF RESPONDENT

ANTHONY F. SHELLEY

Counsel of Record

THERESA S. GEE

DAWN E. MURPHY-JOHNSON

MILLER & CHEVALIER CHARTERED

655 Fifteenth St., N.W.

Suite 900

Washington, D.C. 20005

(202) 626-5800

ashelley@milchev.com

October 20, 2015

INTEREST OF AMICUS CURIAE

SUMMARY OF ARGUMENT

ARGUMENT

I.

Il.

i

TABLE OF CONTENTS

THE COURT SHOULD REVISE ITS

ERISA EXPRESS PREEMPTION JU-

IE icikcistcccivncdsininiesveniiniidssssniancicton

A. The Preemption Standards Articu-

lated in Travelers and Its Progeny

Are in Need of Updating. ........................00008

B. The Court Should Revise Its

§ 1144(a) Standards to Eliminate the

Presumption Against Preemption

and to Revive a More Potent “Refer-

iliac batictlanicdsenimenes

THE VERMONT LAW IS EXPRESSLY

PREEMPTED UNDER EXISTING

§ 1144(a) STANDARDG...................ccessssessereeeees

A. Under Current Law, ERISA Ex-

pressly Preempts the Vermont Law

Due to Its Interference with Con-

B. ERISA Requires Detailed Reporting

Concerning Medical Claims Data

and Similar Information, and the

Vermont Law Undermines the Ex-

clusivity of Those Requirements.................

C. The Heavy Administrative Burdens

Created by the Vermont Law, Par-

eee eee eee eee ee ee

il

ticularly for Multi-State ERISA

Plans, Highlight the Need for

aac cecedatlienicaienbeanianishiales 29

SE ccccdindccsnnipscsntnniniescnsotnecicionndsntineninenies 33

ill

TABLE OF AUTHORITIES

Page(s)

Cases

Aetna Life Ins. Co. v. Methodist Hosps. of

Dallas, No. 3:14-cv-347-M, 2015 U.S.

Dist. LEXIS 26455 (N.D. Tex. Mar. 4,

2015), appeal pend ‘gz, No. 15-10210 (5th

Sk II Bc II ccccevccieccncescessconevscecseoens 13

Alessi v. Raybestos-Manhattan, Inc.,

I I a iestesuie 7, 28

Altria Group, Inc. v. Good,

leis 15

America’s Health Ins. Plans v. Hudgens,

742 F.3d 1319 (11th Cir. 2014)........0.000000000000... 13

Ariz. v. Inter Tribal Council of Ariz., Inc.,

I I ca 8

Bates v. Dow Agrosciences L.L.C.,

I 13, 18

Black & Decker Disability Plan v. Nord,

dias )

Cal. Div. of Labor Standards Enforcement

v. Dillingham Constr., N.A.,

Se eB iinicrrenscencncconsnneinseusoens passim

CTS Corp. v. Waldburger,

ee I inn a csmsmubenannndenionoonsae 8

De Buono v. NYSA-ILA Med. & Clinical

Servs. Fund, 520 U.S. 806 (1997).............000000.. 19

Egelhoff v. Egelhoff,

Eee 10, 19, 29

Fifth Third Bancorp v. Dudenhoeffer,

ee is, SE citisntinietosnnctnnnccnssiinansctsnpsessins 9

lV

FMC Corp. v. Holliday,

498 U.S. 52 (1980)................................ 3, 7, 15, 16

Fort Halifax Packing Co. v. Coyne,

SEE Ee ee 28

Franchise Tax Bd. v. Constr. Laborers

Vacation Trust, 263 U.S. 1 (1983).................... 12

Gade v. Natl Solid Wastes Mgmt. Ass'n,

I a scsipmiusananebioaee 13

Geier v. Am. Honda Motor Co.,

I i sete 11,13

Golden Gate Rest. Ass'n v. City & Cnty. of

San Francisco, 546 F.3d 639

Tr dessansitoniatan 13, 14

Guss v. Utah Labor Relations Bd.,

I a smpeniemmnasenth 23

Hines v. Davidowitz,

ET eee ae Re aD 11,13

Ingersoll-Rand Co. v. McClendon,

a cesionsionnons 6, 7,19

Ky. Ass’n of Health Plans v. Miller,

Ee ne 25

M&G Polymers USA, LLC v. Tackett,

Ey TN, sid cas sepeninseniunenete 9, 10

Mackey v. Lanier Collection Agency &

Serv., Inc., 486 U.S. 825 (1988)............0000000000 17

Malone v. White Motor Corp.,

Oe I acess sendseechaeinibnnenaniions 20

Morales v. Trans World Airlines, Inc.,

I a sssetiunubeben 8

N.Y. State Conference of Blue Cross &

Blue Shield Plans v. Travelers Ins. Co.,

il passim

Vv

Northwest, Inc. v. Ginsberg,

134 S. Ce. 1422 (BO14).........0cccrecsccsscceseees

Pharm. Care Mgmt. Ass'n v. D.C.,

613 F.3d 179 (D.C. Cir. 2010)...........0.....

Pharm. Care Mgmt. Ass'n v. Rowe,

429 F.3d 294 (1st Cir. 2005)...

Pilot Life Ins. Co. v. Dedeaux,

EE Ts

Retail Indus. Leaders Ass'n v. Fielder,

475 F.3d 180 (4th Cir. 2007) .........0000.....

Rice v. Santa Fe Elevator Corp.,

ee

Self-Ins. Inst. of Am., Inc. v. Snyder,

761 F.3d 631 (6th Cir. 2014), pet. for

cert. pend’g, No. 14-741 (filed Dec. 18,

Shaw v. Delta Air Lines,

ee ee itsitinsevisiniiitennnesnninens

Sprietsma v. Mercury Marine,

Se As OS Qe rsecnninsencensvssincsinniniassiien

Statutes

Employee Retirement Income Security

Act, 29 U.S.C. §§ 1001 et seq. .................

29 U.S.C. § 1003 ...cccscecceccsssesssecssecesveeeseee

| 2 Ree ioe ee

I ics inicuisctnbinennnmnsdananaiie

ls WI iaciiscssinnsssiecuipeaeniainddamamiiatl

Sele Ob II ccsisscccsticnevcersccnncnsiaabuions

ee le ais icictsesintinisaetnigntstesidendientes

Public Health Service Act,

42 U.S.C. §§ 300gg et seq. ................0000005

42 U.S.C. § S00gg- 15a..............000..0000000008

yosounensii 1

vernsivnilin 21

senile 22

42 U.S.C. § B00GE-17...0..0.0-.0.0.s0ecesceccececceseeseeeees 24

a 24

i aaa incesengeniens passim

2 eS | Se passim

Welfare and Pension Plans Disclosure Act,

Ee 20

Other Authorities

lai scares cnmnncnmensenecans 31

Administration Recommendations to the

House and Senate Conferees on H.R. 2

to Provide for Pension Reform (Apr.

1974), reprinted in Staff of S.

Subcomm. on Labor of Comm. on Labor

& Pub. Welfare, 94th Cong., Vol. III,

Legislative History of [ERISA] of 1974,

at 5131 (Comm. Print Apr. 1976)..................... 20

DOL, FAQs About Affordable Care Act

Implementation (Part XV) (Apr. 29,

2013) (“ACA FAQs”),

http://www.dol.gov/ebsa/faqs/faq-aca

ce 21, 22, 23

DOL, FAQS about Affordable Care Act

Implementation (Part XXVIII) (Aug.

11, 2015),

http://www.dol.gov/ebsa/faqs/faq-

EE RC 23

HHS, Agency Information Collection

Activities: Proposed Collection;

Comment Request on Transparency

Reporting Provisions, 80 Fed. Reg.

TE 23

i Fe ee passim

INTEREST OF AMICUS CURIAE'

The Blue Cross and Blue Shield Association

(“BCBSA”) is the trade association that coordinates

the national! interests of the independent, locally op-

erated Blue Cross and Blue Shield companies

(“BCBSA Member Companies”). Together, the 36 in-

dependent, community-based and locally operated

BCBSA Member Companies administer health bene-

fit plans or provide health insurance to more than

100 million people — almost one-third of all Ameri-

cans — in al] 50 states, the District of Columbia, and

Puerto Rico. The BCBSA Member Companies offer a

variety of products supplying administrative services

or insurance to all segments of the population, in-

cluding private and public employer groups, small

businesses, and individuals.

The BCBSA Member Companies are subject to

regulations under a variety of federal and state stat-

utes, including the Employee Retirement Income Se-

curity Act (“ERISA”), 29 U.S.C. §§ 1001 et seg. This

case concerns whether ERISA preempts a Vermont

law — Vt. Stat. Ann., tit. 18, § 9410, known as an all-

payer claims database (“APCD”) statute — requiring,

among others, third-party administrators of self-

funded ERISA plans and insurers of insured ERISA

plans to report data about claims to a Vermont state

agency. In their role as third-party administrator to

or insurer of ERISA plans, BCBSA’s Member Com-

1 Petitioner and Respondent have each filed letters granting

blanket consent to the filing of amicus curiae briefs in support

of either or neither party. Pursuant to Rule 37.6, the amicus

states that no counsel for a party authored this brief in whole or

in part, and no person or entity, other than the amicus, its

members, or its counsel, made a monetary contribution to the

preparation or submission of the brief.

2

panies are subject to Vermont’s law or other states’

APCD laws, insofar as such laws apply to them.

They, therefore, have a substantial interest in the

question whether ERISA preempts the Vermont

statute and similar APCD laws existing in other

states.

SUMMARY OF ARGUMENT

I. This case offers the opportunity for a necessary

update of some of the governing ERISA express

preemption principles emanating from N.Y. State

Conference of Blue Cross & Blue Shicid Plans v.

Travelers Ins. Co., 514 U.S. 645 (1995). The use of a

presumption against ERISA express preemption, as

Travelers invokes, is inharmonious with the Court’s

developing jurisprudence on express preemption pro-

visions generally and with other ERISA precedents

that have warned against the use of presumptions

when construing ERISA statutory terms. Additional-

ly, the Travelers preemption regime devolves, in

practice, to a standard close to ordinary conflict

preemption, which unduly restricts a preemption

clause that Congress anticipated, at the time of en-

actment, would be expansive. And Travelers and its

progeny have not brought greater predictability to

the ERISA preemption area, with lower courts (as

the majority and dissent did here) continuing to di-

verge on whether similar state laws are preempted

under ERISA’s preemption clause, 29 U.S.C.

§ 1144(a).

In order to bring better order to the area, the

Court should discard a presumption against ERISA

preemption, leaving § 1144(a) to be applied without

artificially tipping the balance in favor of the states

and against federal] interests. Another important

improvement the Court can make is to reinvigorate

3

the “reference to” component of ERISA express

preemption, whereby state laws that refer to ERISA

plans are found to “relate to any employee benefit

plan” (29 U.S.C. § 1144(a)) and thus be preempted.

The Court has taken much power from the “reference

to” benchmark by indicating it applies where a state

law applies exclusively to ERISA plans. The Court

should return to the rubric adopted in FMC Corp. v.

Holliday, 498 U.S. 52 (1990), by finding ERISA to

preempt a state law that facially includes ERISA

plans or their essential actors among its regulatory

objects. The test is easily applied and truer to

ERISA’s text. Vermont’s APCD law would succumb

under that “reference to” test.

II]. Even without any adjustment to the current

ERISA express preemption framework, the Vermont

law is preempted. Under Travelers and its progeny,

a state law “relates to” (in the sense it has a “connec-

tion with”) ERISA plans and is therefore preempted

when it interferes with ERISA’s objectives. Because

one of ERISA’s main goals is to ensure uniform, ex-

clusively federal reporting by ERISA plans, and be-

cause Vermont’s law upsets that goal, the Vermont

statute is preempted under § 1144(a). In further

support of Respondent, the amicus emphasizes two

points key to the preemption analysis. First,

ERISA’s reporting obligations — and thus a subject

on which Congress sought uniform standards — in-

clude reporting on medical claims data. The Afford-

able Care Act expressly incorporated into ERISA

transparency requirements contained in the Public

Health Service Act, and those requirements are in-

tricate and cover the same ground as Vermont's

APCD law. Second, the compliance burdens created

by Vermont’s law and other states’ similar laws are

immense, especially for multi-state ERISA plans.

4

ARGUMENT

I. THE COURT SHOULD REVISE ITS ERISA

EXPRESS PREEMPTION JURISPRUDENCE

A. The Preemption Standards Articulated in

Travelers and Its Progeny Are in Need of Up-

dating

Twenty years have passed since N.Y. State Con-

ference of Blue Cross & Blue Shield Plans v. Travel-

ers Ins. Co., 514 U.S. 645 (1995) (“Travelers”), a deci-

sion that “marked something of a pivot in ERISA

preemption.” Pet. App. 18. While intended to adjust

an existing body of decisions that the Court believed

did “not give us much help drawing the line” for

ERISA preemption (7ravelers, 514 U.S. at 655),

Travelers itself is now in need of repair. One thresh-

old rule it set forth for preemption — namely, a pre-

sumption against express preemption — is now in

tension with the Court’s since-developed case law in

other preemption contexts and even in other ERISA

settings. Moreover, the post-7ravelers regime aligns

too closely to ordinary “conflict” preemption. And

Travelers and its progeny have not lessened unpre-

dictability in this area of the law.

1. ERISA’s preemption section states that “the

provisions of [ERISA] . . . shall supersede any and all

State laws insofar as they may now or hereafter re-

late to any employee benefit plan described in section

4(a) and not exempt under section 4(b).”. 29 U.S.C.

§ 1144(a). ERISA §§ 4(a) and 4(b), in turn, extend

ERISA’s coverage to any employee benefit plan es-

tablished or maintained by a private employer or

employee organization (such as a union) and exempt

plans operated by government employers and

churches (along with a few others). See id. § 1003(a)-

(b). Of course, the key words of the preemption sec-

5

tion, and the ones that have spawned so much dis-

cussion in the case law, are those bringing within the

section’s compass state laws that “relate to any em-

ployee benefit plan.”

Faced once again, after many prior attempts, with

the challenge of interpreting those words, the Court

in Travelers announced — for the first time — that

there would be a presumption against preemption

when applying ERJSA’s express preemption section.

“(T]he starting presumption [is] that Congress does

not intend to supplant state law.” Travelers, 514

U.S. at 654. Thus, in ERISA cases, including in

Travelers itself, “where federal law is said to bar

state action in fields of traditional state regulation,”

the courts must “work[] on the ‘assumption that the

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

perseded by the Federal Act unless that was the

clear and manifest purpose of Congress.” Id. at 655

(quoting Rice v. Santa Fe Elevator Corp., 331 U.S.

218, 230 (1947)).

Next, the Court registered “frustrat[ion]” with its

earlier attempts to construe §1144(a). Travelers,

514 U.S. at 656. “Relate to” is a phrase that, on its

face, does not “do much limiting.” Jd. at 655. From

early on, attempting to give content to the text, the

Court had explained that “[a] law ‘relates to’ an em-

ployee benefit plan, in the normal sense of the

phrase, if it has a connection with or reference to

such a plan.” Shaw v. Delta Air Lines, 463 U.S. 85,

96-97 (1983). But the “connection with” language,

proved to be scarcely “more help than... ‘relate to.”

Travelers, 514 U.S. at 656. “For the same reasons

that infinite relations cannot be the measure of pre-

emption, neither can infinite connections.” Jd. And

the “reference to” prong of the standard often did not

6

aid matters because the Court, in Travelers and then

subsequent cases, said it applies to the narrow and

infrequent situation “[w]here a State’s law acts im-

mediately and exclusively upon ERISA plans, ... or

where the existence of ERISA plans is essential to

the law’s operation.” Cal. Div. of Labor Standards

Enforcement v. Dillingham Constr., N.A., 519 U.S.

316, 325 (1997) (“Dillingham”); accord Travelers, 514

U.S. at 656.

Accordingly, to go “beyond the unhelpful text,” at

least on the “connection with” side of things, the

Court emphasized that ERISA preemption decisions

should be tied to the statute’s underlying purposes.

The courts must “look instead to the objectives of the

ERISA statute as a guide to the scope of the state

law that Congress understood would survive.” Trav-

elers, 514 U.S. at 656. In Travelers, the Court also

identified the underlying purpose most relevant to

preemption inquiries: with the preemption section,

“Congress intended ‘to ensure that plans and plan

sponsors would be subject to a uniform body of bene-

fits law; the goal was to minimize the administrative

and financial burden of complying with conflicting

directives among States or between States and the

Federal Government... , [and to prevent] the poten-

tial for conflict in substantive law . . . requiring the

tailoring of plans and employer conduct to the pecu-

liarities of the law of each jurisdiction.” Jd. at 656-

57 (quoting Ingersoll-Rand Co. v. McClendon, 498

U.S. 133, 142 (1990)) (alterations in original).

The Court in Travelers also surveyed its past de-

cisions and noted the types of state laws that would

fail under the revamped preemption regime. In so

doing, the Court provided the lower courts with a

sort of shorthand checklist of the types of state laws

7

that would conflict with ERISA’s goal of uniform na-

tional regulation and not survive merely on the pre-

sumption against preemption. Referring to its prior

precedents, the Court said: “In each of these cases,

ERISA pre-empted state laws that mandated em-

ployee benefit structures or their administration.

Elsewhere, we have held that state laws providing

alternative enforcement mechanisms also relate to

ERISA plans, triggering pre-emption.” Id. at 658

(citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85

(1983); FMC Corp. v. Holliday, 498 U.S. 52 (1990);

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504

(1981); Ingersoll-Rand Co. v. McClendon, 498 U.S.

133 (1990)).

2. Travelers — especially its presumption against

preemption — has become out of step with the Court’s

more general preemption jurisprudence. In recent

cases, several Justices have criticized the use of a

presumption against preemption in express preemp-

tion contexts. As Justice Scalia has stated, joined by

three other Justices:

I remain convinced that “[t]he proper rule of

construction for express pre-emption provi-

sions is_.. the one that is customary for stat-

utory provisions in general: Their language

should be given its ordinary meaning.” Cipol-

lone v. Liggett Group, Inc., 505 U. S. 504, 548,

112 S. Ct. 2608, 120 L. Ed. 2d 407 (1992) (Scal-

ia, J., concurring in judgment in part and dis-

senting in part). The contrary notion — that

express pre-emption provisions must be con-

strued narrowly — was “extraordinary and un-

precedented” when this Court announced it

two decades ago, id., at 544, 112 S. Ct. 2608,

120 L. Ed. 2d 407, and since then our reliance

8

on it has been sporadic at best, see Altria

Group, Inc. v. Good, 555 U. S. 70, 99-103, 129

S. Ct. 538, 172 L. Ed. 2d 398 (2008) (Thomas,

J., dissenting).

CTS Corp. v. Waldburger, 134 S. Ct. 2175, 2189

(2014) (Scalia, J., concurring, and joined by Roberts,

C.J., and Thomas and Alito, J.J.). Justice Kennedy

has added that the notion of a presumption against

preemption from prior express preemption case law

is better thought of “not as a presumption but as a

cautionary principle to ensure that pre-emption does

not go beyond the strict requirements of the statuto-

ry command.” Ariz. v. Inter Tribal Council of Ariz.,

Inc., 183 S. Ct. 2247, 2261 (2013) (Kennedy, J., con-

curring).

Evidencing the point that application of a pre-

sumption against express preemption has been spo-

radic, the Court has regularly, even in the time

roughly contemporaneous to Travelers and since

then, decided express preemption cases without men-

tioning any such presumption. In this competing

body of case law, the Court has treated the question

of express preemption as “one of statutory intent,

and [the Court] begin[s] with the language employed

by Congress and the assumption that the ordinary

meaning of that language accurately expresses the

legislative purpose.” Morales v. Trans World Air-

lines, Inc., 504 U.S. 374, 383 (1992) (internal quota-

tion marks and citation omitted); accord Sprietsma v.

Mercury Marine, 537 U.S. 51, 62-63 (2002); see gen-

erally Northwest, Inc. v. Ginsberg, 134 S. Ct. 1422,

1429-33 (2014) (finding express preemption with no

reference to any presumption against preemption).

Even if a presumption against preemption did fit

other statutory regimes with express preemption

9

provisions, the Court should eschew it for ERISA.

The Court — also in the time since Travelers — has

clarified that judge-made presumptions are especial-

ly unsuited for a comprehensive, highly-reticulated

statute like ERISA. For instance, in Fifth Third

Bancorp v. Dudenhoeffer, 134 S. Ct. 2459, 2463

(2014), the Court considered “whether, when an [em-

ployee stock ownership plan (“ESOP’)] fiduciary’s de-

cision to buy or hold the employer’s stock is chal-

lenged in court, the fiduciary is entitled to a defense-

friendly standard that the lower courts have called a

‘presumption of prudence.” The Court rejected such

a presumption upon reviewing the statutory provi-

sions concerning fiduciary conduct, finding they

“make[] no reference to a special ‘presumption’ in fa-

vor of ESOP fiduciaries.” Jd. at 2467. Similarly, in

M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926,

935 (2015), the Court rejected a “presumption” (pre-

viously applied by the Sixth Circuit) favoring the

vesting of retiree health benefits in collective-

bargaining situations. Because ERISA’s terms give

employers “large leeway to design disability and oth-

er welfare plans as they see fit,” the ERISA plans

“should be enforced as written,” subject only to “ordi-

nary principles of contract law.” Jd. at 933 (internal

quotation marks omitted); see also Black & Decker

Disability Plan v. Nord, 538 U.S. 822, 831 (2003) (re-

jecting presumption favoring views of treating physi-

cian in the processing of health-benefit claims, be-

cause “[njothing in the Act itself... suggests that

plan administrators must accord special deference to

the opinions of treating physicians”).

Whereas in these other ERISA situations the

Court was unwilling to add presumptions unmen-

tioned in the text of the specific ERISA provisions at

issue, the Court in Travelers did the opposite: it cre-

10

ated a presumption on preemption nowhere refer-

enced in ERISA’s express preemption clause. Con-

sistent with the Court’s more recent rejection of in-

terpretive devices unmoored in ERISA’s actual

terms, ERISA’s express Preemption regime too

should be “shorn of presumptions.” M&G Polymers,

135 S. Ct. at 927 (Ginsburg, J., concurring).

Not only is a presumption against ERISA express

preemption in tension with the Court’s other

preemption and ERISA case law, it was, respectfully,

from the start contrary to Congress’s original intent

with regard to § 1144(a). As Respondent’s brief ably

demonstrates in its thorough review of ERISA’s leg-

islative history (see Resp. Br. 17-23), Congress did

not in 1974 have in mind the sort of narrow preemp-

tion when it comes to ERISA that a presumption

against preemption implies. To the contrary, the

Court has characterized ERISA’s preemption section

on numerous occasions as “clearly expansive,” having

“a broad scope,” having “an expansive sweep,” “con-

spicuous for its breadth,” “deliberately expansive,”

and “broadly worded.” Dillingham, 519 U.S. at 324

(referencing Court’s statements in earlier prece-

dents) (internal quotation marks and citations omit-

ted); see also Egelhoff, 532 U.S. at 146. When a pro-

vision in a statute is characterized by Congress and

this Court alike as the statute’s “crowning achieve-

ment,” as ERISA’s preemption clause has been de-

scribed, it makes little sense to begin analysis of

whether the provision operates in a particular situa-

tion with an approach that all doubts shall be re-

solved against the provision’s application. Shaw, 463

U.S. at 99 (quoting 120 Cong. Rec. 29,197 (1974)

(statement of Rep. Dent)).

11

3. Travelers’s instruction to focus the express

preemption inquiry on ERISA’s purposes (at least

when applying the “connection with” language) like-

wise artificially constricts the power of § 1144(a).

Again, under Travelers, courts look to “the objectives

of the ERISA statute as a guide to the scope of the

state law that Congress understood would survive,’

as well as to the nature of the effect of the state law

on ERISA plans.” Dillingham, 519 U.S. at 325. True

enough, a court should refrain from woodenly apply-

ing a preemption clause, without regard to its pur-

poses. But Travelers’s focus on the statutory objec-

tives has had a tendency to conflate ERISA express

preemption with ordinary conflict preemption. Since

at least 1941, the Court has enforced a conflict

preemption standard whereby a state law is sup-

planted by federal law if the state enactment “stands

as an obstacle to the accomplishment and execution

of the full purposes and objectives of Congress.”

Hines v. Davidowitz, 312 U.S. 52, 67 (1941); accord

Geier v. Am. Honda Motor Co., 529 U.S. 861, 881-82

(2000). In language reminiscent of Hines, the Court

in Travelers found a New York law exacting sur-

charges on certain types of commercial insurance to

escape preemption, because “cost uniformity was al-

most certainly not an object of [ERISA] pre-emption.”

514 U.S. at 662.

The problem with transforming ERISA express

preemption simply into an examination of whether

the application of state law would upset Congress’s

ERISA objectives is that it makes § 1144(a) superflu-

ous. That is, the Hines conflict preemption standard

existed prior to ERISA and applies in any federal

statutory context, irrespective of whether it has an

express preemption provision. It therefore would

apply in the ERISA context, even absent Congress’s

12

enactment of § 1144(a). Yet, Congress still enacted

ERISA’s express preemption clause, showing it

wanted something more. While relegating a statuto-

ry provision to the category of surplussage is never

favored, it should truly be anathema for ERISA’s ex-

press preemption provision, where we know Con-

gress intended the section to be key to the legislation

and even revolutionary for its time. See Franchise

Tax Bd. v. Constr. Laborers Vacation Trust, 263 U.S.

1, 24 n.26 (1983) (describing § 1144(a) as a “virtually

unique pre-emption provision”).

Adding further to the funneling of most ERISA

preemption cases into a conflict preemption frame-

work was the Court’s simultaneous diminishment of

the “reference to” standard for determining when a

law “relates to” employee benefit plans. Earlier, the

“reference to” prong had a greater scope (see infra p.

16); however, Travelers and Dillingham appeared to

limit that part of the test to state laws that name

ERISA plans as their “exclusive” subject. See Dil-

lingham, 519 U.S. at 325. It is a rare instance where

a state passes a law that seeks to regulate ERISA

plans, and just them, given the long history of sub-

stantial preemption. Consequently, by constricting

the reach of the “reference to” test, the Court left

nearly all express preemption issues to be deter-

mined under the more conflict-preemption-oriented

approach associated with the “connection with”

strand.

4. Travelers also has not, as might have been

hoped, ushered in an era of predictable, consistent

lower court decisions on ERISA preemption ques-

tions. On significant issues, the lower courts — all

espousing to apply dutifully Travelers’s teachings —

have reached opposite conclusions on similar state

13

laws. Compare Pharm. Care Mgmt. Ass'n v. D.C.,

613 F.3d 179 (D.C. Cir. 2010) (finding that ERISA

preempts District of Columbia law regulating con-

tracts with pharmacy benefit managers) with Pharm.

Care Mgmt. Ass’n v. Rowe, 429 F.3d 294 (1st Cir.

2005) (rejecting preemption for similar Maine law);

compare Retail Indus. Leaders Ass’n v. Fielder, 475

F.3d 180, 183 (4th Cir. 2007) (finding that ERISA

preempts Maryland law requiring specific level of

employer expenditures for employee health benefits)

with Golden Gate Rest. Ass'n v. City & Cnty. of San

Francisco, 546 F.3d 639 (9th Cir. 2014) (finding simi-

lar local California ordinance not to be preempted);

compare America’s Health Ins. Plans v. Hudgens, 742

F.3d 1319 (11th Cir. 2014) (holding that ERISA

preempts Georgia’s claims prompt-payment law as

applied to self-funded ERISA plans) with Aetna Life

Ins. Co. v. Methodist Hosps. of Dallas, No. 3:14-cv-

347-M, 2015 U.S. Dist. LEXIS 26455 (N.D. Tex. Mar.

4, 2015) (finding no preemption for similar Texas

law), appeal pend’g, No. 15-10210 (5th Cir. filed Mar.

17, 2015).

One reason that Travelers results in unpredicta-

bility is that purposes-oriented preemption (as under

Hines) can sometimes turn into a “freewheeling judi-

cial inquiry into whether a state statute is in tension

with federal objectives,” rather than “an inquiry into

whether the ordinary meanings of state and federal

law conflict.” Bates v. Dow Agrosciences L.L.C., 544

U.S. 431, 459 (2005) (Thomas, J., concurring in part

and dissenting in part) (quoting Gade v. Nat7 Solid

Wastes Mgmt. Ass'n, 505 U.S. 88, 111 (1992) (Kenne-

dy, J., concurring)); accord Geier, 529 U.S. at 911

(Stevens., J., dissenting) (criticizing Hines preemp-

tion as not “a matter of precise statutory construc-

tion,” but “an exercise in free-form judicial policy-

14

making”) (internal quotation marks, citation, and al-

teration omitted).

Another reason that Travelers has not brought

order to the ERISA preemption arena is that it failed

to solve the “difficulty of defining [the express

preemption section's] key term.” Travelers, 514 U.S.

at 656. Travelers exchanged defining terms such as

“relates to,” has “connection with,” or makes “refer-

ence to” employee benefit plans with inquiries into

whether a state law concerns “employee benefit plan

structures” or “administration,” with state laws fall-

ing within the scope of the latter terms being on the

Travelers shorthand list of suspect state measures.

Id. at 658. “Structures” and “administration” are not

precise terms, as the majority and dissenting opin-

ions in Second Circuit in this case illustrate. See Pet.

App. 29 n.13 (“The dissent draws a ‘distinction be-

tween general administration and administration of

plans, claims, and benefits... .”) (citation omitted);

see also Golden Gate Rest. Ass'n, 546 F.3d at 657

(finding that impermissible requirements regarding

administration must mean the “administrative [or]

financial burden of complying with conflicting direc-

tives relating to benefits law”) (internal quotation

marks and citation omitted).

B. The Court Should Revise Its § 1144(a) Stand-

ards to Eliminate the Presumption Against

Preemption and to Revive a More Potent “Ref.-

erence to” Analysis

Travelers was not the cure, and the Court should

use this case to bring greater predictability and order

to the ERISA express preemption area. It first

should discard the presumption against preemption,

consistent with the Court’s developing general juris-

prudence critical of such a presumption in express

15

preemption contexts and with its ERISA case law re-

jecting judge-made presumptions for construing

ERISA statutory terms. Instead, the Court should

“interpret{! the statute without reference to the pre-

sumption or any perceived need to impose a narrow

construction on the provision in order to protect the

police power of the States.” Altria Group, Inc. v.

Good, 555 U.S. 70, 101 (2008) (Thomas, J., dissent-

ing, and joined by Roberts, C.J., and Scalia and Alito,

J.J.). Where “an express pre-emption clause” exists,

the courts’ “task of statutory construction must in

the first instance focus on the plain wording of the

[express preemption] clause, which necessarily con-

tains the best evidence of Congress’ pre-emptive in-

tent”). Sprietsma v. Mercury Marine, 537 U.S. 51,

62-63 (2002) (internal quotation marks and citation

omitted).

Of course, § 1144(a)’s text has been a source of

frustration for the Court, and it therefore would not

do much good to re-focus the statutory analysis away

from a presumption and to the text, unless some

greater clarity can now be ascribed to “relate to.” To

that end, one substantial improvement the Court

could make would be to resuscitate the “reference to”

prong of the “relate to” test. In Travelers and Dil-

lingham, the Court appeared to relegate (or at least

the lower courts have assumed as much) a “reference

to” finding principally to state laws that target exclu-

sively ERISA plans, an uncommon occurrence. See

supra p. 6. But that was not always the case. In

FMC Corp. v. Holliday, 498 U.S. 52 (1990), the Court

found a Pennsylvania anti-subrogation law preempt-

ed under the following reasoning:

Pennsylvania’s antisubrogation law has a “ref-

erence” to benefit plans governed by ERISA.

16

The statute states that “in actions arising out

of the maintenance or use of a motor vehicle,

there shall be no right of subrogation or reim-

bursement from a claimant’s tort recovery

with respect to... benefits paid or payable

under section 1719.” 75 Pa. Cons. Stat. § 1720

(1987). Section 1719 refers to “any program,

group contract or other arrangement for pay-

ment of benefits.” These terms “include, but

[are] not limited to, benefits payable by a hos-

pital plan corporation or a professional health

service corporation.” § 1719 (emphasis added).

FMC Corp., 498 U.S. at 59 (emphasis and alterations

in original).

In FMC Corp., then, the Court found that a state

law made “reference to” ERISA plans because it ad-

dressed benefits and contracts for benefits and con-

tained language extending its reach to benefits paya-

ble from a private employee benefit plan (i.e., by not

limiting itself solely to non-ERISA employee benefit

plan situations). Cf. Pilot Life Ins. Co. v. Dedeaux,

481 U.S. 41, 48 (1987) (finding that contract and tort

state law causes of action “undoubtedly meet the cri-

teria for pre-emption under § 514(a)” because “each

[was] based on alleged improper processing of a claim

for benefits under an employee benefit plan”) (empha-

sis added). The Pennsylvania law did not work ex-

clusively on ERISA plans, but operated on an enu-

merated field that encompassed ERISA plans and

did not seek to exclude them.?

2 FMC Corp.'s test that a state law references ERISA plans

when it includes ERISA plans among its objects is more con-

sistent with § 1144(a)’s text than is the 7ravelers-Dillingham

notion that the state law must reference exclusively ERISA

plans. After all, “reference to” is a construction of “relate to” in

17

Some ease and predictability could be added to

the ERISA express preemption area, were the Court

to return to a test whereby a state law makes “refer-

ence to” ERISA plans if it overtly mentions employee

benefit plans, employee benefits, or the entities inex-

tricably tied to employee benefit plans — such as

third-party administrators or pharmacy benefit

managers — as among its objects, even if they are not

the sole objects of the state legislation. The test

would be easy to apply, because courts could refer to

the face of the state measure to determine if it names

employee benefit plans or the actors associated with

employee benefit plans. There would be predictabil-

ity, since there would be facial analysis of statutory

text, not the less precise gleaning of the purposes of

ERISA and weighing of whether the state law frus-

trates or otherwise too negatively impacts those pur-

poses.

Under a strengthened “reference to” standard,

Vermont’s APCD law would be preempted — easily.

the statute, and the statute does not provide that state laws are

preempted if they “relate only or solely to any employee benefit

plan” but simply if they “relate to any employee benefit plan.”

3 Laws of general application that regulate businesses or the

public generally, and thus for that lone reason include ERISA

plans among their regulated entities, would not be preempted

under the invigorated “reference to” test. It is laws that overtly

take aim at employee benefit plans or those who administer

them that would be superseded. Hence, a general garnishment

statute would not be preempted, but a state law that sets forth

procedures specifically for the garnishment of fringe benefits

would be. See generally Mackey v. Lanier Collection Agency &

Serv., Inc., 486 U.S. 825, 831-32 (1988). Similarly, a general

sales tax would not be preempted, but a state tax on the pro-

cessing of benefit claims would be. But see Self-Ins. Inst. of

Am., Inc. v. Snyder, 761 F.3d 631 (6th Cir. 2014), pet. for cert.

pend'g, No. 14-741 (filed Dec. 18, 2014).

18

In brief, it mentions among the objects it brings un-

der its control private-employer employee benefit

plans. The implementing regulations for Vermont's

statute make this obvious. In the regulations, Ver-

mont extends the reporting law to “any administra-

tor of an insured, self-insured, or publicly funded

health care benefit plan offered by public and private

entities.” Vt. Reg. H-2008-01, § 3(X) (Pet. App. 112-

13) (emphasis added). By extending its operation to

those who administer employee benefit plans gov-

erned by ERISA (whether they are insured or self-

funded), the state law refers to ERISA plans. In

sum, the preemption analysis under § 1144(a) could

begin and end with the text of that one Vermont reg-

ulation.

Finally, even with an updated “reference to” test,

there would remain for state laws surviving that test

the hurdle of avoiding a “connection to” ERISA plans,

with the attendant complications of making preemp-

tion determinations under the Travelers approach.

But at least the “reference to” test would mean that,

in many instances, a simpler methodology focused on

the text of the state law, as well as the text of

§ 1144(a) (i.e., with “relate to” meaning “reference

to”), would govern the preemption outcome. Moreo-

ver, the elimination of the presumption against

preemption even for “connection with” analysis

would remove the “tip[ping of] the scales in favor of

the States and against the Federal Government,” in

a situation where Congress emphasized the primacy

of federal interests by enacting a broad preemption

provision. Bates v. Dow Agrosciences L.L.C., 544

U.S. 431, 457 (2005) (Thomas, J., concurring in part

and dissenting in part, and joined by Scalia, J.).

19

Il. THE VERMONT LAW IS_ EXPRESSLY

PREEMPTED UNDER EXISTING § 1144(a)

STANDARDS

A. Under Current Law, ERISA _ Enxpressly

Preempts the Vermont Law Due to Its Interfer-

ence with Congress's Desire for Uniformity in

Reporting

Even without any revision to the regime ushered

in by Travelers, Vermont's APCD law cannot survive

ERISA express preemption. After Travelers, a state

statute that interferes with ERISA’s objectives “re-

lates to” ~ in particular, has a “connection with” —

ERISA plans under § 1144(a) and, therefore, is

preempted. See Travelers, 514 U.S. at 653; see also

Egelhoff v. Egelhoff, 532 U.S. 141, 147 (2001) ; De

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

520 U.S. 806, 813-14 (1997); Dillingham, 519 U.S. at

325. One of ERISA’s oft-repeated chief aims was to

ensure uniform, and thus exclusively federal, regula-

tion on core subjects covered by ERISA, and that in-

cludes reporting. See Ingersoll-Rand Co. v. McClen-

don, 498 U.S. 133, 137 (1990) (ERISA “sets various

uniform standards, including rules concerning re-

porting, disclosure, and fiduciary responsibility”).

The underpinning for uniformity is straightforward:

“Requiring ERISA administrators to master the rele-

vant laws of 50 States” — whether on reporting or

other areas addressed in ERISA — “would undermine

the congressional goal of ‘minimizing the administra-

tive and financia) burdens’ on plan administrators —

burdens ultimately borne by the beneficiaries.”

Egelhoff, 532 U.S. at 149-50 (quoting Ingersoll-Rand

Co. v. McClendon, 498 U.S. 133, 142 (1990)).

Indeed, the situation prior to ERISA’s enactment,

where states had control over reporting with respect

20

to employee benefit plans proved unworkable.

ERISA’s reporting and disclosure requirements su-

perseded the Welfare and Pension Plans Disclosure

Act (““WPPDA”), 72 Stat. 997 (1958). The WPPDA

did not authorize the Labor Department to prescribe

the “form and detail” of reporting but permitted

states to regulate such reporting, which resulted in

“administrative chaos.” Administration Recommen-

dations to the House and Senate Conferees on H.R. 2

to Provide for Pension Reform, at 88 (Apr. 1974), re-

printed in Staff of S. Subcomm. on Labor of Comm.

on Labor & Pub. Welfare, 94th Cong., Vol. III, Legis-

lative History of [ERISA] of 1974, at 5131 (Comm.

Print Apr. 1976) [hereinafter “Comm. Print”]. With

ERISA, Congress repealed the WPPDA and replaced

it with simple, uniform reporting requirements “con-

solidate[d] . . . into a single report.” Id. at 83, Comm.

Print at 5126. It did so not solely as a matter of ad-

ministrative convenience for the federal government;

Congress believed it was “essential” to “minimize the

burdens placed on plan administrators by .. nu-

merous reporting requirements.” Id.; see generally

Malone v. White Motor Corp., 435 U.S. 497, 505, 512

(1978).

Thus, because a state law conflicting with

ERISA’s objectives fails under § 1144(a), and one of

ERISA objectives, in turn, is uniformity in require-

ments for reporting by ERISA plans, ERISA would

expressly preempt Vermont's law if the law frus-

trates the attainment of nationally uniform ERISA-

plan reporting standards. Respondent’s brief (as

with the Second Circuit’s decision) more thoroughly

illustrates that Congress intended reporting on

ERISA plans to be a core ERISA subject matter, and

likewise intended uniformity in the subject matter.

21

Resp. Br. 17-24. And it also shows how the Vermont

law breaches those standards. Id. at 24-47.

The amicus wishes (in the sections below) to ex-

pand on two points key to the preemption analysis,

on which the amicus — as an association of entities

that administer or insure health benefits for nearly

one-third of all Americans — is uniquely positioned to

contribute: (1) the extent to which reporting of spe-

cifically medical claims data is a core matter within

ERISA’s confines; and (2) the heavy burdens placed

on ERISA administrators and insurers by APCD

laws, particularly disparate APCD state laws appli-

cable to multi-state ERISA plans. Both points en-

hance further the case for express ERISA preemption

under currently governing standards.

B. ERISA Requires Detailed Reporting Concern-

ing Medical Claims Data and Similar Infor-

mation, and the Vermont Law Undermines the

Exclusivity of Those Requirements

1. ERISA’s reporting obligations extend to medi-

cal claims information for self-funded and insured

ERISA plans. Most recently, with the passage of the

Patient Protection and Affordable Care Act (“ACA”)

and subsequent related legislation, Congress in-

structed additional reporting requirements for health

plans covered by ERISA. Through portions of the

Public Health Service Act (“PHSA”), 42 U.S.C. §§

300gg et seg., which are expressly incorporated into

ERISA, group health plans (including self-insured

plans) and health insurance issuers that insure

group health plans within ERISA’s scope are re-

quired to report information concerning the cost and

quality of health care. See FAQs About Affordable

Care Act Implementation (Part XV) (Apr. 29, 2013)

(“ACA FAQs”], http://www.dol.gov/ebsa/faqs/faq-aca

22

15.html. ERISA’s incorporation provision states:

“the provisions of part A of Title XXVII of the Public

Health Service Act (as amended by the Patient Pro-

tection and Affordable Care Act) shall apply to group

health plans, and health insurance issuers providing

health insurance coverage in connection with group

health plans, as if included in this subpart.” 29

U.S.C. § 1185d(a)(1) (emphasis added).

Specifically, under what are known as the PHSA’s

“transparency in coverage provisions — again, as in-

corporated into ERISA — group health plans and

health insurance issuers must submit information to

the Departments of Health and Human Services

(“HHS”), Labor, and Treasury (collectively, the “De-

partments”) and the relevant state insurance com-

missioner about:

i) Claims payment policies and practices

ii) Periodic financial disclosures

ii) Data on enrollment

iv) Data on disenrollment

v) Data on denied claims

vi) Data on rating practices

vii) Cost-sharing and payment for out-of-

network coverage

viii) Enrollee and participant rights

ix) Other information as determined appropri-

ate by the [Departments].

42 U.S.C. §§ 18031(e)(3)(A), 300gg-15a; ACA FAQs at

Q3, http://www.dol.gov/ebsa/faqs/faq-aca15.html.

The transparency provisions took effect in 2010,

but the Departments have provided notice that they

will not require compliance with the provisions until

a later date to be set by them, after notice-and-

23

comment rulemaking regarding the provisions’ re-

quirements.4 The Secretary of Labor, in turn, is

tasked with “updat[ing] and harmoniz{ing] the Secre-

tary’s rules concerning the accurate and timely dis-

closure to participants by group health plans of plan

disclosure, plan terms and conditions, and periodic

financial disclosure with the standards established”

by the Departments under the transparency provi-

sions. 42 U.S.C. § 18031(e)(3)(D); see also ACA FAQs

at Q4, http://www.dol.gov/ebsa/faqs/faq-acal5.html

(“the Departments will coordinate regulatory guid-

ance on the transparency in coverage standards”).5

Also under the ACA-related PHSA provisions in-

corporated into ERISA, the Departments, “in consul-

tation with experts in health care quality and stake-

holders, shal] develop reporting requirements for use

by a group health plan, and a health insurance issu-

er offering group or individual] health insurance cov-

erage, with respect to plan or coverage benefits and

4 See ACA FAQs at Q4, http://www.dol. gov/ebsa/faqs/faq-

acal5.html; see also HHS, Agency Information Collection Activ-

ities: Proposed Collection, Comment Request on Transparency

Reporting Provisions, 80 Fed. Reg. 48320 (Aug. 12, 2015); DOL,

FAQs about Affordable Care Act Implementation (Part XXVIII)

(Aug. 11, 2015), http://www.dol.gov/ebsa/faqs/faq-aca28.html.

5 The United States notes that the Department of Labor is

“currently considering a rulemaking to require health plans to

report more detailed information about various aspects of plan

administration, such as enrollment, claims processing, and

benefit offerings.” U.S. Amicus Br. 3-4. Just because rules

have not yet been finalized does not mean the states can act in

the meantime. See Guss v. Utah Labor Relations Bd., 353 U.S.

1, 10-11 (1957) (holding that the States are not free to regulate

conduct in areas that Congress has decided require national

uniformity through federal preemption, even when “federal

power has been delegated but lies dormant and unexercised”)

(internal quotation marks and citation omitted).

24

health care provider reimbursement structures.” 42

U.S.C. § 3300gg-17(a)(1); see 29 U.S.C. § 1185d(a).

Additional reporting is required (again as part of the

PHSA provisions incorporated into ERISA) for insur-

ers of ERISA plans, which must submit reports to

HHS concerning the percentage of premium revenue

that they spend on claims for group health plans

they insure. 42 U.S.C. § 300gg-18.

These recent additions to ERISA’s reporting re-

quirements fortify that reporting — indeed, detailed

reporting about claims, eligibility, and other aspects

of welfare benefit plan experience — is and remains a

core ERISA concern. And to boot, there are addi-

tional preemption terms that cover these new report-

ing requirements and that re-confirm the preemptive

force under § 1144(a) of the requirements. In 29

U.S.C. § 1191(a), Congress provided:

(1) Subject to paragraph (2) . . . this part

shall not be construed to supersede any

provision of State law which establishes,

implements, or continues in effect any

standard or requirement solely relating to

health insurance issuers in connection

with group health insurance coverage ex-

cept to the extent that such standard or

requirement prevents the application of a

requirement of this part.

(2) Nothing in this part shall be construed to

affect or modify the provisions of section

1144 of this title with respect to group

health plans.

29 U.S.C. § 1191(a)(1)-(2) (emphasis added). Hence,

§ 1191 instructs — in subsection (a)(2) — that substan-

tive provisions in this part of ERISA, including the

transparency requirements added from the PHSA

25

and ACA, enjoy the usual ERISA preemptive power

vested through § 1144. Subsection (a)(1) additionally

instructs that Congress’s decision to regulate in the

insurance areas covered in this part of ERISA should

not be read as an effort to upend the usual protection

for state law afforded by the insurance savings

clause, 29 U.S.C. § 1144(b)(2)(A), unless the state law

establishes standards for health insurers that pre-

vent the application of — i.e., conflict with — this part

of ERISA.®

2. The Vermont law is preempted under

§ 1144(a) because it undermines ERISA’s aim for

uniform, and thus exclusively federal, reporting.

ERISA’s reporting obligations include — particularly

as a result of ERISA’s incorporation of the PHSA

transparency standards via the ACA — reporting on

medical claims and other welfare plan data. Concur-

rently with ERISA reporting requirements, the Ver-

mont law establishes a database to determine health

care resources, needs, policy, quality, and cost. See

Vt. Stat. Ann. tit. 18, § 9410. Under the state law,

ERISA plans and their insurers must report a broad

range of data, including claims and enrollment in-

formation and “any other information relating to

6 State law requirements, such as Vermont's, requiring report-

ing on claims and other medical data would not constitute

saved state insurance regulations, since they do not “substan-

tially affect the risk pooling arrangement between the insurer

and the insured.” Ky. Ass’n of Health Plans v. Miller, 538 U.S.

329, 342 (2003). In reality, APCD laws have nothing to do with

risk-pooling at all, just reporting, and therefore are preempted

under § 1144(a) both for self-funded and insured ERISA plans.

But § 1191(a)(1) still plays an important role, because there are

other provisions in this part of ERISA besides transparency,

such as benefit mandates, that do implicate the insurance sav-

ings clause. See, e.g., 29 U.S.C. §§ 1182-83 (mandating certain

mental health and mastectomy coverage).

26

health care costs, prices, quality, utilization, or re-

sources required by the Board,” in an electronic for-

mat. Id. § 9410(c)(3), (h). Viewed in light of the

PHSA transparency requirements codified in ERISA,

Vermont's reporting scheme — as noted in the chart

below — attempts to foist a detailed, burdensome lay-

er of reporting on ERISA plans that is sometimes

overlapping with, and sometimes additional to and

conflicting with, the federal system (with rough

counterparts side by side below):

Information Required

by ERISA, 29 U.S.C.

§ 1185a, by incorporat-

ing 42 U.S.C. §§ 300gg-

15a, 18031(e)(3)(A)

Information Requir-

ed by Vt. Stat. Ann.,

tit. 18, §9410 and

Reg. H-2008-01, Vt.

Code R. (“Reg. H”)

Claims payment policies

and practices (42 U.S.C.

§ 18031(e)(3)(A)(i))

Health insurance

claims and enrollment

information

(§ 9410(c)(1); Reg.

§§ 4, 5)

H,

Periodic financial disclo-

sures (42 U.S.C.

§ 18031(e)(3)(A)(i1))

(No counterpart)

(No counterpart)

Information relating to

hospitals (§ 9410(c)(2))

Data on enrollment (42

U.S.C. § 18031(e)(A)Qii))

Member eligibility data

relating to health care

provided to Vermont

residents and health

care provided by Ver-

mont health care pro-

viders and facilities to

both Vermont residents

and non-residents

27

(§ 9410(h)(1)(A);

H, § 5(A)(9))

Reg.

Data on disenrollment

(42 U.S.C.

§ 18031(e)(3)(A)(iv))

(No counterpart)

Data on denied claims

Data on paid claims

(42 U.S.C. (§ 9410(h)(1)(B);_ _— Reg.

§ 18031(e)(3)(A)(v)) H, § 4(A), (D), 5(A))

Data on rating practices | (No counterpart)

(42 U.S.C.

§ 18031(e)(3)(A)(vi))

(No counterpart)

Subscriber information

necessary to determine

third-party liability for

benefits provided

(§ 9410(h)(1)(C))

Cost-sharing and pay-

ment for out-of-network

coverage (42 U.S.C.

§ 18031(e)(3)(A)(vii))

Co-insurance and co-

payment _ information

(Reg. H, § 4(A)(6))

(No counterpart)

Coordination of benefit

claim information (Reg.

H, § 4(A)(7))

Enrollee and participant

rights (42 U.S.C.

§ 18031(e)(3)(A)(viii))

(No counterpart)

(No counterpart)

Pharmacy claim infor-

mation (Reg. H,

§ 5(A)(14)-(15))

Other information as de-

termined appropniate by

the Departments

(42 U.S.C.

Other information re-

lating to health care

costs, prices, quality,

utilization, or resources

28

§ 18031(e)(3)(A)Gx))

required by the Board

(§ 9410(c)(3))

Timing and manner of

reporting to be developed

through coordination

among Departments (45

C.F.R. § 156.220(b); ACA

Information for ERISA

plans with 2000 or

more participants must

be submitted monthly;

500 to 1999 partici-

FAQs a! 4) pants quarterly; and

200 to 499 participants

annually (Reg. UH,

§ 6(1)

As the chart evinces, Vermont's reporting law

treads on the area covered by ERISA’s reporting re-

quirements, not only duplicating federal require-

ments but also supplementing and conflicting with

them by requiring significant additional information

and imposing a rigid reporting schedule not required

under federal law. Yet, ERISA was designed “to es-

tablish the regulation of employee welfare benefit

plans ‘as exclusively a federal concern.” Travelers,

514 U.S. at 656 (quoting Alessi v. Raybestos-

Manhattan, Inc., 451 U.S. 504, 523 (1981)). A na-

tionally “uniform administrative scheme” on report-

ing cannot possibly exist if Vermont's law, along with

similar laws existing in other states, add to ERISA’s

national reporting requirements. Fort Halifax Pack-

ing Co. v. Coyne, 482 U.S. 1, 9 (1987). On the basis of

this interference with ERISA’s objective for uniformi-

ty in the core area of reporting for employee benefit

plans, including reporting concerning medical claims

data, the Vermont statute is preempted under

§ 1144(a).

29

C. The Heavy Administrative Burdens Created by

the Vermont Law, Particularly for Multi-State

ERISA Plans, Highlight the Need for Preemp-

tion

Preemption here is necessarily enhanced, as the

Second Circuit held, by the significant burden of

complying with differing state APCD laws. See

Egelhoff v. Egelhoff, 532 U.S. 141, 151 (2001) (but-

tressing preemption holding with finding that “the

burden [of compliance with the state law] .. . is hard-

ly trivial”). Petitioner casually dismisses the Court

of Appeals’s finding that the burden created by com-

pliance with divergent laws of this genre is “intolera-

ble.” Pet. App. 25. In this regard, Petitioner as-

sumes that those administering ERISA plans, includ-

ing the BCBSA Member Companies as third-party

administrators to self-funded plans and insurers of

insured ERISA plans, already collect the data neces-

sary to meet each state’s reporting requirements, see

Pet. Br. 23, 52-55, and that it is as simple as pushing

a few buttons to transmit the required data to any

number of states. Jd. at 55 (“Reams of information

may be transmitted with a few key strokes.”). In our

experience, however, compliance with state reporting

requirements like Vermont’s can be just as time-

consuming, frustrating, and resource-intensive as

the Court of Appeals determined.

Typically, a substantial majority of a BCBSA

Member Company’s business is private-employer

based and, therefore, subject to ERISA. In adminis-

tering that significant portion of its business, then,

the BCBSA Member Company — if APCD laws were

not preempted by ERISA — must comply not only

with federal reporting obligations under ERISA to

which the ERISA plan is subject, but also potentially

30

with reporting requirements of any states where an

employer with whom the BCBSA Member Company

contracts has employees, as many of these laws pur-

port to have extra-territorial reach. Notably, Ver-

mont’s law does not require reporting only from

third-party administrators or insurers stationed in

Vermont, but from an entity — seemingly anywhere —

that processes or insures benefits for a Vermont resi-

dent. See Vt. Stat. Ann., tit. 18, § 9410(b). The pro-

spect is that a very large employer with employees in

every state — or the third-party administrator or in-

surer with whom the employer contracts — must

comply with fifty states’ different APCD laws. And

sometimes it must comply with two or more states’

laws for the same data, such as when one state re-

quires data about its residents’ claims wherever in-

curred, and the state where the claims were incurred

requires reporting on all claims in the state, irrespec-

tive of whether the recipient is a resident.

It is burdensome to respond to a single state’s

APCD law. In BCBSA Member Companies’ experi-

ence, it is not uncommon that, once such a law has

been enacted, a full-court press is required initially

to create and bring “on line” the systems necessary

for compliance. It can require the work of multiple

full-time employees as well as hundreds of additional

employee hours to wade through technical issues

with the state’s data vendor and through legal issues

with state regulators. And once reporting begins, the

compliance systems do not continue forward on auto-

pilot; there is an ongoing burden to keep the data re-

porting system up and running. To comply with a

single state law, this can require several full-time

employees on an open-ended basis, as well as signifi-

31

cant financial outlays associated with support pro-

vided by outside vendors.’

One major, and time-consuming, complication of-

ten encountered is the seemingly arbitrary percent-

age-based “thresholds” set by state laws for how

many claims files must contain a particular data el-

ement, in order for the files to avoid a finding of non-

compliance. States can require, for instance, that

third-party administrators and insurers report who

recommended admission to a medical facility. If the

healthcare provider does not include that infor-

mation when submitting his or her claim to the

ERISA plan administrator or insurer, then the entity

doing the reporting will not have the data. If the

state sets a minimum threshold requiring that at

least 50% of all claim files submitted to the state by

that entity must include that data, the entity might

not meet the reporting threshold. And if it does not

meet the threshold, the entity must devote additional

time and resources to seeking variances from the

7 For example, Vermont specifies in detail the file format and

other technical requirements necessary for data submission.

See Vt. Reg. H-2008-01, §§ 6, 7. The technical systems, there-

fore, must be developed to allow for the reporting of the re-

quested data. Before data can even be submitted, the reporter

must submit a test file to ensure compliance. See id. § 6(E).

Thereafter, if a data file does not conform, it must be corrected

and resubmitted within ten days. See id. The same scenario

can replicate itself in other states where the reporter must

likewise report for data subject to that jurisdiction’s APCD law.

And the tasks are made even more complicated and time-

consuming because the reporter must additionally scrub data to

comply with overriding federal directives, such as the federal

Substance and Alcohol Abuse statute. See 42 C.F.R. pt. 2.

32

state — for data that the healthcare provider simply

never supplied.®

Further complications arise due to a lack of uni-

formity among the states as to the data they require,

the format in which it must be reported, and the fre-

quency with which it must be transmitted. Time and

resources are required just to track which states

have reporting laws and determine whether compli-

ance is required, and then to implement and run the

necessary programs. Over time, state reporting re-

quirements also change, adding to the expense.

To be sure, BCBSA’s Member Companies incur

these burdens on a large scale because they are in

the business of providing services and products (ad-

ministrative or insvrance-related) to ERISA plans

and therefore deal with large swaths of information.

But the burdens do not go away when moved from a

macro to a micro scale. If anything, they become

more acute. Again, Vermont’s law applies, under

implementing regulations to “any administrator of

an insured, self-insured, or publicly funded health

care benefit plan offered by public and private enti-

8 Another aspect of APCD laws that creates severe difficulties

especially for out-of-state entities administering benefits for the

reporting state’s residents is that the reporting state often re-

quires data on plan features otherwise mandated by the report-

ing state in its insurance role (e.g., about cost-sharing or copay

features, etc.). But the out-of-state entity, if a self-funded

ERISA plan, will have created its own benefits array limited

only by what federal] law mandates; and insured ERISA plans

would have followed their own state’s benefit mandates. Thus,

the state requiring reporting may want information on a topic

foreign to the out-of-state entity doing the reporting on Vermont

residents. When that box then shows up empty (or below the

minimum threshold of anticipated data responses), the report

would be rejected, spiraling the endeavor into an effort to ex-

plain, and get approval for, variances.

33

ties.” Reg. H-2008-01, § 3(X). Accordingly, a large

ERISA plan that is self-administered, and has partic-

ipants and beneficiaries throughout the country,

would face the same systems start-up and ongoing

costs of compliance, except for a smaller universe of

individuals. The economies of scale that a BCBSA

Member Company might enjoy to make compliance

more streamlined would be nonexistent in the single

ERISA plan situation, with its burden then repeated

by other single ERISA plans to the same degree.

CONCLUSION

The Court should affirm the decision of the

Court of Appeals.

Respectfully submitted,

ANTHONY F. SHELLEY

Counsel of Record

THERESA S. GEE

DAWN E. MURPHY-JOHNSON

MILLER & CHEVALIER

CHARTERED

655 Fifteenth St., N.W.

Suite 900

Washington, D.C. 20005

(202) 626-5800

ashelley@milchev.com

October 2015