If federal health reforms continue to rely on employer-sponsored health care coverage, ERISA preemption reform should be part of the next steps. State-level reform has acquired greater urgency, while the justifications for preempting that source of reform has eroded. This article recommends a statutory waiver for ERISA preemption as a feasible way to adapt to these circumstances. It offers proposed statutory text for reformers inclined to pursue ERISA reform as health reform.
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References
1.
29 U.S.C. § 1144(a). Courts have held that ERISA’s civil remedies provision, 29 U.S.C. § 1132(a), completely preempts parallel state-law remedies. E.g., Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). This article concerns only § 1144’s regulatory preemption, not § 1132’s claim preemption.
W.E.Parmet, “Regulation and Federalism: Legal Impediments to State Health Care Reform,”American Journal of Law & Medicine19, no. 1 (1993): 121-44, 135-36.
4.
See, e.g., UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 363 (1999) (The statute’s “meaning is not ‘plain’; sensible construction of ERISA, our decisions indicate, requires that we measure these words in context.”); De Buono v. NYSA—ILA Medical and Clinical Services Fund, 520 U. S. 806, 809 (1997) (lamenting that the statute is “opaque”); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47 (1987) (noting that “the wide variety of state statutory and decisional law arguably affected” by ERISA’s broad language prompts repeated calls for interpretation); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985) (calling the statute “not a model of legislative drafting”). See alsoW. M.Acker, “Can the Courts Rescue ERISA?”Cumberland Law Review29, no. 2 (1999): 285-300, 285 (concluding that they cannot because ERISA preemption is “beyond redemption”).
5.
Cf. DiFelice v. Aetna U.S. Healthcare, 346 F.3d 442, 453 (3d Cir. 2003) (Becker, J., concurring) (joining the “the rising judicial chorus urging that Congress and [the Supreme] Court revisit what is an unjust and increasingly tangled ERISA regime”).
6.
See, e.g., Nat’l Council of Ins. Legislators, Resolution in Support of Amending ERISA to Enable State Policymakers to Enact More Meaningful State Healthcare Reforms, March17, 2019, available at <http://ncoil.org/wp-content/uploads/2019/03/ERISA-Resolution-FINAL.pdf> (last visited July 20, 2020).
7.
See generallyJ.A.Wooten, “A Legislative and Political History of ERISA,”Journal of Pension Benefits14, No. 1 (2006): 31-35.
8.
SeeD.Bogan, “Protecting Patient Rights Despite ERISA: Will the Supreme Court Allow States to Regulate Managed Care?”Tulane Law Review74, no. 3 (2000): 951-1026, 972-77.
9.
29 U.S.C. § 1144(a) (emphasis supplied). See Bogan, supra note 8, at 978-79.
10.
A.Enthoven and V.Fuchs, “Employment-Based Health Insurance: Past, Present, and Future,”Health Affairs25, no. 6 (2006): 1538-1547, at 1539.
11.
SeeS.F.Befort and C.J.Kopka, “The Sounds of Silence: The Libertarian Ethos of ERISA Preemption,”Florida Law Review51, no. 1 (2000): 1-40, 39.
12.
S.Okie, “The Employer as Health Coach,”New England Journal of Medicine375, no. 15 (2007): 1465-69.
13.
A.Kirkland, “Critical Perspectives on Wellness,”Journal of Health Politics, Policy, & Law39, no. 5 (2014): 971-988.
14.
SeeJ.S.King, “COVID-19 and the Need for Health Care Reform,”New England Journal of Medicine (April17, 2020), available at <https://www.nejm.org/doi/full/10.1056/NEJMp2000821> (last visited July 20, 2020).
15.
See B.S. Maher, supra note 3.
16.
See id. at 1268.
17.
29 U.S.C. § 1002(1).
18.
SeeJ.A.Wooten, “A Legislative and Political History of ERISA, Part 2,”Journal of Pension Benefits14, no. 3 (2007): 5-10.
19.
See G. Klaxon, et al., Kaiser Family Foundation, 2018 Employer Health Benefits Survey, Section 10: Plan Funding, at 167. The precipitous unemployment during the COVID-19 pandemic likely will push this percentage downward in 2020.
This is true even if self-funded plans rely on third-party administrators to handle claims and stop-loss insurance to manage risk.
24.
See Befort and Kopka, supra note 11, at 37 (“[T]he heart of ERISA’s libertarian ethos [is] to create a vacuum, largely uniform in its lack of either federal or state regulation, within which a multiplicity of welfare benefits could evolve.”).
25.
See, e.g., Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 402(2002) (Thomas, J., dissenting) (“[T]he Court would do well to remember that no employer is required to provide any health benefit plan under ERISA.”).
26.
E.g., U.S. Dep’t of Labor, Health Plans & Benefits: ERISA, available at <https://www.dol.gov/general/topic/health-plans/erisa> (last visited July 20, 2020) (“ERISA requires plans to provide participants with plan information including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty.”).
27.
E.g., 29 U.S.C §§ 1181 (COBRA preexisting conditions), 1182 (medical underwriting & health status discrimination), 1183 (guaranteed renewability), 1185 (maternity, newborns), 1185a (mental health parity), 1185b (mastectomy reconstruction), 1185c (students on medically necessary leave), 1185d, 1191 (preemption and state flexibility), 1191a (special rules), 1191b (definitions), 1191c (regulations).
28.
See, e.g., 29 U.S.C.A. § 1185b(e)(1)(2) (“Nothing in this section shall be construed to affect or modify the provisions of section 1144 of this title with respect to group health plans.”).
See American Cancer Society, Women’s Health and Cancer Rights Act, May 2019, available at <https://www.cancer.org/treatment/finding-and-paying-for-treatment/understanding-health-insurance/health-insurance-laws/womens-health-and-cancer-rights-act.html> (last visited July 20, 2020) (“Several states have their own laws requiring health plans that cover mastectomies to provide coverage for reconstructive surgery after a mastectomy. These state laws only apply to those health plans purchased by an employer from a commercial insurance company. If an employer is self-insured, state laws do not apply but federal laws do. … [I]t can be hard to tell whether you are in a self-insured or a commercially insured plan unless you ask.”).
32.
Compare Retail Industry Leaders Association v. Fielder, 475 F.3d 180, 198 (4th Cir. 2007) with Golden Gate Restaurant Ass’n v. City and County of San Francisco, 546 F.3d 639, 660 (9th Cir. 2008). See Fuse Brown and McCuskey, supra note 3, at 424-428.
33.
Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 402(2002) (J. Thomas, dissenting) (“[T]he Court would do well to remember that no employer is required to provide any health benefit plan under ERISA … [The state law] independent review provisions could create a disincentive to the formation of employee health benefit plans, a problem that Congress addressed by making ERISA’s remedial scheme exclusive and uniform.”).
34.
Fuse Brown and McCuskey, supra note 3, at 447.
35.
Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747(1985).
36.
See, e.g., Borzi, supra note 3, at 663; Bogan, supra note 8, at 952-53, 964-65. Cf. Befort and Kopka, supra note 11.
37.
Fuse Brown and McCuskey, supra note 3 at 447.
38.
A.Gluck, A.Hoffman, and P.D.Jacobson, “ERISA: A Bipartisan Problem For The ACA And The AHCA,”Health Affairs Blog (June2, 2017) (“[T]he ACA explicitly exempted from some of its new requirements the very same self-insured employer plans that ERISA regulates”), available at <https://www.healthaffairs.org/do/10.1377/hblog20170602.060391/full/> (last visited July 20, 2020).
39.
Id. at 1122-25.
40.
E.g., CMS Guidance, 31 CFR 33 (Oct. 24, 2018) (recasting the ACA’s 1332 “Waiver for State Innovation” as the “State Relief and Empowerment Waiver”).
41.
P.Klein, “Graham-Cassidy Has One Great Idea,”New York Times, September10, 2017 (opinion that, “the idea of giving states more control over their health care systems should survive no matter what happens with [the] Graham-Cassidy” bill’s effort to repeal the ACA).
42.
K.Vukadin, “On Opioids and ERISA: The Urgent Case for a Federal Ban on Discretionary Clauses,”University of Richmond Law Review53, no. 2 (2019): 687-732.
SeeK.L.Gudiksen and J.S.King, “The Burden of Federalism: Challenges to State Attempts at Controlling Prescription Drug Costs,”Journal of Legal Medicine39, no. 2 (2019): 95-120, 99.
46.
Rutledge v. Pharmaceutical Care Management Ass’n, 18-540 (S. Ct. January 10, 2020).
47.
Brief for United States as Amici Curiae Supporting Petitioner, Rutledge v. Pharm. Care Mgmt. Ass’n, No. 18-540 (S. Ct. Mar. 2, 2020).
M.A.Bobinski, “Unhealthy Federalism: Barriers to Increasing Health Care Access for the Uninsured,”University of California Davis Law Review24, no. 2 (1990): 255-348, 344-45.
See, e.g., 29 U.S.C. § 1023(a)(3)(A), (4)(A) (authorizing Secretary of Labor to waive external review requirements for certain plans’ annual reports); 29 U.S.C. §§ 1082(c) - 1084 (authorizing Secretary of Treasury to implement “waiver in case of business hardship” for employer liability for contributions); 29 U.S.C. § 1132(c)(10) (authorizing Secretary of Labor to penalize employers and plans for using participants’ genetic information, and authorizing the Secretary to waive those penalties for “reasonable cause”); 29 U.S.C. § 1132(l)(3) (authorizing Secretary of Labor to waive penalties on fiduciaries in certain circumstances); 29 U.S.C. §§ 1202(b), 1203(a), 1202a(a) (authorizing Secretary of Treasury to waive imposition of ERISA taxes in certain circumstances, with input from Secretary of Labor). But see, e.g., 29 U.S.C. § 1025(a)(2)(A) — Notes — (noting that 1986 amendment took away some of the Secretary’s power to waive requirement that multiemployer plan furnish certain information to employers and employee representatives).
60.
E.g., 29 U.S.C. §§ 1144a (“clarification of church welfare plan status under State insurance law”); 1150 (“applicability of State law to combat fraud and abuse”); 1191(a)(1) (“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 except to the extent that such standard or requirement prevents the application of a requirement of this part”); 1191(b)(1) (preempting conflicting state laws on preexisting condition exclusions in fully-insured plans); 1191(b)(2) (preserving state laws on fully-insured plans’ that expand ERISA’s preexisting condition protections, deadlines, or special enrollment periods).
61.
See, e.g., 29 U.S.C. § 1136(a) (authorizing the Secretary of Labor to “coordinate” with states in the enforcement and administration of the statute); 29 U.S.C. § 1136(c) (permitting the Secretary to delegate to a state his investigative and civil enforcement authority over certain “multiple employer welfare arrangements); 29 U.S.C. § 1144(b)(3) (“Nothing in this [preemption] section shall be construed to prohibit use by the Secretary of services or facilities of a State agency as permitted under section 1136 of this title.”).
62.
Several other statutes have authorized the waiver of their preemptions. E.g., 49 U.S.C. § 5125(e) (providing mechanism for states to apply to Secretary of Transportation for a “waiver of preemption” under federal highways act); 42 U.S.C. § 6297(d) (providing mechanism for states to petition Secretary of Energy for waiver of preemption under federal Energy Policy and Conservation Act); 42 U.S.C. § 7543 (providing mechanism for EPA Administrator to waive Clean Air Act preemption for state laws that are “at least as protective of public health” as the federal requirements). Cf. 21 U.S.C. § 360k (authorizing the FDA to determine the scope of the Medical Devices Amendments’ pre-emption clause).
63.
See, e.g., N.Huberfeld, “Can Work be Required in the Medicaid Program,”New England Journal of Medicine378, no. 9 (2018): 788-791; Letter from Senator Wyden to Secretaries Azar and Mnuchin and Administrator Verma (Nov. 16, 2018), available at <https://www.finance.senate.gov/imo/media/doc/111618%201332%20guidance%20letter%20final.pdf> (last visited July 20, 2020).
64.
ERISA was enacted and signed by President Ford on September 2, 1974 (Labor Day). Hawaii passed its Prepaid Health Care Act in June of 1974. See Haw. Rev. Stat. §§ 393-1 – 393-51 (1974), available at <https://labor.hawaii.gov/dcd/files/2013/01/PHC-highlights.pdf> (last visited July 20, 2020).
65.
Haw. Rev. Stat. §§ 393-3(8), 393-7, 393-11, 393-12. Hawaii employers must pay “at least one-half of the premium” and the employees’ remaining share cannot exceed 1.5% of their wages. Haw. Rev. Stat. § 393-13.
66.
See 29 U.S.C. § 1144(b)(5)(A) (stating that the “relate to” preemption “shall not apply to the Hawaii Prepaid Health Care Act”).
67.
Hawaii’s exemption applies only to the original 1974 state law and administrative updates to it. Any substantive amendment and any new health reform law Hawaii enacts after the September 2, 1947 effective date of ERISA is subject to the ERISA preemption provision. 29 U.S.C. § 1144(b)(5)(B). The exemption does not apply to ERISA’s taxation, reporting, and fiduciary requirements, which continue to preempt even the 1974 Hawaii law. See 29 U.S.C. §§ 1144(b)(5)(A), (C).
68.
See Groves, supra note 57, at 635-644.
69.
See id. Congress did, however, create “substantive exceptions” to preemption for certain multistate employer plans, domestic relations and child support orders, and exhaustion requirements. See Befort and Kopka, supra note 11, at 33-34.
70.
E.g., State Care Act of 1992, S. 3180, 102d Cong. (1992) (introduced by Senators Patrick Leahy (VT) and Ron Wyden (OR)); The State-Based Comprehensive Care Act of 1992, H.R. 4218, 102d Cong. (1992) (introduced by Washington Rep. Jim McDermott) [supported]. See Groves, supra note 68, at 640.
SeeK.Vukadin, “Unfinished Business: The Affordable Care Act and the Problem of Delayed and Denied ERISA Health Care Claims,”John Marshall Law Review47, no. 3 (2014): 887-921.
77.
29 U.S.C. § 1191(a)(2) (2012). See Gobeille, 136 S.Ct. at 947 (finding the ACA had no bearing on the interpretation of ERISA preemption).
See U.S. House of Representatives v. Texas, Dkt. 19-841 (S. Ct. 2020).
86.
See McCuskey, supra note 38, at 1133-37 (articulating the limitations on agency discretion in the ACA 1332 waiver process).
87.
SeeD.J.Barron and T.D.Rakoff, “In Defense of Big Waiver,”Columbia Law Review113, no. 2 (2013): 265-346, 278.
88.
Those prerequisites could be that the state law has been duly enacted by its legislature, or that the state certifies its law will not reduce the percentage of people insured in the state.
89.
See McCuskey, supra note 38.
90.
See Barron and Rakoff, supra note 87, at 309-11.
91.
See McCuskey, supra note 38, at 1150-55. P.R.Lee and C.L.Estes, “New Federalism and Health Policy,”Annals of the American Academy of Political & Social Science468, no. 1 (1983): 88-102.
