Amicus Curiae Brief — Rebaldo v. Cuomo

wee

H)

No. 84-1347 ~ a. Supreme Court. US

eS 8),

IN THE

Supreme Court of the United State

APR 23 1985

CLERK

ALEXANDER UL. STEVAS

os ane

OCTOBER TERM, 1984

SEBASTIAN REBALDO, AS CHAIRPERSON OF THE BOARD OF

TRUSTEES OF THE UNITED OPTICAL WORKERS INSURANCE FUND,

Petitioner,

VS.

Mario CuoMo, GOVERNOR OF THE STATE OF NEW YORK; and

DAvID AXELROD, COMMISSIONER OF HEALTH OF THE

STATE OF NEW YORK,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Second Circuit

BRIEF OF AMICUS CURIAE BLUE CROSS AND

BLUE SHIELD OF GREATER NEW YORK

ROBERT A. BICKS

BREED, ABBOTT & MORGAN

153 East 53rd Street

New York, New York 10022

(212) 888-0800

Counsel of Record for Blue Cross

and Blue Shield of Greater New

York

Or COUNSEL:

ROBERT A. BICKS

ALAN C. DREWSEN

MICHIKO TAMATE

BREED, ABBOTT & MORGAN

153 East 53rd Street

New York, New York 10022

(212) 888-0800

BEST AVAILABLE COPY

TABLE OF CONTENTS

FETTER Te LE POET RO Po

SSL OLR LI OTS IE

A. The Purpose of NYPHRM......................0........

B. The Operation of NYPHRM.............................

C. The Role of Blue Cross In New York’s Health

RN OUT GIPOIUIIID scsccccsesensncrscsneceanetnsenses

i ss cceanniigbnbienenstaidnonen

TEA

THE DECISION BELOW IS CONSISTENT WITH DECI-

SIONS OF THIS COURT AND DOES NOT CONFLICT

WITH DECISIONS OF OTHER CIRCUITS. ..................--

A. The Decision Below Squares With Prior Deci-

“ge” EES cepa mary re

B. The Decision Below Accords with Applicable

Decisions From Other Circuits .....................

C. Without Record Basis Are Petitioner’s Claims

ee NNT SIIIIID siiosnstthchentshcnicnsintthnnateademincenine

I itiinicsemcinaiviciticinatnicen PR NF Oe RE SO ae

STIPULATION OF CONSENT FOR BLUE CROSS TO APPEAR

LES LE ET IRM OR IO SAE

ii

TABLE OF AUTHORITIES

CASES

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

(EET SS Soe eee ee a

Buczynski v. General Motors Corp., 616 F.2d 1238 (3d

Cir. 1980), aff'd sub nom. Alessi v. Raybestos-

Manhattan, Inc., 451 U.S. 504 (1981) ...................

Hewlett-Packard Co. v. Barnes, 571 F.2d 502 ( 9th Cir. ),

cert. denied, 439 U.S. 831 (1978) ...........ccccccceeeeeeeeeeeees

Hewlett-Packard Co. v. Barnes, 425 F.Supp. 1294

(N.D. Ca. 1977), aff'd, 571 F.2d 502 (9th Cir. ), cert.

I I Ets EE © BET) nccscecncccrsesccssccccssssvecesercesece

Metropolitan Life Insurance Co. v. Massachusetts, No.

84-325, argument scheduled. ....................c0cccceeesseeeeeeevees

Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984) .............

Shaw v. Delta Air Lines, Inc., 103 S. Ct. 2890 (1983).....

Standard Oil Co. v. Agsalud, 633 F.2d 760 (9th Cir.

1980), aff'd mem., 454 U.S. 801 (1981)...

STATUTES AND REGULATIONS

29 U.S.C. § 1001 et seq. (1982) (Employee Retirement

Income Security Act of 1974 (“ERISA”) ) ...................

Section 3( 1), 29 U.S.C. § 1002 (1) ......ccccccccsscccccccees

Section 3( 32), 29 U.S.C. § 1002 (32) 0.0.0...

Section 4(b)(1), 29 U.S.C. § 1003 (b) ........ ee.

Section 514(a), 29 U.S.C. § 1144 (a)...

Section 514(b), 29 U.S.C. § 1144 (b) ......

Section 514(c), 29 U.S.C. § 1144 (c) .......

G2 UBC. © Been Oe FCC) CIDER ) .........cccccccccccccccces

N.Y. Ins. Law § 4308 (McKinney 1984) .........................

N.Y. Pub. Health Law § 2807-a et seq. (McKinney

tant haa nian snhehanbedninanksnnsnsnacenepiqannsaneaeaduinnens

N.Y. Pub. Health Law § 2807-a(6)(b) (McKinney

cb cdtenannacbhnAandinananenceesnancemmnnnetubnnen

RG a IN GRID WD WUE OOD vaiinseaccnesesnicccerennscacerererenscosnnes

12

7, 8, 9, 11, 12

8, 9, 10

No. 84-1347

IN THE

Supreme Court of the United States

OcTOBER TERM, 1984

SEBASTIAN REBALDO, as CHAIRPERSON OF THE BOARD OF

TRUSTEES OF THE UNITED OpTICAL WORKERS INSURANCE FUND,

Petitioner,

VS.

Mario CuoMo, GOVERNOR OF THE STATE OF NEW YORK; and

Davipd AXELROD, COMMISSIONER OF HEALTH OF THE

STATE OF NEW YORK,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Second Circuit

BRIEF OF AMICUS CURIAE BLUE CROSS

AND BLUE SHIELD OF GREATER NEW YORK

INTEREST OF THE AMICUS CURIAE

Blue Cross and Blue Shield of Greater New York (“Blue

Cross”), with the consent of all parties, submits this amicus

curiae brief in opposition to the petition for certiorari. The

decision below correctly construed ERISA’ to avoid conflict

1The Employee Retirement Income Security Act of 1974, 29

U.S.C. § 1001 et seg. (1982) (“ERISA”).

2

with long-standing New York State policy to promote max-

imum availability of health insurance coverage at affordable

rates.

A. The Purpose of NYPHRM

This proceeding seeks to preempt under ERISA one key

provision of New York State’s Prospective Hospital Reimburse-

ment Method, N.Y. Pub. Health Law §2807-a ef seg.

(McKinney Supp. 1984) (“NYPHRM”), enacted in 1982.

NYPHRM is a three year experiment in the comprehensive

regulation of all financing for hospital inpatient services, which

by its terms ends on December 31, 1985.2 Adopting NYPHRM,

the State’s goal was to curb an unacceptable rate of inflation in

the cost of hospital care, and at the same time to ameliorate

operating deficits plaguing certain not-for-profit hospitals as

well as distribute more equitably the burden of funding hospital

services.

NYPHR\M, for the first time, empowers the State to control

all aspects of hospital care financing by regulating all sources of

hospital revenue—particularly, the prices at which all persons

may purchase hospital services. Before NYPHRM, the State

controlled reimbursement to hospitals by the State Medicaid

Program and by not-for-profit insurers such as Blue Cross.

Also, pre-NYPHRM, the State regulated the charges that

hospitals levied upon others. However, the State had no power

over the largest single purchaser of hospita! services, the federal

Medicare Program. The upshot was that while the State had

2Since NYPHRM runs out at year’s end, now under consid-

eration is whether to extend NYPHRM,, as is or in some altered form,

as well as alternative modes for financing hospital services in New

York. On such issues, all interested parties have had their say,

including State officials, legislators, commercial carriers, the State's

Blue Cross plans, representatives of self-insured funds and other

persons. If NYPHRM is allowed to expire and the financing of

hospital inpatient services is determined pursuant to a new statute or

returned to the methodology that NYPHRM replaced, this case will

be moot. Likewise, if NYPHRM is to be extended, self-insured funds

are urging the very change in NYPHRM that petitioner seeks to bring

about through ERISA preemption. Such an amendmen: would also

render the case moot.

3

long since decreed that Medicaid and Blue Cross reimburse

hospitals at prospectively determined rates that accounted only

for efficient performance of services, Medicare operated under

no such discipline. Since the State had “no role in setting

Medicare rates or handling Medicare payments . . . Medicare

continued until 1982 to calculate hospital entitlements on the

basis of costs computed at the end of each fiscal year.” (App.

4.)3 Because NYPHRM would not work unless Medicare

reimbursement was brought under effective State regulation,

the Legislature specified that NYPHRM could not take effect

until the federal government agreed to adopt NYPHRM’s

methodology for Medicare reimbursement. 1982 N.Y. Laws

$36 § 10(a).

New York thus applied for a Medicare “waiver,” ie.,

authorization from the federal government to adopt NYPHRM

as an experiment in Medicare reimbursement that was other

than cost-based.4 This waiver the federal government granted

in December of 1982, and the State promptly proceeded to

implement NYPHRM.

B. The Operation of NYPHRM

NYPHRM requires that the State “establish for each

hospital an ‘inpatient revenue cap’, i.e., the maximum amount

of inpatient revenue the hospitai will be authorized to receive

for services during a twelve-month period .. . .” (App. 7.)

Each “general hospital is [then] required to establish a charge

schedule sufficient to generate the inpatient revenue authorized

by the revenue cap” (id.), taking into account that the Legisla-

ture had determined that certain payors were to receive a

“differential” from the hospitals’ gross charges. See

§ 2807-a(6)(b). At the same time, the Legislature concluded

3 References are to the Appendix to the Petition.

“From the outset of Medicare, Congress had empowered the

Secretary of Health, Education and Welfare to engage in “ex-

periments and demonstration projects” to determine, inter alia,

“whether the rates of payment or reimbursement for health care

services, approved by a State . . . would have the effect of reducing

the costs of such programs [| Medicare] without adversely affecting the

quality of such services.” 42 U S.C. § 139Sb-1(a)(1)(C) (1982).

a

that all other payors, government-sponsored as well as private,

were to pay the hospitals’ established charges.

Thus, NYPHRM prescribes two levels of payment for

hospital inpatient services. The first is based on each hospital's

applies to the federal Medicare program, the State's Medicaid

program, corporations under Article 43 of the Insurance Law,

which includes the State's Blue Cross Plans, and health mainte-

nance organizations throughout New York. All other payors,

such as commercial carriers, the State's Workers Compensation

program, its no-fault insurance program, uninsured persons,

and self-insurers such as the petitioner, pay the hospital's

charges, which are set by statute at no more than 12-15% above

such “costs.” NYPHRM does not distinguish among charge-

payors except to permit hospitals to continue any “negotiated

payment rate determination systems [with] self-insured and

self-administered groups” that were already in effect on May |,

1982.

Cc. The Role Of Blue Cross In New York's Health Care

Delivery System

Blue Cross is a not-for-profit health services corporation

organized and operating for almost one-half century now

pursuant to Article 43 ( formerly Article [X-C ) of the New York

State Insurance Law. Blue Cross operates in a 1 7-county area

that includes New York City and its environs. It provides

hospital and health related benefits to some 9 million persons.

An additional 4 million persons are covered by other Blue Cross

plans that operate, also pursuant to Article 43, throughout the

State.

New York State's Superintendent of Insurance and Com-

missioner of Health closely regulate all aspects of Blue Cross's

operations. Thus, Blue Cross can offer no contract to sub-

scribers without the prior approval of the Superintendent. N_Y.

ins. Law § 4308 (McKinney 1984). Similarly, Blue Cross rates

or “premiums” to its subscribers must also be approved by the

Superintendent. (/d.) Blue Cross can reimburse hospitals and

5

other institutional providers of care to subscribers only in

by the Commissioner of Health under NYPHRM.

Since its founding in the 1930's, Blue Cross has been

regulated by the State in such a manner as to further various

community ends the State has deemed worthy. Included

among these ends are the following:

First, via its “open enrollment” periods, during which

any person regardless of prior illness, physical condition,

age or sex can obtain health insurance, and its Medicare

supplementary coverage, Blue Cross—unlike commercial

carriers—affords coverage at a uniform community-wide

rate otherwise unavailable for high-risk individuals.

Community-rated and Medicare supplementary coverage

resulted in an operating loss for Blue Cross of

$116,000,000 for the three year period ended December

31, 1982;

Second, w provide hospitals needed operating funds,

Blue Cross, but no charge-payor under NYPHRM, makes

various interim payments to hospitals and otherwise pro-

vides their working capital prior to formal submission of

claims. During 1983 the average outstanding balance in

the advanced financing program was $180,400,000 which

reduced Blue Cross’s investment income by almost

Third, Blue Cross provides comprehensive coverage

which, in turn, limits the amount of bad debts incurred by

hospitals, bad debts which ran roughly $260,000,000 in

1982, the year before NYPHRM went into effect.

Recognizing the cost of such public functions as well as the

fact that NYPHRM both decreased Blue Cross’s pre-

NYPHRM “differential” and otherwise increased Blue Cross's

annual costs another $100,000,000 by requiring contribution to

a hospital bad debt and charity pool, the Legislature deter-

6

mined that Blue Cross (along with Medicare and Medicaid)

should purchase hospital services on a basis different from other

payors.5 Invalidation of § 2807-a(6)(b), as petitioner here

seeks, would undermine this difference in treatment and leave

one category of payors, self-insured benefit plans, free from any

State regulation over the price at which they may negotiate for

hospital services. Such consequence would disparage Blue

Cross’s ability to perform those community functions with

which it has been charged.

Blue Cross, to repeat, is required to insure, on a

“community-rated” basis, persons and groups that are, on the

whole, older, poorer and less healthy than “experience-rated”

groups and therefore constitute unacceptably high risks for

other insurers. To insure all persons at a uniform and

affordable “community” rate, Blue Cross relies on a subsidy

which it collects from its “expericnce-rated” groups. Without a

hospital payment differential, premiums to such groups could

not be set at a level that would provide the necessary subsidy,

without losing them to competitors who accept no such public

responsibility. Typically, ““experience-rated” groups are com-

prised of members who are employed, on the whole younger,

and generally healthier than those who pay the community

rate. Covering such “experience-rated” groups, Blue Cross

includes a 1% subsidy for community rates in its retention

formula used in calculating rates. Beyond that, all investment

income earned on premiums paid by “experience-rated” groups

goes to subsidize the community rate.

In short, for Blue Cross to continue to offer adequate

protection to those whose needs are the greatest, it must depend

upon, and also be attractive to, those groups whose needs are

less. However, it is those ““experience-rated” groups with lesser

needs that, afforded a unique freedom from regulation and the

right to negotiate hospital rates, would be most likely to move

5 As the district court concluded, “defendants and amicus have

provided the Court with considerable justification for the payment

rate differential established between ERISA plans and corporations

such as Blue Cross.” (App. 27.)

7

away from Blue Cross, thereby eroding the very subscriber base

on which State policy has long banked in utilizing Blue Cross as

its instrument for affordable community rates.

STATEMENT OF THE CASE

Petitioner is Chairperson of a self-insured and self-

administered employee welfare benefit plan (the “Fund”’)

regulated by ERISA. The Fund had no contracts in place with

hospitals at the statutory cutoff date of May 1, 1982. As of the

date it became a self-insurer on January 1, 1983, the Fund

apparently entered into contracts with hospitals for inpatient

services at rates below those prescribed in § 2807-a(6)(b). In

December, 1983, almost one and one-half years after

NYPHRM was enacted, this suit was commenced to preserve

those contracts entered into after NYPHRM’s deadline.

The district court for the Southern District of New York

granted summary judgment for petitioner and declared § 2807-

a(6)(b) to be preempted by ERISA § 514(a) “to the extent it

prohibits a hospital from establishing inpatient charges for self-

insured employee benefit plans covered by ERISA which are

other than those authorized by Public Health Law § 2807-

a(6).” (App. 45.)

Vacating the decision of the district court, the United

States Court of Appeals for the Second Circuit held, in Rebaldo

v. Cuomo, 749 F.2d 133 (2d Cir. 1984), that § 2807-a(6)(b)

does not purport to regulate the structure, administration or

benefits afforded by ERISA plans. Therefore that statute was

deemed not to “relate to” ERISA plans and not preempted

under ERISA § 514(a).

SUMMARY OF ARGUMENT

Petitioner has failed to show that the decision below

conflicts with the decision of any other court of appeals or with

applicable decisions of this Court. As a result, the petition for

certiorari should be denied.

" 8

ARGUMENT

THE DECISION BELOW IS CONSISTENT

WITH DECISIONS OF THIS COURT AND DOES

NOT CONFLICT WITH DECISIONS OF OTHER

CIRCUITS

The beginning point below was that, reading ERISA

§§ 514(a) and 514(c)(2) together, “a state law must ‘pur-

port[ ] to regulate... the terms and conditions of employee

benefit plans’ to fall within the preemption provision” (App.

9). The court recognized the “broad and liberal construction”

given the term “relate to” by the Supreme Court in Shaw vy.

Delta Air Lines, Inc., 103 S. Ct. 2890 (1983) (App. 10) and

that “ERISA preempts state laws that require or forbid the

provision of a certain kind of benefit.” (App. 11.) At the same

time, the court went on to emphasize that:

ERISA does not invalidate those State statutes whose

effect on pension plans is simply tangential in nature. . . .

This conclusion follows as a matter of common sense from

the fact that ERISA plan members and managers are

bound to engage in myriad transactions that Congress

never considered when it drafted § 514. A preemption

provision designed to prevent state interference with feder-

al control of ERISA plans does not require the creation of

a fully insulated legal world that excludes these plans from

regulation of any purely local transaction. (App. 10.)

This conclusion applies with particular force where, as here, the

“containment of hospital costs is an exercise cf = State’s police

powers, which should not be superseded by federal regulations

unless that was the clear intent of Congress.” ( Jd.)

Against that background, the court held that ““New York’s

decision to regulate the amounts hospitals can charge” was

among those “state actions [that] may affect employee benefit

plans in too tenuous, remote, or peripheral a manner to warrant

a finding that the law ‘relates to’ the plan.” (App. 11.) Re ected

because it “proves altogether too much” was the contention

9

that NYPHRM should be preempted because it increased the

Fund’s cost of doing business:

The purchase of hospital service is like the purchase of

public utility service, or of any other service or commodity

whose price is controlled by the State. Insofar as the

regulation of hospital rates affects a plan’s cost of doing

business, it also may be analogized to State labor laws that

govern working conditions and labor costs, to rent control

laws that determine what employee benefit plans pay or

receive for rental property, and even to such minor costs as

the Thruway, bridge and tunnel tolls that are charged to

pians’ officers or employees. In short, if ERISA is held to

invalidate every State action that may increase the cost of

operating employee benefit plans, those plans will be

permitted a charmed existence that never was con-

templated by Congress. Where, as here, a State statute of

general application does not affect the structure, the admin-

istration, or the type of benefits provided by an ERISA

plan, the mere fact that the statute has some economic

impact on the plan does not require that the statute be

invalidated. (App. 12.)

Nor was whatever “indirect economic impact as may result

from State control over hospital rates” deemed to “run counter

to ERISA’s aim of national uniformity in plan regulation.”

(App. 12-13.) For even without NYPHRM, “every hospital

will be able to set its own rates for ERISA plans, and

[ petitioner] does not contend that these rates are, or will be,

uniform, even as between hospitals in the same locality. Lack

of uniformity is not a valid argument for preemption of New

York’s statute.” (App. 13.)

A. The Decision Below Squares With

Prior Decisions By This Court

In Shaw v. Delta Air Lines, Inc., 103 S. Ct. 2890 (1983),

for example, the Court held that subsections of two New York

statutes relating to discrimination on the basis of preg-

nancy—the Human Rights Law and the Disability Benefits

10

Law—“relate[d] to” ERISA plans, the former because it

required a specific structure in ‘such plans and the latter because

it required that the plans pay specific benefits. Jd. at 2900. As

noted by the court below, by way of contrast, NYPHRM

regulates neither the structure of nor benefits to be provided by

ERISA plans. - In addition, while the purpose of the laws in

Shaw was to regulate employment practices, which includes the

provision of employee benefits, the purpose of NYPHRM is

solely to regulate hospital costs and is in no way concerned with

the structure, administration or benefits package of ERISA

plans.

Similarly, unlike Alessi v. Raybestos-Manhattan, Inc., 451

U.S. 504 (1981), no conflict exists between NYPHRM and

federal law. In Alessi, the New Jersey Workers’ Compensation

Act, which prohibited the integration of pension benefits with

workers’ compensation awards, was deemed to be preempted

because Congress had deliberately permitted integration.

Hence, preemption was based on the narrow ground that there

existed a “direct clash between the state statute and the federal

policy to keep calculation of pension benefits a subject of either

labor-management negotiations or federal legislation.” Jd. at

526 n.22.6 In contrast, no federal policy can be derived from

ERISA or any other federal law, with respect to the price

payable by particular persons—ERISA plans or anyone else

—for hospital inpatient services.

Also misplaced is petitioner’s reliance on Alessi for the

proposition that NYPHRM is preempted because through its

regulation of hospital costs it “indirectly” regulates ERISA

plans. (Petition, at 15-16.) As the Third Circuit found in

Alessi, the “only purpose and effect of the [New Jersey] statute

is to set forth an additional statutory requirement for pension

plans.” Buczynski v. General Motors Corp., 616 F.2d 1238, 1250

(3d Cir. 1980), aff'd sub nom. Alessi v. Raybestos-Manhattan,

Inc., 451 U.S. 504 (1981) (emphasis in original). Thus, the

6 The Supreme Court in Shaw recognized that the Alessi decision

rested narrowly on “the state law’s frusiration of [ particular] Con-

gressional intent.” Shaw, 103 S. Ct. at 2900 n.15.

11

statute was “indirect” only in that the pension regulation was

embodied in a workers’ compensation law.

Here, New York State makes no attempt to “avoid[ j

through form the substance of the preemption provision.”

Alessi, 451 U.S. at 525. NYPHRM in form and in fact is a

hospital cost containment statute. Nowhere mentioned is

ERISA. It does refer to “negotiated payment rate determina-

tion systems between self-insured and _ self-administered

groups”—but only to preserve those already in effect when

NYPHRM was enacted. The fact is that the great bulk of

ERISA plans are not “self-insured and _ self-administered

groups,” and many of the most Significant “employee benefit

plans” are exempt from ERISA. See 29 U.S.C. §§ 1002(1),

1002( 32), 1003(b)(1).

B. The Decision Below Accords with Applicable Decisions

from Other Circuits.

Thus, Standard Oil Co. v. Agsalud, 633 F.2d 760 (9th Cir.

1980), aff'd mem., 454 U.S. 801 (1981), held that ERISA

preempted Hawaii’s Comprehensive Prepaid Health Care Act

which, unlike NYPHRM, “directly and expressly regulates

employers and the type of benefits they provide employees.”

633 F.2d at 766.7 The decision below acknowledged that

“ERISA preempts state laws that require or forbid the provi-

sion of a certain kind of benefit” (App. 11), but correctly

concluded that NYPHRM was not such a law.

There is likewise no conflict with Hewlett Packard Co. v

Barnes, 571 F.2d 502 (9th Cir.), cert. denied, 439 U.S. 831

(1978). The California Knox-Keene Health Care Service Plan

Act there preempted indisputably regulated ERISA plans. The

California Act regulated “health care service plans” which were

any plans providing health care services or insurance (including

self-insurance ) in return for a prepaid charge. As noted by the

7 In fact, the State itself in Agsalud argued that the Hawaii Act

did not “relate to” a: employee benefit plan because it “pertain[ed ]

principally to benefits rather than administration.” Jd. at 765.

12

district court, the Act directly regulated “‘such areas as funding,

disclosure, sales practices and quality of services.” Hewlett-

Packard Co. v. Barnes, 425 F. Supp. 1294, 1297 (N.D. Ca.

1977), aff'd, 571 F.2d 502 (9th Cir. ), cert. denied, 439 U.S. 831

(1978).8

C. Without Record Basis Are Petitioner’s Claims Of Adverse

Impact

Finally, the petitioner, as well as the amici, fall back on the

prediction of dire consequences for self-insurance if the decision

below is allowed to stand. Thus, petitioner asserts that § 2807-

a(6)(b) makes self-insurance unprofitable, that all previously

self-insured funds will be forced to return to Blue Cross and will

then be forced to accept state-mandated benefits they might

otherwise not want to provide for their members. To this point

the short answer offered below suffices:

Where, as here, a State statute of general application

does not affect the structure, the administration, or the type

of benefits provided by an ERISA plan, the mere fact that

the statute has some economic impact on the plan does not

require that the statute be invalidated. (App. 12.)

8 Similarly wide of the mark is the suggestion that the “issues

presented are related closely to those before the Court in Metropolitan

Life Insurance Company v. Massachusetts, No. 84-325, argument

scheduled.” (Petition at 1.) While both concern ERISA preemption,

at this juncture the issues presented to this Court are otherwise

dissimilar.

In Metropolitan, the question is whether a Massachusetts statute

that requires insurance companies to provide specified medical ben-

efits in all their contracts, presumably including those sold to ERISA

plans, is saved from preemption by ERISA § 514(b), the insurance

savings clause. In the present case, the Second Circuit determined

that NYPHRM was not preempted by ERISA because the state

statute did not “relate to” ERISA plans. Hence, even if this Court

determines that the Massachusetts statute in Metropolitan is pre-

empted, based on an interpret #1 of the scope of the insurance

savings clause urged by appellant ierein, such a decision would have

no effect on whether § 2807-a(6)(b), which regulates the price

hospitals can charge for inpatient services, “relates to” ERISA plans.

13

CONCLUSION

The petition for a writ of certiorari should be denied.

< Respectfully submitted,

BREED, ABBOTT & MORGAN

. 153 East 53rd Street

New York, New York 10022

(212) 888-0800

Counsel of Record for

Blue Cross and Blue Shield

of Greater New York

OF COUNSEL:

ROBERT A. BICKS

ALAN C. DREWSEN

MICHIKO TAMATE

APPENDIX

SUPREME COURT OF THE UNITED STATES

Octoser Term, 1984

SEBASTIAN REBALDO, as Chairperson of the

Board of Trustees of the Unrrep Optica.

Workers INSURANCE FUND,

Petitioner,

— against —

Mario Cuomo, GOVERNOR OF THE STATE OF

New York; and Davip AxeL_rop, Commis-

SIONEK OF HEALTH OF THE STATE OF NEW

York,

Respondents.

It ts HEREBY AGREED by and between the parties herein,

through their counsel, that consent is given, pursuant to Rule 36

of the Revised Rules of this Court, for Blue Cross and Blue

Shield of Greater New York to file a brief in this proceeding

before the Supreme Court of the United States as amicus

curiae.

Dated: New York, New York

March 6, 1985

Sipser, Weinstock, Harper, Dorn

& Lemowrrz

By /s/

A Member of the Firm

Attorneys for Petitioner

380 Madison Avenue

New York, New York 10017

(212) 867-2100

ROBERT ABRAMS

Attorney General of the

State of New York

By /s/

Judith A. Gordon,

Assistant Attorney General

Attorney for Respondents

2 World Trade Center

New York, New York 10047

(212) 488-2462