Author, Emily Meyer, New York, +1 212 556 2312, emeyer@kslaw.com

In Gobeille, Chair of the Vermont Green Mountain Care Board v. Liberty Mutual Insurance Co., decided on March 1, 2016, the Supreme Court held that the Employee Retirement Income Security Act of 1974 (“ERISA”) preempts application of a Vermont health care information reporting requirement to ERISA plans. Following the decision, ERISA plans are presumably exempt from all state health care information reporting laws and may well be exempt from almost all significant state reporting or disclosure requirements.

Vermont’s Health Care Information Reporting Law

Under Vermont law, all entities that provide or pay for health care services provided either in Vermont or to Vermont residents are required to report cost, price and other data about those services for compilation into an “all-payer claims database” intended to provide helpful information to health care policymakers. (Similar reporting requirements have been enacted in 17 other states, according to the dissent in Gobeille.) Liberty Mutual Insurance Company (“Liberty Mutual”), citing its concern that disclosing confidential information about plan participants might violate its fiduciary duties, instructed the claims administrator of its self-insured health plan to refuse to comply with Vermont’s health care reporting requirements and sought a declaration that application of the requirements to the Liberty Mutual plan was preempted by ERISA.

Decision

The Supreme Court held that ERISA preempts application of Vermont’s reporting requirements to self-insured ERISA plans such as the Liberty Mutual plan. Writing for the 6-justice majority, Justice Kennedy stated that ERISA preempts two categories of state laws:  laws that act “immediately and exclusively upon ERISA plans … or where the existence of ERISA plans is essential to the law’s operation” and laws that govern “a central matter of plan administration” or interfere with “nationally uniform plan administration.” Citing the requirement that ERISA welfare benefit plans file an annual report with the Department of Labor (“DOL”) and the DOL’s authority to establish additional reporting and disclosure requirements, the Court found that reporting, disclosure and recordkeeping are “central to, and an essential part of, the uniform system of plan administration contemplated by ERISA.” The Court concluded that the Vermont law, by governing plan reporting, disclosure and recordkeeping, governs a central matter of plan administration and interferes with nationally uniform plan administration and therefore falls into one of the two categories of preempted laws.

Concurrences and Dissent

Justices Thomas and Breyer wrote concurrences and Justices Ginsburg and Sotomayor dissented. Justice Thomas expressed concern that ERISA’s preemption provision may not be constitutional and that the Court’s interpretation of the provision cannot be reconciled with the text of the statute. Justice Breyer wrote that the potential for duplicative or conflicting information reporting requirements in the absence of preemption and the fact that the DOL has the authority to impose health care information reporting requirements on ERISA plans were additional justifications for the Court’s holding. In her opinion for the dissent, Justice Ginsburg stated that ERISA and the Vermont law require different types of reporting and serve different purposes and argued that state reporting rules should be preempted only if they are designed to serve the same purposes as ERISA’s reporting requirements. She discussed two precedent cases in which the Court found that reporting and recordkeeping requirements “incident to state laws of general applicability” were not preempted by ERISA; in one, the Court upheld a gross-receipts tax (which included a reporting requirement) as applied to services provided by a hospital that was operated by an ERISA plan.

Implications

Gobeille was a welcome decision for sponsors of self-insured health plans, as it is now clear that they are exempt from the health care reporting requirements imposed in many states and may well be exempt from almost all significant state reporting or disclosure requirements. The concurring and dissenting opinions in Gobeille suggest that the scope of ERISA preemption is far from settled, however. And the DOL, which submitted an amicus brief arguing that the Vermont reporting requirement was not preempted by ERISA, may respond to the decision by imposing its own health care information reporting requirement.