On March 1, 2016, in a 6-2 decision, the U.S. Supreme Court held, in Gobeille v. Liberty Mutual Insurance Company, that ERISA’s reporting requirements preempted Vermont’s state health care reporting scheme. The case addressed a state’s ability to mandate that self-insured ERISA-covered health plans transmit their files on eligibility, medical claims and pharmacy claims to a state-run all-payer claims database. While the decision was limited to Vermont’s scheme, it will weaken the ability of other states (including Colorado) to mandate that self-insured ERISA-covered health plans transmit data to a statewide database.

In Gobeille, Liberty Mutual Insurance Company maintained a self-insured health plan for its employees in all 50 states. Vermont established an “all-payers” claims database that required submission of data – including information relating to health care costs, prices, quality and utilization, data relating to health insurance claims and enrollment, as well as information on members, subscribers and policy holders – from certain public and private health care providers and payers, including self-insured health plans, health insurers, third party administrators, and governmental agencies. The third-party administrator for the plan, Blue Cross Blue Shield of Massachusetts, was required to report the health claims data for the plan under Vermont’s mandatory reporting laws, but had not been doing so, and was instructed by Liberty Mutual (the plan sponsor) not to comply. Liberty Mutual then filed suit in district court. Although the district court upheld Vermont’s mandatory reporting laws, the Second Circuit reversed and held that such laws were preempted by ERISA, notably stating that “one of ERISA’s core functions – reporting – [cannot] be laden with burdens, subject to incompatible, multiple and variable demands, and freighted with risk of fines, breach of duty, and legal expense” of the type imposed by the Vermont reporting regime.

In reaching its decision, the Gobeille majority found that reporting, disclosure and record-keeping are essential to the “uniform system of plan administration contemplated by ERISA.” Given this “uniform rule design” of ERISA, the majority found that the ERISA express preemption clause applied to invalidate the Vermont reporting statute as applied to ERISA-covered self-funded plans. Notably, the majority found that, because requirements to comply with different regulations from multiple jurisdictions could create “wasteful administrative costs” and significant liability, the Vermont reporting statute at issue should be preempted, even where the current regulations at issue did not necessarily impose a significant administrative burden on the plan sponsor.

Aside from the practical ramifications of the Gobeille decision significantly weakening the ability of states to collect health-care data, the decision also is notable in that it represents a broadening of the application of ERISA’s sometimes vague preemption rule to situations that present the possibility (even without the actual imposition) of burdensome reporting requirements on plans. In the reporting context, this effectively lessens administrative burdens on sponsors of multi-state self-insured ERISA health plans.

Impact on Colorado Self-Insured Health Plans

Since Colorado is one of seventeen states that have adopted an all-payer claims database similar to Vermont’s, the Gobeille decision will impact self-insured health plans subject to ERISA. Created by legislation in 2010, the Colorado All Payer Claims Database (CO APCD) was intended to be a comprehensive source for health care price, cost of care and utilization data in Colorado. Pursuant to a new rule promulgated in 2015, and following an opt-out period that expired at the end of 2015, self-insured health plans that have 100 or more covered lives in Colorado are required to submit eligibility data, medical and pharmacy claims data and provider files to CO APCD on a timely monthly basis, or otherwise be subject to significant penalties.

On its website, the Center for Improving Value in Health Care, the administrator of the CO APCD, states that it is reviewing the Gobeille decision to determine its impact on the database, but hopes that self-insured plans will voluntarily submit claims “in order to identify ways to lower costs and improve care.” We anticipate that the Colorado Department of Health Care Policy and Financing will amend the CO APCD reporting rules in light of the Gobeille decision.