Amicus Curiae Brief — Standard Insurance Co. v. Saklad

No. 93-799

IN THE

Supreme Court of the United States

OCTOBER TERM, 1993

MOTION FILED

; NEC 2 1 1S23

STANDARD INSURANCE COMPANY, aaa

Petitioner,

Vv.

JEROME SAKLAD,

Respondent.

On Petition for Writ of Certiorari

to the Court of Appeals

of the State of Oregon

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE

AND BRIEF AMICUS CURIAE OF THE HEALTH

INSURANCE ASSOCIATION OF AMERICA

IN SUPPORT OF PETITIONER

WALTER R. ALLAN

SHAWN HANSON

MICHAEL A. CONLEY

PILLSBURY MADISON & SUTRO

1667 K. Street, N.W.

Suite 1100

(202) S87-0300

Attorneys for Amicus Curiae

Health Insurance Association

of America

* Counsel of Record

Of Counsel:

THERESA L. SOROTA

HEALTH INSURANCE

ASSOCIATION OF AMERICA

1025 Connecticut Ave., N.W.

Washington, D.C. 20036

(202) 223-7822

December 21, 1993

WILSON - Epgs PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

IN THE

Supreme Court of the United States

OCTOBER TERM, 1993

No. 93-799

STANDARD INSURANCE COMPANY,

‘ Petitioner,

JEROME SAKLAD,

Respondent.

On Petition for Writ of Certiorari

to the Court of Appeals

of the State of Oregon

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE

Pursuant to Rule 37.2 of the Rules of this Court, the

Health Insurance Association of America (“HIAA”)

hereby moves for leave to file the attached brief amicus

curiae in sepport of the petition filed by Standard Insur-

ance Company. Petitioner has consented to the filing of

this brief. Although respondent has not opposed the filing

of this brief, HIAA has been unable to contact him di-

rectly to obtain his formal consent.

There are two good reasons why this Court should

accept HIAA’s brief in addition to the petition. As an

organization that represents the interests of more than

250 insurance companies in the United States) HIAA

offers this Court a uniquely broad view of the practical

impact of the Oregon Court of Appeals’ decision and the

conflict in authority concerning whether ERISA* pre-empts

provisions like the Oregon garnishment exemption at issue

in this case. In particular, HIAA’s brief focuses on the

insurance industry’s ongoing struggle to contain costs in

the face of enormous losses caused by fraud. HIAA

emphasizes the risk that such efforts will be thwarted by

decisions like the Oregon Court of Appeals’ ruling in this

case, which deprives benefit plans of what is often the

only effective means of enforcing judgments against de-

frauders like respondent.

Additionally, HIAA’s brief discusses an Eleventh Cir-

cuit decision * issued since the petition was filed that con-

flicts with the Oregon Court of Appeals’ decision in this

case and further demonstrates the need for this Court to

clarify the bounds of ERISA pre-emption.

For these reasons, HIAA requests leave to file the

attached brief amicus curiae.

1 HIAA is a non-profit trade association whose members provide

approximately 70 percent of the fully-insured commercial health

insurance in the United States. Most of the policies issued by

HIAA’s members are provided to or through employee benefit plans

covered by the Employee Retirement Income Security Act of 1974

(“ERISA”).

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

$§ 1001 et seq.

° Schlein v. Mills, 1993 WL 468513 (CA11 Dec. 2, 1993).

Of Counsel:

THERESA L. SOROTA

HEALTH INSURANCE

ASSOCIATION OF AMERICA

1025 Connecticut Ave., N.W.

Washington, D.C. 20036

(202) 223-7822

December 21, 1993

Respectfully submitted,

WALTER R. ALLAN *

SHAWN HANSON

MICHAEL A. CONLEY

PILLSBURY MADISON & SUTRO

1667 K. Street, N.W.

Suite 1100

(202) 887-0300

Attorneys for Amicus Curiae

Health Insurance Association

of America

* Counsel of Record

TABLE OF CONTENTS

INTEREST OF THE AMICUS .q..W0..o.....cccccccseccsseeees

REASONS FOR GRANTING THE PETITION ...........

I.

II.

ITI.

MACKEY DOES NOT REQUIRE A STATE

STATUTE TO MENTION ERISA BY NAME

IN ORDER TO BE PRE-EMPTED ........00......

MACKEY DOES NOT EXEMPT EVERY

STATE-LAW PROVISION RELATING TO

GARNISHMENT FROM. ERISA PRE-EMP-

CLARIFYING MACKEY WILL FURTHER

THE POLICIES UNDERLYING ERISA PRE-

EMPTION AND WILL ENABLE BENEFIT

PLANS TO REDUCE THE IMPACT OF

BF RAAIEE i. .ciecisenttasaniseennaea ee

COC LATE GIES «ncninreassosacescacessincaciopsibeaeeeaie eeenenane ene ae

(i)

11

ii

TABLE OF AUTHORITIES

Cases Page

CSCAC Vv. El Capitan Development Co., 53 Cal.3d

1041, 282 Cal. Rptr. 277, cert. denied, 112 S. Ct.

GBD (AGGE) » nsartentsentiictiinderucnsaaaeee cebu 2

FMC Corp. V. Holliday, 498 U.S. 52 (1990) ............. 5, 10

Fort Halifax Packing Co. Vv. Coyne, 482 U.S. 1

€| | SET ROAR Lee Li e o 9

Guidry Vv. Sheet Metal Workers International As-

sociation, 1993 WL 444979 (Nov. 4, 1993) .......... 2, 3,6

Ingersoll-Rand Co. Vv. McClendon, 498 U.S. 133

CBD D) caccecccocsescsecrnsenntninbitndibaiiies nae 6, 9

Iron Workers Pension Fund vy. Terotechnology,

891 F.2d 548 (CA5), cert. denied, 497 U.S. 1024

CRO oa ccnnncascrnconsccscnantissicaticsinsousueeee 2

Mackey v. Lanier Collection Agency, 486 U.S. 825

CBDGIB D xasccscccscrcisescncdnincasecsmnsinatiapenmaanmadaalaianees passim

Schlein v. Mills, 1993 WL 468: 513 (CA11 Dee. 2,

SOG ic cassee eee PRR CORR ERIN 52 cebsnaiiio . 23.6

Statutes and Codes

Employee Retirement Income Security Act of 1974,

29 U.S.C. § 1001 et seq. ......... vaccsceenee-eenceeeneefMASSiMm

Conn. Gen. Stat. § § 52-352b(e) (1993)

Ga. Code Ann. § 18-4-22.1 (1982) eee

Idaho Code § 41-1834 6. | pie nes oe ere

Iowa Code § 627.6(8) (c) (1993) ...........0.0000000..

La. Rev. Stat. Ann. § 22:646 (1993) 000000.

Me. Rev. Stat. Ann. tit. 14 § 4422(13) (c) (1993)..

Mich. Comp. Laws § 600.6023 (f) (1993) 0.000000.

Minn. Stat. § 550.39 (1993) ....0000... ee. Bae

Miss. Code Ann. § 85-3-1 (b) (ii) (1991)... “Ay <2 ake A

N.J. Rev. Stat. § 17B: 24-8 (1993) ............000000000.

Pa. Cons. Stat. Ann. tit. 42 § 8124(c) (7) (1993)..

S.C. Code Ann. § 15-41-30(10) (c) (1991) 00.

Tenn. Code Ann. § 26-2-110(a) (1993) 20000000.

Other Authorities

Health Insurance Association of America, Prevent-

ing and Controlling Health Insurance Fraud

CRO, BOE) cansicctsiicsadancdadacetuabancnanenee 2

Ee

Cwwwwwwwwww uw

ili

TABLE OF AUTHORITIES—Continued

Page

General Accounting Office, GAO/HRD 92-69, Re-

port to Chairman, Subcommittee on Human Re-

sources and Intergovernmental Relations, Com-

mittee on Government Operations, House of

Representatives (May 1992) ........................-.---000 2

IN THE

Supreme Court of the United States

OCTOBER TERM, 1993

No. 93-799

STANDARD INSURANCE COMPANY,

Petitioner,

Vv.

JEROME SAKLAD,

Respondent.

On Petition for Writ of Certiorari

to the Court of Appeals

of the State of Oregon

BRIEF AMICUS CURIAE OF THE HEALTH

INSURANCE ASSOCIATION OF AMERICA

IN SUPPORT OF PETITIONER

INTEREST OF THE AMICUS

The Health Insurance Association of America (“HIAA”)

is a non-profit national trade organization formed to

advance the interests of the more than 250 insurance

companies it represents. These companies provide ap-

proximately 70 percent of the fully-insured commercial

health insurance in the United States, providing health

care coverage to over 65 million Americans. Most of the

policies issued by HIAA’s members are provided to or

through employee benefit plans covered by the Employee

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

HIAA’s interest in the decision below is direct and

substantial. Health care fraud like that perpetrated by

2

the respondent in this case is unfortunately common and

costly." If benefit plan sponsors are unable to enforce

judgments against those who defraud them, the enormous

burden of health care fraud * will be borne by plan bene-

ficiaries in the form of increased premium costs or reduced

benefits.

HIAA is also affected by the lack of uniformity in the

iaw governing whether a defrauded benefit plan can ob-

tain restitution from the defrauder, which is highlighted

by ‘is case. Because the Oregon Court of Appeals’ deci-

sion in this case conflicts with the Tenth Circuit’s recent

ruling in Guidry v. Sheet Metal Workers International

Association, 1993 WL 444979 (Nov. 4, 1993) and the

Eleventh Circuit’s decision in Schlein v. Mills, 1993 WL

468513 (Dec. 2, 1993), the ability of benefit plans to

enforce judgments against those who have defrauded them

is different in Oregon than it is in Colorado and Florida.

Further, the rationale underlying the Oregon court’s ruling

on the bounds of ERISA pre-emption is in substantial

tension with the position on this issue taken by a number

of other courts.* In light of these differing views, it is at

1 Health Insurance Association of America, Preventing and Con-

trolling Health Insurance Fraud (Jan. 1991), p. 1 (noting the

estimate that health insurance fraud in 1990 constituted a 10 per-

cent surcharge of $55 billion to the annual national cost of health

care).

2See General Accounting Office, GAO/HRD 92-69, Report to

Chairman, Subcommittee on Human Resources and Intergovern-

mental Relations, Committee on Government Operations, House of

Representatives (May 1992), p. 1 (noting the common estimate

that losses resulting from fraud and abuse account for 10 percent

of current health care spending and that health care spending is

expected to reach $1 trillion by 1995).

3 See CSCAC v. El Capitan Development Co., 58 Cal.3d 1041, 282

Cal. Rptr. 277, cert. denied, 112 S. Ct. 430 (1991); Iron Workers

Pension Fund v. Terotechnology, 891 F.2d 548 (CA5), cert. denied,

497 U.S. 1024 (1990). The petition discusses these cases at pages

11-13.

3

best uncertain whether a benefit plan could collect judg-

ments in those States in which exemption provisions like

the one at issue in this case have not been reviewed for

ERISA pre-emption.* This disparity in state laws will

generate increased administrative costs, because benefit

plans will have to comply with varying provisions govern-

ing the collection of fraud judgments.

REASONS FOR GRANTING THE PETITION

The petition presents a classic case for this Court’s

intervention. The lower courts are confused about two

aspects of this Court’s ruling concerning the scope of

ERISA pre-emption in Mackey v. Lanier Collection

Agency, 486 U.S. 825 (1988); both are presented in the

petition. Relying on language from Mackey, the Oregon

Court of Appeals ruled in this case that ERISA does not

pre-empt a state-law provision exempting ERISA plan

benefits from garnishment because (1) the exemption is

not limited to ERISA benefits; and (2) this Court has

tacitly held that generally applicable exemptions from

garnishment are not pre-empted by ERISA. This reading

of Mackey conflicts squarely with the recent Tenth Circuit

decision in Guidry and Eleventh Circuit ruling in Schlein,

is inconsistent with this Court’s ERISA precedent, and is

contrary to the policy and purpose underlying ERISA’s

pre-emption provision.

In addition to satisfying these traditional criteria for

certworthiness, this case offers the Court a particularly

* Provisions exempting plan benefits from garnishment exist in

a variety of forms in most states. A sampling of these statutes

reveals both the “patchwork” of state laws relating to garnishment

exemptions and the need for uniformity. See, e.g., Conn. Gen. Stat.

§ 52-352b(e) (1993); Idaho Code § 41-1834 (1993); Iowa Code

§ 627.6(8) (c) (1993); La. Rev. Stat. Ann. § 22:646 (1993); Me.

Rev. Stat. Ann. tit. 14 4422(18)(c) (1993); Mich. Comp. Laws

§ 600.6023(f) (1993); Minn. Stat. § 550.39 (1998); Miss. Code

Ann. § 85-3-1(b) (ii) (1991); N.J. Rev. Stat. § 17B-24-8 (1993) ;

Pa. Cons. Stat. Ann. tit. 42 § 8124(c) (7) (1998); S.C. Code Ann.

§ 15-41-30(10) (c) (1991); Tenn. Code Ann. § 26-2-110(a) (1993).

4

good vehicle for resolving the evident confusion concern-

ing what this Court held in Mackey concerning the bounds

of ERISA pre-emption. The issues presented are well-

defined and free of procedural problems, and the facts

and governing law are undisputed. There is no ostensible

benefit to be gained by allowing these issues to “percolate”

any longer in the lower courts: the split in authority on

the meaning of Mackey is established and unlikely to

resolve itself. By taking this case and clarifying two

points in Mackey, this Court would eliminate this con-

fusion speedily.

Beyond resolving the conflicting decisions regarding

the meaning of Mackey and the scope of ERISA pre-

emption, granting the petition and reversing the decision

of the Oregon Court of Appeals would further the public

interest in two related ways. First, a ruling that ERISA

pre-empts antigarnishment provisions like that at issue in

this case would mean that a defrauded benefit plan could

use existing state-law garnishment procedures to satisfy

judgments against the defrauder and thereby offset the

burden caused by health care fraud. Second, a ruling

ensuring the uniform availability of such procedures would

avoid a “patchwork” of conflicting state laws and the

accompanying administrative burdens on benefit plans

and benefit providers like HIAA’s members.

I. MACKEY DOES NOT REQUIRE A STATE STAT-

UTE TO MENTION ERISA BY NAME IN ORDER

TO BE PRE-EMPTED.

Mackey v. Lanier Collection Agency, supra, addressed

whether a creditor could enforce a series of judgments by

garnishing certain benefits from the debtors’ vacation and

holiday ‘benefits plan, which was an “employee welfare

benefit plan” under ERISA § 1002(1). Georgia law

established generally applicable garnishment procedures

but exempted from garnishment “[fJunds or benefits of

[an] . . . employee benefit plan or program subject to...

5

[ERISA].” Ga. Code Ann. § 18-4-22.1 (1982). This

Court ruled that the antigarnishment provision was pre-

empted under ERISA § 514(a) because it “relate[d] to”

an employee benefits plan. 486 U.S., at 829-30. In dis-

cussing why the antigarnishment exception was pre-empted

while the general garnishment scheme was not, the Court

provided the following explanatory footnote—which ap-

parently has given rise to confusion regarding the scope

of ERISA pre-emption:

“It is not incongruous to find that Ga. Code Ann.

§ 18-4-20 (Supp. 1987), which provides for garnish-

ment of ERISA welfare benefit plans, escapes pre-

emption under ERISA, while striking down § 18-

4-22.1—an cxception to the general state-law pro-

vision—as pre-empted. While we believe that state-

law garnishment procedures are not pre-empted by

$ 514(a), we also conclude that any state law which

singles out ERISA plans, by express reference, for

special treatment is pre-empted. ... It is this ‘singling

out’ that pre-empts the Georgia antigarnishment ex-

ception.” Mackey, 486 U.S., at 838, n.12 (em-

phasis in original).

In an apparent misunderstanding of the Court’s reason-

ing in Mackey, the Oregon Court of Appeals held that

the antigarnishment exemption at issue in this case did

not “relate to” an ERISA plan—and therefore was not

pre-empted by ERISA-—because it was not limited to

ERISA-covered plans, even though there was no dispute

that the exemption applied to benefits derived from plans

covered by ERISA. Pet. App. 3. This analysis is con-

trary to this Court’s ERISA pre-emption precedent, which

holds that a state statute can be pre-empted by ERISA in

any of three ways. First, a statute is pre-empted if—as

was true in’ Mackey—it refers to ERISA plans directly.

Second, a statute is pre-empted if it refers to plans that

are covered by ERISA without mentioning ERISA di-

rectly. See FMC Corp. v. Holliday, 498 U.S. 52, 58

(1990); Mackey, 486 U.S., at 831. Third, a statute is

6

pre-empted if it has a “connection with” a plan covered

by ERISA, i.e., if the ERISA plan is affected by the

statute at issue “even if the law is not specifically de-

signed to affect such plans, or the effect is only indirect.”

See Ingersoll-Rand Co. v. McClendon, 498 U.S. 133,

13@ (1990).

The Oregon Court of Appeals apparently understood

Mackey as limiting the pre-emptive scope of ERISA to

Statutes that “single out” ERISA by name. Pet. App. 3.

As such, the Court of Appeals conducted only one-third

of the pre-emption analysis required by this Court’s prece-

dent and missed the point of Mackey. Other courts have

adopted a similarly erroneous view of the Court’s holding

in Mackey.° 5:

A different view of Mackey—one consistent with this

Court’s precedent—is that the Court included the foot-

noted language quoted above to explain why the particu-

lar antigarnishment exemption in Mackey was pre-empted,

and not to repudiate the alternative bases for pre-emption

under the Court’s ERISA cases. In accord with this in-

terpretation of Mackey, the Tenth Circuit in Guidry found

that a Colorado antigarnishment exception was pre-empted

by ERISA §514(a) although the exemption refers only

to the “ ‘avails of any pension or retirement benefits, or

deferred compensation plan,’” and—like the Oregon ex-

emption at issue in this case—does not mention ERISA

specifically. Similarly, the Eleventh Circuit recently ruled

in Schlein that ERISA pre-empted a Florida garnishment

exemption ° although the “statutory language of [the ex-

5 The petition discusses these cases and their various construc-

tions of Mackey at pages 20-21.

® The Eleventh Circuit ruled that the Florida exemption, though

pre-empted by ERISA § 514(a), fell within the §514(d) exception

to pre-emption. 1993 WL 468513, at *10. The Schlein court’s dis-

cussion of §514(a) is what is relevant for purposes of analyzing

the split in authority that HIAA and petitioner have asked this

Court to resolve.

7

emption provision] does not expressly mention ERISA.”

1993 WL 468513, at *5. The Schlein court found that

the exemption “related to” ERISA because benefit plans

covered by ERISA fell within the exemption’s scope.

Ibid.

This Court should grant the petition to resolve this split

in authority and clarify that nothing in Mackey was in-

tended to abrogate this Court’s holdings that S$ 514(a) of

ERISA pre-empts any state law that refers to ERISA

plans directly or indirectly, or substantively affects such

plans.

If. MACKEY DOES NOT EXEMPT EVERY STATE-

LAW PROVISION RELATING TO GARNISHMENT

FROM ERISA PRE-EMPTION.

This Court recognized in Mackey that general state-

law garnishment mechanisms are not pre-empted by

ERISA because they are necessary to give effect to the

“sue and be sued” provision of ERISA ($ 502(d)), be-

cause Congress “remain[ed] silent” though it was aware

welfare benefits could be garnisheed, and because such

mechanisms are merely “procedural”’* in nature. 486

US., at 833-38.

7 The Court carefully limited the scope of its ruling that Georgia’s

general garnishment procedures were not pre-empted:

“We note... that under Georgia law (at least), garnish-

ment is a ‘procedural’ mechanism for the enforcement of judg-

ments. Georgia’s statute that provides for garnishment creates

no substantive causes of action, no new bases for relief, or any

grounds for recovery; the Georgia garnishment law does not

create the ruie of decision in any case affixing liability. Rather

under Georgia law, postjudgment garnishment is nothing more

than a method to collect judgments otherwise obtained by pre-

vailing on a claim against the garnishee. See Ga. Code Ann.

§ 18-4-60 (1982).” Mackey, 486 U.S., at 835, n.10 (emphasis in

original).

8

In rejecting petitioner’s pre-emption argument in this

case, the Oregon Court of Appeals collapsed—and thereby

distorted—this Court’s analysis in Mackey:

“We understand Mackey to mean that the congres-

sional silence concerning garnishment of ERISA wel-

fare plans acknowledged and accepted various state

practices soncerning garnishment, including the prac-

tice of refusing garnishment.” Pet. App. 3 (emphasis

added ).

By tocusing only on the “congressional silence” aspect

of this Court’s reasoning in Mackey, the Oregon Court

of Appeals reached the anomalous conclusion that the

Oregon antigarnishment provision survived ERISA pre-

emption even though—in direct contrast to the general

garnishment procedures upheld in Mackey—this provision

frustrated ERISA’s “sue and be sued” provision and had

a substantive impact on a plan’s ability to enforce a judg-

ment. In this case, respondent was able to use the Oregon

antigarnishment provision at issue to prevent an ERISA

plan fiduciary from recouping losses the plan suffered

because of respondent’s fraud. Thus, although petitioner

was able to sue respondent under ERISA’s civil enforce-

ment provision and obtain a judgment against him, the

judgment was robbed of effectiveness by the Oregon anti-

garnishment provision. Respondent was able to resist the

force of the judgment against him because of the sub-

stantive “right” to relief created by the Oregon anti-

garnishment provision. This is the type of conflict with

state law that ERISA’s broad pre-emption provision was

intended to eliminate.

This Court’s ruling in Mackey that Georgia’s general

garnishment procedures were not pre-empted by ERISA

was careful and deliberately narrow. The Court noted

that whether these provisions were pre-empted was a

“complex” and “close” question, 486 U.S., at 830-31,

and took care to explain that the provisions withstood

pre-emption only because they satisfied each of the three

9

criteria set forth above. Although some courts have been

sensitive to tlie distinctions this Court drew in Mackey

others—like the Oregon Court of Appeals in this case—-

have not. By reading Mackey as permitting all provisions

of the Oregon garnishment statute to be classified as “pro-

cedural”—and thus not pre-empted—the Oregon Court of

Appeals restricted the scope of ERISA pre-emption in a

way that is inconsistent with this Court’s settled precedent

and the purpose of ERISA’s pre-emption provision. This

Court should grant the petition to clarify the distinction

drawn in Mackey between purely procedural state-law

mechanisms that are not pre-empted by ERISA and state

laws that have a substantive impact on ERISA benefit

plans and therefore fall within ERISA’s pre-emptive scope.

Ill. CLARIFYING MACKEY WILL FURTHER THE

POLICIES UNDERLYING ERISA PRE-EMPTION

AND WILL ENABLE BENEFIT PLANS TO RE-

DUCE THE IMPACT OF FRAUD.

This Court has emphasized that Congress’s overriding

purpose in enacting ERISA’s broad pre-emption provision

was to eliminate conflicting or inconsistent state and local

regulation of ERISA-covered plans to increase efficiency

and reduce the cost of providing benefits,° and has recog-

nized that subjecting benefit providers to disparate legal

regimes increases the risk that employers will opt not to

offer certain benefits to their employees. Fort Halifax

Packing Co. v. Coyne, 482 U.S. 1, 10 (1987).

This link between cost containment and the increased

availability of benefits to employees is a fundamental

8 See cases cited and discussed in the petition at 11-12.

® Ingersoll-Rand Co., 498 U.S., at 142 (“Section 514(a) was in-

tended to ensure that plans and plan sponsors would be subject to

a uniform body of benefit law; the goal was to minimize the ad-

ministrative and financial burden of complying with conflicting

directives among States or between States and the Federal Govern-

ment.”’).

10

premise on which Congress structured ERISA’s broad

pre-emption clause. It makes sense. Reducing the cost

of providing benefits makes it more likely that a wider

range of benefits will be provided to employees, thereby

achieving Congress’s ultimate goal in enacting ERISA.

By taking this case. clarifying Mackey, and reversing the

decision of the Oregon Court of Appeals, this Court will

further the cost-containment goal in two related respects.

First, a reversal of the Oregon Court of Appeals’ deci-

sion and rep:diation of its narrow construction of the

“relates to” language in ERISA § 514(a) will enable

benefit providers to contain costs directly by using state-

law garnishment procedures to enforce judgments against

those who have defrauded them. A growing number of

insurers are developing anti-fraud programs in an effort

to redress the tremendous losses attributable to health

care fraid.’® Provisions like the Oregon garnishment ex-

emption at issue in this case can deprive a defrauded plan

of access to what is often the only source of funds avail-

able to recoup the losses caused by the defrauder.

Second. by holding that ERISA pre-empts state laws

like the Oregon garnishment exemption, the Court will

eliminate the disparities in state law governing the ability

of defrauded benefit plans to use existing state-law gar-

nishment procedures. Like the antisubrogation provision

of Pennsylvania law that this Court found pre-empted by

ERISA in FMC Corp. v. Holliday, supra, varying court

rulings on the status of antigarnishment provisions will

compel benefit providers to

10In a 1993 survey of 86 insurance companies (representing 65

percent of the commercial insurance market and 14 percent of the

Blue Cross/Blue Shield market), HIAA found that 79 percent of

the insurers who responded to the survey had developed health care

anti-fraud programs. The number of cases investigated by these

companies has increased by more than 75 percent since 1990. 1993

HIAA Anti-Fraud Survey.

Be

11

“design their programs in an environment of differ-

ing State regulations[, which] would complicate the

administration of nationwide plans, producing ineffi-

ciencies that employers might offset with decreased

benefits.” 498 U.S., at 60.

This is the risk Congress intended to avoid in enacting

ERISA. By granting the petition and reversing the Oregon

Court of Appeals’ decision, this Court will ensure the

uniformity of law essential to effective cost containment

and the correlative increase in the availability of benefits

to plan beneficiaries.

CONCLUSION

For the foregoing reasons, HIAA respectfully urges

this Court to grant the petition and set this case for oral

argument.

Respectfully submitted,

WALTER R. ALLAN *

SHAWN HANSON

MICHAEL A. CONLEY

PILLSBURY MADISON & SUTRO

1667 K. Street, N.W.

Suite 1100

(202) 887-0300 ™

Attorneys for Amicus Curiae

Health Insurance Association

of America

* Counsel of Record

Of Counsel:

THERESA L. SOROTA

HEALTH INSURANCE

ASSOCIATION OF AMERICA

~ 1025 Connecticut Ave., N.W.

Washington, D.C. 20086

(202) 223-7822

December 21, 1993