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Originally published in "Thomson Reuters Westlaw Journal Insurance Coverage," May 19, 2016.
On March 1 the US Supreme Court again reinforced the broad preemptive scope of the Employee Retirement Income Security Act of 1974, 29 U.S.C.A. §1001. In "Gobeille v. Liberty Mutual Insurance Co.," 136 S. Ct. 936, the court held that a Vermont law aimed at creating an all-inclusive heath care database was preempted by ERISA because its reporting requirements encroached upon a key aspect of ERISA: a uniform system of plan administration for employee benefit plans.
Writing for the 6-2 majority, Justice Anthony Kennedy found that reporting, disclosure and recordkeeping are “central to,” “an essential part of,” “integral aspects of” and “fundamental components of” ERISA and its regulation of plan administration, and that the Vermont law must be preempted because the central design of ERISA “is to provide a single uniform national scheme for the administration of ERISA plans without interference from the laws of the several states.”
The Vermont law was preempted with respect to ERISA-governed, self-insured health plans because it potentially exposed ERISA plans to a patchwork of state-by-state regulations and reporting requirements the court found would likely increase administrative costs and liability for ERISA plans.
In 1974, Congress enacted ERISA to create a uniform system of regulation for benefits provided by employers to employees, such as life, health and disability insurance. Since its enactment, ERISA has been highly litigated, especially in the area of federal preemption of state law.
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