Liberty Mutual Ins. Co. v. Donegan, No. 12-4881 (2d Cir. 2014)
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A Vermont statute requires all "health insurers" to file with the State reports containing claims data and other "information relating to health care." Liberty Mutual sought a declaration that the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., preempted the Vermont statute and regulation. The district court granted summary judgment in favor of Vermont. The court held that the reporting requirements of the Vermont statute and regulation have a "connection with" ERISA plans and were therefore preempted as applied. The court's holding was supported by the principle that "reporting" is a core ERISA function shielded from potentially inconsistent and burdensome state regulation. Accordingly, the court reversed and remanded with instructions to enter judgment for Liberty Mutual.
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12-4881-cv Liberty Mut. Ins. Co. v. Donegan 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2013 (Argued: November 18, 2013 Decided: February 4, 2014) Docket No. 12-4881-cv - - - - - - - - - - - - - - - - - - - -x LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, - v.SUSAN L. DONEGAN, IN HER CAPACITY AS THE COMMISSIONER OF THE VERMONT DEPARTMENT OF FINANCIAL REGULATION, Defendant-Appellee. - - - - - - - - - - - - - - - - - - - -x Before: KEARSE, JACOBS, and STRAUB, Circuit Judges. Liberty Mutual Insurance Co. appeals from a judgment entered in the 29 United States District Court for the District of Vermont (Sessions, J.). The district 30 court concluded that the Employee Retirement Income Security Act of 1974 does 1 not preempt a Vermont statute and regulation requiring self-insured employee 2 health plans to report to the state, in specified format, claims data and other 3 information relating to health care. For the following reasons, we reverse and 4 remand with instructions to enter judgment for Liberty Mutual. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Judge STRAUB dissents in part and concurs in part in a separate opinion. NANCY G. ROSS, McDermott Will & Emery LLP, Chicago, IL (John A. Litwinski, McDermott Will & Emery LLP, Chicago, IL; M. Miller Baker, McDermott Will & Emery LLP, Washington, DC, on the brief), for Appellant. BRIDGET C. ASAY, Assistant Attorney General, Office of the Attorney General, Montpelier, VT for William H. Sorrell, Attorney General, State of Vermont, for Appellee. KATHRYN COMERFORD TODD, National Chamber Litigation Center, Washington, DC (Jane E. Holman, National Chamber Litigation Center, Washington, DC; Carol Connor Cohen and Nancy S. Heermans, Arent Fox LLP, Washington, DC, on the brief), for amicus curiae Chamber of Commerce of the United States of America in support of Appellant. MELISSA MOORE, U.S. Department of Labor, Washington, DC (M. Patricia Smith, 2 1 2 3 4 5 6 7 8 9 10 Solicitor of Labor; Timothy D. Hauser, Associate Solicitor; Nathaniel I. Spiller, Counsel for Appellate and Special Litigation, on the brief), for amicus curiae Acting Secretary of the United States Department of Labor in support of Appellee. DENNIS JACOBS, Circuit Judge: Liberty Mutual Insurance Co. operates a self-insured employee health 11 plan. A Vermont statute requires all health insurers (including self-insured 12 plans) to file with the State reports containing claims data and other 13 information relating to health care. A State regulation specifies how such 14 information must be recorded and transmitted. 15 When Vermont subpoenaed claims data from the Liberty Mutual plan s 16 third-party administrator, this suit was commenced in the United States District 17 Court for the District of Vermont (Sessions, J.). Liberty Mutual sought a 18 declaration that the Employee Retirement Income Security Act of 1974 ( ERISA ) 19 preempts the Vermont statute and regulation. The district court granted 20 summary judgment in favor of Vermont. 21 22 The ERISA preemption clause is not self-reading and ERISA preemption doctrine is not static. The early judicial consensus, based on the broad wording 3 1 of the preemption clause (and legislative history), was to construe preemption 2 broadly. More recent precedent has pulled back by setting a rebuttable 3 presumption against preemption of state health care regulations. Two constants, 4 however, remain: (1) recognition that ERISA s preemption clause is intended to 5 avoid a multiplicity of burdensome state requirements for ERISA plan 6 administration; and (2) acknowledgment that reporting is a core ERISA 7 administrative function. These two considerations lead us to conclude that the 8 Vermont law, as applied to compel the reporting of Liberty Mutual plan data, is 9 preempted. We therefore reverse and remand for entry of judgment in favor of 10 Liberty Mutual. 11 12 BACKGROUND 13 I 14 The Vermont statute establishes and provides for the maintenance of a 15 unified health care database. Vt. Stat. Ann. tit. 18, § 9410(a)(1). The database 16 enable[s] the State s Department of Banking, Insurance, Securities and Health 4 1 2 3 4 5 6 7 8 9 10 11 12 Care Administration ( Department )1 to carry out [its] duties . . . , including : (A) determining the capacity and distribution of existing resources; (B) identifying health care needs and informing health care policy; (C) evaluating the effectiveness of intervention programs on improving patient outcomes; (D) comparing costs between various treatment settings and approaches; (E) providing information to consumers and purchasers of health care; and (F) improving the quality and affordability of patient health care and health care coverage. Id. To populate the database, the statute requires [h]ealth insurers, health 13 care providers, health care facilities, and governmental agencies to file reports, 14 data, schedules, statistics, or other information, as the Department deems 15 necessary, at the time and place and in the manner the Department requires. Id. 16 at § 9410(c)-(d). The statute authorizes the Department to require the filing of 17 health insurance claims and enrollment information used by health insurers 18 and any other information relating to health care costs, prices, quality, 19 utilization, or resources. Id. at § 9410(c). 20 The Department is now called the Department of Financial Regulation. Many of the Department s health care database responsibilities were recently transferred to Vermont s Green Mountain Care Board. See id. § 9410. 1 5 1 2 Knowing and willful failure to comply is punishable by penalty of not more than $10,000 per violation. See id. at § 9410(g). 3 In 2008, the Department promulgated a regulation to implement the 4 statute and create the Vermont Healthcare Claims Uniform Reporting and 5 Evaluation System (the Reporting System ). See Regulation H-2008-01, 21-040- 6 021 Vt. Code R. § 1 ( Regulation H-2008-01 ). The regulation requires reporting 7 of myriad categories of claims data. See infra 26-29. Health Insurers are 8 required to regularly submit medical claims data, pharmacy claims data, 9 member eligibility data, provider data, and other information relating to health 10 care provided to Vermont residents and health care provided by Vermont health 11 care providers and facilities to both Vermont residents and non-residents in 12 specified electronic format to the Department for each health line of business . . . 13 per the data submission requirements contained in appendices to the 14 regulation. Regulation H-2008-01 § 4(D). 15 A [h]ealth insurer is defined broadly to include any health insurance 16 company, . . . third party administrator, . . . and any entity conducting 17 administrative services for business or possessing claims data, eligibility data, 18 provider files, and other information relating to health care provided to Vermont 6 1 residents or by Vermont health care providers and facilities. Id. § 3(X). 2 Begging the preemption question, the term [h]ealth insurer may also 3 include, to the extent permitted under federal law, any administrator of an insured, 4 self-insured, or publicly funded health care benefit plan offered by public and 5 private entities. Id. (emphasis added). A health insurer with 200 or more 6 enrolled or covered members in each month during a calendar year is designated 7 a Mandated Reporter. Id. § 3(Ab). All other entities are Voluntary 8 Reporter[s]. Id. § 3(As). 9 The Department makes the collected data available as a resource for 10 insurers, employers, providers, purchasers of health care, and state agencies to 11 continuously review health care utilization, expenditures, and performance in 12 Vermont. Vt. Stat. Ann. tit. 18, § 9410(h)(3)(B). The Department decides the 13 extent of such disclosure allowed by HIPAA, the federal Health Insurance 14 Portability and Accountability Act of 1996, id., and maintains the confidentiality 15 code by which filed information is handled in an ethical manner, id. § 9410(f). 16 [D]irect personal identifiers, such as name, address, and Social Security 17 number, may not be publicly disclosed. Id. § 9410(h)(3)(D). 18 7 1 Sixteen other states collect health care data for their own health care claims 2 databases. J.A. 368-74 (State Health Reporting Laws Summary Table). Data 3 submission requirements vary. Some states provide only for voluntary 4 reporting. See id. Some expressly exclude self-insured employee plan data from 5 their database reporting laws. See id. The majority, however, follow Vermont in 6 requiring such plans to report claims data. See id. 7 8 9 II Liberty Mutual Insurance Co. is the administrator and named fiduciary of 10 a health plan (the Plan ) that provides benefits to 137 individuals in Vermont 11 and to over 80,000 individuals nationwide. The Plan is self-insured or self- 12 funded, i.e., health care claims are paid from Liberty Mutual s general assets. 13 Plan documents provide that the Plan has been established for the 14 exclusive benefit of Participants and except as otherwise provided . . . , all 15 contributions under the Plan may be used only for such purpose. J.A. 39. The 16 documents also represent that medical records, such as those related to risk 17 factor screening, are kept strictly confidential. J.A. 71-72. The Plan represents, 18 however, that it shall comply with all other state and federal law to the extent 8 1 not preempted by ERISA and to the extent such laws require compliance by the 2 Plan. J.A. 41. 3 Like many self-insured employer health plans, the Plan uses a third-party 4 administrator ( TPA ). Blue Cross Blue Shield of Massachusetts, Inc. ( Blue 5 Cross ), as the Plan s TPA for Vermont participants, does claims-handling: 6 processing, review, and payment. Under its contract with Liberty Mutual, any 7 information transferred to Blue Cross must be used solely for the purpose of 8 administering the Plan, and Blue Cross auditors must guard against 9 unauthorized disclosure of health care information. See J.A. 57-58. Liberty 10 Mutual itself is a Voluntary Reporter because it has fewer than 200 covered 11 members in Vermont (and has presumably decided not to volunteer); but 12 because Blue Cross qualifies as a Mandated Reporter and possesses the Plan s 13 claims data, the reporting of its data is mandatory. 14 In August 2011, Vermont issued a subpoena demanding that Blue Cross 15 supply the Plan s [e]ligibility files, [m]edical claims files, and [p]harmacy 16 claims files and threatened that noncompliance might result in fines and a 17 suspension of Blue Cross s authority to do business. J.A. 24-25. Liberty Mutual 18 instructed Blue Cross not to comply and filed this suit, seeking (1) a declaration 9 1 that ERISA preempts the Vermont statute and regulation; and (2) an injunction 2 blocking enforcement of the subpoena. Vermont agreed to stay enforcement of 3 the subpoena pending judicial resolution of the ERISA preemption question. 4 In dueling motions, Vermont sought to dismiss the complaint for lack of 5 standing and for failure to state a claim, and Liberty Mutual moved for summary 6 judgment. With the consent of the parties, the district court treated the motions 7 as cross-motions for summary judgment. See Liberty Mut. Ins. Co. v. Kimbell, 8 No. 2:11-cv-204, 2012 WL 5471225, at *1 (D. Vt. Nov. 9, 2012). 9 The court concluded that Liberty Mutual had Article III standing but that 10 ERISA did not preempt the Vermont statute and regulation and that Vermont 11 was therefore entitled to summary judgment. See id. 12 13 DISCUSSION 14 I 15 We agree with the district court that Liberty Mutual has standing to 16 challenge the subpoena issued to Blue Cross.2 Liberty Mutual has demonstrated The parties have not briefed the standing issue on appeal, but Article III standing is the threshold question in every federal case, determining the power 2 10 1 the irreducible constitutional minimum of standing : (1) an invasion of a 2 legally protected interest which is (a) concrete and particularized; and (b) actual 3 or imminent, not conjectural or hypothetical ; (2) a causal connection between 4 the injury and the conduct complained of ; and (3) that the injury will likely be 5 redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 6 560-61 (1992) (footnote, citations, and internal quotation marks omitted). 7 It is of no moment that the subpoena was issued to Blue Cross and not 8 directly to Liberty Mutual. The TPA agreement provides that Liberty Mutual 9 will hold Blue Cross harmless for any financial charges arising from or in 10 connection with the Plan. J.A. 54-55. Liberty Mutual therefore faces a choice 11 between (1) allowing Blue Cross to turn over the Plan s data in what Liberty 12 Mutual considers a violation of its duties as Plan administrator and fiduciary; or 13 (2) directing non-compliance, and indemnifying Blue Cross for the ensuing civil 14 penalties. Either way, under Lujan, Liberty Mutual suffers a redressable injury- 15 in-fact as a direct result of Vermont s threatened, imminent action. 16 of the court to entertain the suit. Warth v. Seldin, 422 U.S. 490, 498 (1975). 11 1 2 II We review de novo the grant of summary judgment on the preemption 3 question. See, e.g., Wrobel v. Cnty. of Erie, 692 F.3d 22, 27 (2d Cir. 2012). 4 Summary judgment is appropriate if the record shows there is no genuine 5 dispute as to any material fact and the movant is entitled to judgment as a matter 6 of law. Fed. R. Civ. P. 56(a). [W]e may reverse the grant of summary 7 judgment and order judgment for the non-moving party if we find undisputed 8 support in the record entitling the non-moving party to judgment as a matter of 9 law. New England Health Care Emps. Union v. Mount Sinai Hosp., 65 F.3d 10 11 12 1024, 1030 (2d Cir. 1995). A ERISA s comprehensive regulatory scheme governs most employee benefit 13 plans, including self-insured health plans. See 29 U.S.C. § 1003. ERISA requires 14 plan administrators to file annually with the Department of Labor reports 15 detailing financial and actuarial information. See id. §§ 1021-1024. The 16 Department of Labor is authorized to undertake research and surveys and in 17 connection therewith to collect, compile, analyze and publish data, information, 18 and statistics relating to employee benefit plans. Id. § 1143. 12 ERISA 1 broadly preempts any and all State laws insofar as they may now or hereafter 2 relate to any employee benefit plan. Id. § 1144(a) (emphasis added). With 3 remarkable consistency, the legislative history reflects that this broad wording 4 was purposeful: it was intended to eliminate the threat of a multiplicity of 5 conflicting or inconsistent state laws,3 and to achieve broad preemptive effect in 6 the areas of record-keeping, reporting, and disclosure.4 See 120 Cong. Rec. 29197 (1974) (Statement of Rep. Dent) ( I wish to make note of what is to many the crowning achievement of this legislation, the reservation to Federal authority the sole power to regulate the field of employee benefit plans. With the preemption of the field, we round out the protection afforded participants by eliminating the threat of conflicting and inconsistent State and local regulation. ); id. at 29933 (Statement of Sen. Williams) (discussing inten[t] to preempt the field for Federal regulations, thus eliminating the threat of conflicting or inconsistent State and local regulation of employee benefit plans and stating that [t]his principle is intended to apply in its broadest sense to all actions of State or local governments, or any instrumentality thereof, which have the force or effect of law ). 3 See S. Rep. No. 93-127, at 35 (1973), reprinted in 1974 U.S.S.C.A.N. 4838, 4871 ( Because of the interstate character of employee benefit plans, the Committee believes it essential to provide for a uniform source of law in the areas of vesting, funding, insurance and portability standards, for evaluating fiduciary conduct, and for creating a single reporting and disclosure system in lieu of burdensome multiple reports. (emphasis added)); H.R. Rep. No. 93-533, at 17 (1973), reprinted in 1974 U.S.S.C.A.N. 4639, 4655 (virtually the same); see also 120 Cong. Rec. 29942 (1974) (Statement of Sen. Javits) ( In view of Federal preemption, State laws compelling disclosure from private welfare or pension plans . . . will be superseded. ). 4 13 1 Vermont argues and the district court agreed that Congress could not 2 have intended broad preemption of state reporting laws because the same 3 Congress also passed the National Health Planning and Resources Development 4 Act of 1974 ( NHPRDA ). The NHPRDA provided for the establishment of state 5 health planning agencies and authorized these agencies to assemble and 6 analyze data concerning health; health care delivery, resources, and use; and 7 related environmental factors. See Pub. L. No. 93-641, 88 Stat. 2225, at § 1513(b) 8 (1975). The Supreme Court consulted the NHPRDA to decide ERISA 9 preemption in a case in which the NHPRDA expressly contemplated a state 10 regulatory measure. See N.Y. State Conference of Blue Cross & Blue Shield Plans 11 v. Travelers Ins. Co., 514 U.S. 645, 665-67 (1995). Here, however, the NHPRDA is 12 not similarly indicative.5 And if there were tension between NHPRDA and 13 ERISA, it was relieved in 1986 when the NHPRDA was repealed. The NHPRDA s encouragement of state data collection is not necessarily inconsistent with ERISA s preemptive reach. A lot of data can be collected from health care providers, and from health care payers other than ERISA plans. Nothing in the NHPRDA compels the conclusion that, contrary to every indication in ERISA s text and history, Congress intended to allow a multiplicity of state record-keeping and reporting requirements for self-insured employee plans. 5 14 1 2 B The Supreme Court, and this Court, initially applied ERISA preemption as 3 broadly as the statutory phrase ( relate to any employee benefit plan ) seemed 4 to require. 5 As explained in Shaw v. Delta Air Lines, Inc., the breadth of [ERISA s] 6 pre-emptive reach is apparent from that section s language. 463 U.S. 85, 96 7 (1983); see id. at 98 ( Congress used the words relate to . . . in their broad 8 sense. ).6 Shaw formulated the modern ERISA preemption test: a state law is 9 preempted if it [1] has a connection with or [2] reference to [an ERISA] plan. Id. at 10 96-97 (emphases added). The Court treated as obvious that ERISA preempted 11 state laws dealing with the subject matters covered by ERISA--reporting, 12 disclosure, fiduciary responsibility, and the like. Id. at 98 (emphases added). 13 The open question was whether preemption went beyond these core areas, and 14 the Court held it did. See id. at 96-97. The one note of caution in Shaw was 15 consigned to a footnote: That interpretation was supported by ERISA s exemption for generally applicable state criminal statutes, an exemption that would be unnecessary if preemption applied only to state laws dealing specifically with ERISA plans. Shaw, 463 U.S. at 98 (discussing 29 U.S.C. § 1144(b)(4)). 6 15 1 2 3 4 5 6 7 8 9 10 Some state actions may affect employee benefits plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law relates to the plan. Cf. Am. Tel. & Tel. Co. v. Merry, 592 F.2d 118, 121 (CA2 1979) (state garnishment of a spouse s pension income to enforce alimony and support orders is not pre-empted). The present litigation plainly does not present a border-line question, and we express no views about where it would be appropriate to draw the line. Id. at 100 n.21. For another decade, the Supreme Court and this Court followed Shaw and 11 repeatedly emphasized the broad reach of ERISA preemption. See, e.g., FMC 12 Corp. v. Holliday, 498 U.S. 52, 58 (1990) ( The pre-emption clause is conspicuous 13 for its breadth. ); Gen. Elec. Co. v. N.Y. State Dep t of Labor, 891 F.2d 25, 29 (2d 14 Cir. 1989) ( ERISA was intended to have a sweeping preemptive effect in the 15 employee benefit plan field. Congress intended ERISA to occupy and regulate 16 the field of employee benefit plans. (citation omitted)). The threat of conflicting 17 state and local regulation was consistently cited as a paramount reason for 18 preemption: Preemption was intended to ensure that plans and plan sponsors 19 would be subject to a uniform body of benefits law; the goal was to minimize the 20 administrative and financial burden of complying with conflicting directives 21 among States or between States and the Federal Government. Ingersoll-Rand 22 Co. v. McClendon, 498 U.S. 133, 142 (1990); see Fort Halifax Packing Co. v. 16 1 Coyne, 482 U.S. 1, 10 (1987) ( We have not hesitated to enforce ERISA s pre- 2 emption provision where state law created the prospect that an employer s 3 administrative scheme would be subject to conflicting requirements. . . . Such a 4 situation would produce considerable inefficiencies, which the employer might 5 choose to offset by lowering benefit levels. ); Howard v. Gleason Corp., 901 F.2d 6 1154, 1157 (2d Cir. 1990) ( [T]he express pre-emption provisions of ERISA are 7 deliberately expansive, and designed to establish pension plan regulation as 8 exclusively a federal concern in order to afford employers the advantages of a 9 uniform set of administrative procedures governed by a single set of 10 11 regulations. (citations and internal quotation marks omitted)). These cases specifically re-emphasized that reporting and disclosure 12 are core ERISA functions subject to a uniform federal standard. See Ingersoll- 13 Rand, 498 U.S. at 137 ( [ERISA] sets various uniform standards, including rules 14 concerning reporting, disclosure, and fiduciary responsibility . . . . ); FMC Corp., 15 498 U.S. at 58 (listing reporting and disclosure as subject matters covered 16 by ERISA ). 17 18 The Supreme Court has explained the importance of having uniform federal record-keeping and reporting requirements: 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 [The legislative history] reflect[s] recognition of the administrative realities of employee benefit plans. An employer that makes a commitment systematically to pay certain benefits undertakes a host of obligations, such as determining the eligibility of claimants, calculating benefit levels, making disbursements, monitoring the availability of funds for benefit payments, and keeping appropriate records in order to comply with applicable reporting requirements. The most efficient way to meet these responsibilities is to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits. Such a system is difficult to achieve, however, if a benefit plan is subject to differing regulatory requirements in differing States. A plan would be required to keep certain records in some States but not in others; to make certain benefits available in some States but not in others; to process claims in a certain way in some States but not in others; and to comply with certain fiduciary standards in some States but not in others. Fort Halifax, 482 U.S. at 9 (emphases added). Liberty Mutual places great weight on the Supreme Court s summary 19 affirmance of one of these early preemption cases, Standard Oil Co. v. Agsalud, 20 633 F.2d 760, 763 (9th Cir. 1980). We need not rest our ruling on that case or on 21 so perfunctory a disposition as summary affirmance.7 At the same time, it is The district court in Agsalud held that a Hawaii law (1) requiring workers to be covered by a comprehensive prepaid health care plan and (2) imposing certain reporting requirements which differ[ed] from those of ERISA, was preempted. 442 F. Supp. 695, 696, 706-07 (N.D. Cal. 1977). Though the ruling rested mainly on the state s comprehensive prepaid plan requirement, the court added that the ERISA preemption clause was intended at the very least to preempt state laws regulating disclosure [and] reporting. Id. at 706 n.11. The Ninth Circuit agreed with the district court, 633 F.2d 760, 763 (9th Cir. 7 18 1 telling that when Congress amended ERISA in 1983 to exempt from pre- 2 emption certain provisions of the Hawaii Act, it did not exempt from pre- 3 emption those portions of the law dealing with reporting, disclosure, and 4 fiduciary requirements. Fort Halifax, 482 U.S. at 13 n.7; see H.R. Rep. No. 97- 5 984, at 18 (Dec. 21, 1982) (Conf. Rep.) ( The provision continues Federal 6 preemption of State law with respect to matters governed by the reporting and 7 disclosure and the fiduciary responsibility provisions of ERISA . . . . ). 8 9 C The Supreme Court s 1995 decision in New York State Conference of Blue 10 Cross & Blue Shield Plans v. Travelers Insurance Co. marked something of a 11 pivot in ERISA preemption. See 514 U.S. 645 (1995). The Court began with the 12 starting presumption that Congress does not intend to supplant state law, 13 especially if the state action [occurs] in fields of traditional state regulation, like 1980), and the Supreme Court summarily affirmed, Agsalud v. Standard Oil Co., 454 U.S. 801 (1981). However, the precedential effect of a summary affirmance extends no further than the precise issues presented and necessarily decided by those actions. Anderson v. Celebrezze, 460 U.S. 780, 784 n.5 (1983) (internal quotation marks omitted). 19 1 health care.8 Id. at 654-55. To preempt, a clear and manifest purpose by 2 Congress is required. Id. at 655. Following on this presumption, the Court 3 pulled back on its broad, literal reading of relate to : if the phrase were taken 4 to extend to the furthest stretch of its indeterminacy, then for all practical 5 purposes pre-emption would never run its course. Id. 6 Applying the two-part Shaw test in light of these new principles, the Court 7 concluded that a state statute requiring hospitals to collect a surcharge from 8 patients covered by commercial insurers was not preempted. See id. at 656. The 9 Court explained that state law is preempted if it mandate[s] employee benefit 10 structures or their administration or provid[es] alternative enforcement The dissent relies on this presumption. See Dissenting Op. at 4-5. We acknowledge that the presumption applies when the state law operates in a field that has been traditionally occupied by the States, and that the historic police powers of the State include the regulation of matters of health and safety. De Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806, 814 (1997) (internal quotation marks omitted). However, state health data collection laws do not regulate the safe and effective provision of health care services, which is among the states historic police powers. And collecting data can hardly be deemed historic --most such laws were enacted only within the last ten years. See J.A. 368-74. In any event, the Supreme Court has repeatedly found the presumption overcome if the state laws upset[] the deliberate balance central to ERISA, even if those laws implement policies and values lying within the traditional domain of the States. Boggs v. Boggs, 520 U.S. 833, 840, 854 (1997). 8 20 1 mechanisms. Id. at 658. The state surcharge law withstood preemption in 2 Travelers because it had no more than an indirect economic influence on 3 ERISA plans, it did not bind plan administrators to any particular choice and 4 thus function as a regulation of an ERISA plan itself, and it did not preclude 5 uniform administrative practice or the provision of a uniform interstate benefit 6 package if a plan wishes to provide one. Id. at 659-60. 7 The Court again recognized the central roles of reporting and disclosure: 8 ERISA controls the administration of benefit plans, as by imposing reporting and 9 disclosure mandates. Id. at 651 (emphasis added) (citation omitted). Congress s 10 extension of pre-emption to all state laws relating to benefit plans was meant to 11 sweep more broadly than state laws dealing with the subject matters covered by 12 ERISA, reporting, disclosure, fiduciary responsibility, and the like. Id. at 661 13 (emphases added) (internal quotation marks and brackets omitted). 14 Applying Travelers, cases conclude that state laws having only an 15 indirect economic effect on ERISA plans lack sufficient connection with or 16 reference to an ERISA plan to trigger ERISA preemption. New England 17 Health Care Emps. Union v. Mount Sinai Hosp., 65 F.3d 1024, 1030-33 (2d Cir. 18 1995); see also De Buono v. NYSA-ILA Med. & Clinical Servs. Funds, 520 U.S. 21 1 806, 809 (1997) (state hospital tax not preempted); NYS Health Maint. Org. 2 Conference v. Curiale, 64 F.3d 794, 801-03 (2d Cir. 1995) ( [O]nly link [state 3 surcharge law] has with ERISA plans is its indirect effect on rate diversification 4 among insurers. ). Nevertheless, the Supreme Court teaches that Travelers and 5 its progeny do not disturb the long-standing principle that state statutes that 6 mandate[] employee benefit structures or their administration have a connection 7 with ERISA plans and are therefore preempted. Cal. Div. of Labor Standards 8 Enforcement v. Dillingham Constr., 519 U.S. 316, 328 (1997) (emphasis added) 9 (internal quotation marks omitted). Like Travelers itself, later cases reiterate that 10 ERISA is expressly concerned with reporting, disclosure, fiduciary 11 responsibility, and the like. Id. at 330 (internal quotation marks omitted); see 12 also Boggs v. Boggs, 520 U.S. 833, 841 (1997); Plumbing Indus. Bd. v. E.W. 13 Howell Co., 126 F.3d 61, 66 (2d Cir. 1997). 14 The use of preemption to avoid proliferation of state administrative 15 regimes also remains a vital feature of the law. [D]iffering state regulations 16 affecting an ERISA plan s system for processing claims and paying benefits impose 17 precisely the burden that ERISA pre-emption was intended to avoid. Egelhoff 18 v. Egelhoff, 532 U.S. 141, 150 (2001) (emphasis added) (internal quotation marks 22 1 omitted)); see Romney v. Lin, 94 F.3d 74, 80 (2d Cir. 1996) ( basic purpose of 2 ERISA preemption is to avoid a multiplicity of regulation in order to permit the 3 nationally uniform administration of employee benefit plans ). 4 It is true that this Court s three most recent cases focus primarily on the 5 relationships among the core ERISA entities, and caution against preemption of 6 generally applicable state laws. See Stevenson v. Bank of N.Y. Co., 609 F.3d 56, 7 61 (2d Cir. 2010); Hattem v. Schwarzenegger, 449 F.3d 423, 429-31 (2d Cir. 2006); 8 Gerosa v. Savasta & Co., 329 F.3d 317, 324 (2d Cir. 2003). But these cases involve 9 either a state income tax with only indirect economic effects (the kind of law 10 Travelers expressly permits), see Hattem, 449 F.3d at 425, or state law causes of 11 action that have little to do with the conduct of the plan, Gerosa, 329 F.3d at 12 328; see also Stevenson, 609 F.3d at 61 (noting that state law suit did not 13 implicate actual administration of the plan). They do not purport to save state 14 laws that subject plans to sets of inconsistent state obligations or that tend to 15 control or supersede central ERISA functions. Gerosa, 329 F.3d at 324, 328. 16 17 When this Court has allowed a state reporting requirement to withstand preemption, as it has in two post-Travelers cases, the requirement: 18 23 1 (1) imposed no particular form of record-keeping and created 2 burdens so slight as to create[] no impediment to an employer s 3 adoption of a uniform benefit administration scheme, Burgio & 4 Campofelice, Inc. v. NYS Dep t of Labor, 107 F.3d 1000, 1009 (2d Cir. 1997) 5 (internal quotation marks omitted); or 6 (2) sought information readily obtainable from an employer 7 without specifying a particular form of record-keeping, HMI Mech. Sys., 8 Inc. v. McGowan, 266 F.3d 142, 150-51 (2d Cir. 2001). 9 In effect, these cases adhere to the intact pre-Travelers principle against 10 preemption of laws creat[ing] no impediment to an employer s adoption of a 11 uniform benefit administration scheme, Fort Halifax, 482 U.S. at 14, and with 12 too tenuous, remote, or peripheral an effect on employee benefit plans, Shaw, 13 463 U.S. at 100 n.21. Thus HMI (which Vermont relies on heavily) cautioned that 14 state subpoenas would indeed be overbroad to the extent that they seek the 15 amount of benefits that employees receive or examin[e] employer 16 contributions on a benefit by benefit basis. HMI, 266 F.3d at 151. 24 1 D 2 We hold that the reporting requirements of the Vermont statute and 3 regulation have a connection with ERISA plans (though no reference to 4 them9) and are therefore preempted as applied. Our holding is supported by the 5 principle (undisturbed in Travelers) that reporting is a core ERISA function 6 shielded from potentially inconsistent and burdensome state regulation.10 7 ERISA preempts state laws dealing with the subject matters covered by 8 ERISA--reporting, disclosure, fiduciary responsibility, and the like. Shaw, 436 9 U.S. at 98 (emphases added). [R]eporting is necessarily a function distinct 10 from the disclosure that administrators provide beneficiaries; otherwise The Vermont statute and regulation lack reference to an ERISA plan because they apply to all health care payers and do not act exclusively upon ERISA plans. Dillingham, 519 U.S. at 325; Travelers, 514 U.S. at 656. A connection with an ERISA plan is sufficient, however, for preemption. Shaw, 463 U.S. at 96-97 (setting out disjunctive test). 9 It is of no moment that the law is being applied to, and the subpoena targeted at, Liberty Mutual s TPA rather than Liberty Mutual itself. See Pharm. Care Mgmt. Ass n v. Dist. of Columbia, 613 F.3d 179, 182 (D.C. Cir. 2010) (holding ERISA preempts state law provisions insofar as they apply to a pharmaceutical benefits manager . . . under contract with an employee benefit plan (EBP) because they relate to an EBP ). We agree with the D.C. Circuit that the objective of uniformity in plan administration is not for some reason inapplicable simply because a plan has contracted with a third party to provide administrative services. Id. at 185. 10 25 1 reporting would be subsumed by disclosure and rendered superfluous. 2 Rather, reporting entails what Vermont requires be done: plan record-keeping, 3 and filing with a third-party. 4 But whatever the scope of plan reporting, Vermont cannot deny that 5 that is what it is seeking. The relevant database is called the Vermont 6 Healthcare Claims Uniform Reporting and Evaluation System and the operative 7 section of the regulation is titled Reporting Requirements. 11 Regulation H-2008- 8 01 §§ 3(Ar), 4 (emphases added). 9 Not every state law imposing a reporting requirement is preempted. 10 Burgio and HMI allow a slight reporting burden to be laid on plans, consistent 11 with the preemption rule tolerating laws that create[] no impediment to an 12 employer s adoption of a uniform benefit administration scheme, Fort Halifax, 13 482 U.S. at 14, and with too tenuous, remote, or peripheral an effect on 14 employee benefit plans, Shaw, 463 U.S. at 100 n.21. The dissent argues that the reporting requirement imposed by the Vermont statute differs in kind from the reporting that is required by ERISA and therefore was not the kind of state law Congress intended to preempt. Dissenting Op. at 1. But the conclusion does not follow from the premise. To the contrary: A hodge-podge of state reporting laws, each more onerous than ERISA s uniform federal reporting regime, and seeking different and additional data, is exactly the threat that motivates ERISA preemption. 11 26 1 But the reporting mandated by the Vermont statute and regulation is 2 burdensome, time-consuming, and risky. Even considered alone, the Vermont 3 scheme triggers preemption; considered as one of several or a score of 4 uncoordinated state reporting regimes, it is obviously intolerable. 5 A quick overview of the Reporting System is telling: 6 ! Plans must periodically report: 7 (1) medical claims data composed of service level remittance 8 information for all non-denied adjudicated claims for each billed 9 service including, but not limited to member demographics, 10 provider information, charge/payment information, and clinical 11 diagnosis and procedure codes, and . . . includ[ing] all claims related 12 to behavioral or mental health ; 13 (2) pharmacy claims data containing service level remittance 14 information from all non-denied adjudicated claims for each 15 prescription including, but not limited to: member demographics[,] 16 provider information[,] charge/payment information[,] and national 17 drug codes ; 18 27 1 (3) member eligibility data containing demographic information 2 for each individual member eligible for medical or pharmacy 3 benefits for one or more days of coverage at any time during the 4 reporting month ; 5 (4) and any other information relating to health care provided to 6 Vermont residents and health care provided by Vermont health care 7 providers and facilities to both Vermont residents and non-residents 8 . . . for each health line of business. Regulation H-2008-01 §§ 3-4. 9 ! Plans must report their data frequently. Thus plans with 500 to 10 1,999 covered members must report quarterly and plans with 2,000 or 11 more covered members must report monthly. See id. § 6(I). 12 Compare this to ERISA, which requires a single report annually. See 13 29 U.S.C. § 1021. 14 ! Data must be coded under the appropriate source code system. See 15 Regulation H-2008-01 § 5(A)(5)(a). Sixteen source code systems are 16 provided, including the Admission Source Code ( [a] variety of 17 codes explaining who recommended admission to a medical 18 facility ) and the International Classification of Diseases, 9th 28 1 Revision, Clinical Modification code ( describes the classification of 2 morbidity and mortality information for statistical purposes and for 3 the indexing of hospital records by disease and operations ). Id. 4 Appendix A. 5 ! Individual data elements, data types, field lengths, field 6 description/code assignments, and mapping locators for each file 7 must conform to specified requirements. Id. § 5(B). Fields include 8 Admission Hour and Discharge Hour, thirteen Diagnosis 9 fields, three Procedure fields, and the Drug Name and 10 11 Quantity Dispensed . Id. Appendices C-1-E-2. ! [T]he social security number of the member/subscriber and the 12 subscriber and member names must be encrypted prior to 13 submission by utilizing a standard encryption methodology 14 provided. Id. § 5(A)(5)(b). (Encryption is not required for other 15 data fields.) 16 And nothing prevents the Department from changing these myriad 17 requirements from time to time, so long as the Department complies with the 18 broad mandate of the statute. 29 1 The confidentiality provisions of the Vermont scheme are complex but 2 loose, and impair or (at least) reassign the obligation in the Plan documents to 3 keep medical records strictly confidential, as well as the undertaking by Blue 4 Cross as TPA to use information solely for Plan administration purposes and to 5 prevent unauthorized disclosure.12 The regulation specifically contemplates 6 access to health care claims data sets and related information by persons 7 other than the Department. Id. § 8. Each data field is classified into one of 8 three use and release categories: 9 10 (1) Unavailable Data Elements : not available for general use and release. 11 (2) Restricted Data Elements : only available for use and release as 12 part of a Limited Use Research Health Care Claims Data Set approved 13 by the Department. These elements, and information that can be derived 14 from these elements, include the member s city and zip code, the Whether disclosure to Vermont is authorized under the Plan documents may turn on whether Vermont law creates authorization, because the Plan undertakes to comply with state law; but compliance is allowed only to the extent not preempted by ERISA, a limitation that leaves the Plan and the TPA in a complex and expensive legal muddle. 12 30 1 admission and discharge dates and hours, and the service provider and 2 pharmacy names. 3 (3) Unrestricted Data Elements : available for general use and 4 public release . . . . upon written request. These publicly available 5 elements, and information that can be derived from these elements, 6 include the member s gender, age, medical coverage, prescription drug 7 coverage, and diagnosis; the type of procedure; the service provider s 8 speciality and zip code; and the name and price of any drugs prescribed. 9 Id. § 8 & Appendices J-1-J-14. Specific as these categories are, they may be 10 illusory, because the Department can ease public release restrictions on data that 11 is currently restricted or unavailable, so long as direct personal identifiers are 12 not published and the data is (in the Department s opinion) handled in an 13 ethical manner. Vt. Stat. Ann. tit. 18, § 9410(e)-(f), (h)(3)(D). 14 15 16 17 Since other states can impose their own regimes for reporting and many do these burdens and risks must be multiplied. The trend toward narrowing ERISA preemption does not allow one of ERISA s core functions reporting to be laden with burdens, subjected to 31 1 incompatible, multiple and variable demands, and freighted with risk of fines, 2 breach of duty, and legal expense.13 3 4 5 6 CONCLUSION For the foregoing reasons, we reverse and remand with instructions to enter judgment for Liberty Mutual. The dissent draws a distinction between general administration and administration of plans, claims, and benefits and concludes that ERISA preemption doctrine does not reach state reporting laws that implicate the former. Dissenting Op. at 14. Essentially, the dissent would preempt state reporting laws only if they require plans to submit financial statements. The dissent s view of ERISA plan administration and reporting is unduly narrow. The overview of requirements (set out above) makes clear that Vermont requires ERISA plans to record, in specified format, massive amounts of claims information and to report that information to third parties, creating significant (and obvious) privacy risks and financial burdens that will be passed from the TPA to the Plan and from the Plan to the beneficiaries. That is not a proper allocation of plan assets. See 29 U.S.C. § 1104(a)(1)(A) ( [A] fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and . . . for the exclusive purpose of . . . providing benefits to participants and their beneficiaries; and . . . defraying reasonable expenses of administering the plan[.] ). Modest financial burdens may be tolerable when the state laws imposing them do not directly implicate an ERISA core administrative concern. But the statute and regulation here require reporting of health claims, pharmacy claims, etc., information about the essential functioning of employee health plans. 13 32 1 STRAUB, Circuit Judge, dissenting in part and concurring in part: 2 I respectfully dissent in part and concur in part. 3 I concur with part I of the discussion section of the majority opinion 4 finding that Liberty Mutual has standing. For the reasons that follow, I dissent 5 from the majority s holding that the Vermont statute is preempted by ERISA. 6 The majority finds that the burden imposed by the Vermont reporting 7 requirement warrants preemption of the statute. This conclusion falters for two 8 primary reasons. First, the reporting requirement imposed by the Vermont 9 statute differs in kind from the reporting that is required by ERISA and 10 therefore was not the kind of state law Congress intended to preempt. Second, 11 Liberty Mutual has failed to show any actual burden, much less a burden that 12 triggers ERISA preemption. Rather, the Vermont statute, like others we have 13 previously upheld, does not interfere with an ERISA plan s administration of 14 benefits. For these reasons, our precedent and that of the Supreme Court do not 15 support the conclusion that the Vermont statute s reporting requirements pose 16 the sort of threat to the nationally uniform administration of employee benefit 17 plans that would trigger preemption. N.Y. State Conference of Blue Cross & Blue 18 Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 657 (1995) (hereinafter Travelers ). -1- 1 Looking at the objectives of ERISA and the impact of the Vermont statute 2 on ERISA plans, as we must in order to determine whether the statute has an 3 improper connection with ERISA plans, I conclude that this is not the type of 4 statute that Congress intended to preempt. 5 6 ANALYSIS The preemption clause of the ERISA statute provides that, with certain 7 exceptions not relevant here, ERISA shall supersede any and all State laws 8 insofar as they may now or hereafter relate to any employee benefit plan. 29 9 U.S.C. § 1144(a). The Supreme Court has stated that the basic thrust of the pre- 10 emption clause . . . was to avoid a multiplicity of regulation in order to permit 11 the nationally uniform administration of employee benefit plans. Travelers, 514 12 U.S. at 657. Pre-emption does not occur, however, if the state law has only a 13 tenuous, remote, or peripheral connection with covered plans, as is the case 14 with many laws of general applicability. Burgio & Campofelice, Inc. v. N.Y. State 15 Dep't of Labor, 107 F.3d 1000, 1008 (2d Cir. 1997) (internal quotations marks 16 omitted) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 n.21 (1983)). 17 18 Two kinds of state laws relate to ERISA for purposes of preemption: those that mandate employee benefit structures or their administration, and those that -2- 1 provide alternative enforcement mechanisms. HMI Mech. Sys., Inc. v. McGowan, 2 266 F.3d 142, 149 (2d Cir. 2001) (internal quotation marks and brackets omitted). 3 The Vermont statute does neither. We have noted that courts are reluctant to 4 find that Congress intended to preempt state laws that do not affect the 5 relationships among the core ERISA entities: beneficiaries, participants, 6 administrators, employers, trustees and other fiduciaries, and the plan itself. 7 Gerosa v. Savasta & Co., 329 F.3d 317, 324 (2d Cir. 2003). The Vermont statute 8 does not even arguably regulate these relationships. Moreover, the Vermont 9 statute does not impose regulations on how plans are to be run or how benefits 10 11 are to be administered. Yet the majority takes up Liberty Mutual s invitation to give the term 12 reporting its broadest meaning, and finds the statute is preempted because 13 reporting is a core ERISA function shielded from potentially inconsistent and 14 burdensome state regulation. (Maj. Op. at 24-25) While it is certainly true that 15 ERISA s core areas include reporting, disclosure, *and+ fiduciary responsibility, 16 Shaw, 463 U.S. at 98, and that state laws that would tend to control or supersede 17 central ERISA functions . . . have typically been found to be preempted, Gerosa, 18 329 F.3d at 324, the majority s argument misses the nuance of what reporting -3- 1 means in the context of ERISA, and ignores the case law s focus on whether the 2 administration of benefits to beneficiaries is impacted, an issue on which there is no 3 showing. 4 5 6 7 A. Traditional State Regulation of Health Care and the Presumption Against Preemption The majority s finding, hidden in a footnote, that the presumption against 8 preemption does not apply here, flies in the face of clear Supreme Court 9 precedent instructing us to begin with the presumption that Congress does not 10 intend to supplant state law. Travelers, 514 U.S. at 654-55. [I]n cases like this 11 one where federal law is said to bar state action in fields of traditional state 12 regulation, we have worked on the assumption that the historic police powers of 13 the States were not to be superseded by the Federal Act unless that was the clear 14 and manifest purpose of Congress. Id. at 655 (internal citations and quotation 15 marks omitted). This is because nothing in the language of *ERISA+ or the 16 context of its passage indicates that Congress chose to displace general health 17 care regulation, which historically has been a matter of local concern. Id. at 661. 18 19 The majority nonetheless holds that the presumption against preemption does not apply here because state health data collection laws do not regulate the -4- 1 safe and effective provision of health care services. (Maj. Op. at 19 n.8) This 2 contradicts the very Supreme Court precedent the majority relies upon: DeBuono 3 v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806 (1997). In that case, 4 New York imposed a tax on patient services at various health care providers. 5 520 U.S. at 808. The Court applied the presumption, reasoning that although the 6 New York law was a revenue raising measure, rather than a regulation of 7 hospitals, it clearly operates in a field that has been traditionally occupied by the 8 States. Id. at 814. The Court further stated that the fact that the challenged law 9 targets only the health care industry . . . supports the application of the starting 10 presumption against pre-emption, because the historic police powers of the 11 State include the regulation of matters of health and safety. Id. at 814 & n.10. 12 DeBuono is indistinguishable from the case at hand. Here, the Vermont statute 13 targets only the health care industry and, even if it is not a regulation of health 14 care entities, it certainly operates in *the+ field of health and safety. Indeed, the 15 stated purpose of the Vermont statute is to help improve health care quality. See 16 Vt. Stat. Ann. tit. 18 § 9410(a)(1) (listing purposes, including improving the 17 quality and affordability of patient health care ). There should be no question, 18 therefore, that the presumption applies here. -5- 1 B. 2 When analyzing whether ERISA preempts a state law, we apply the two- 3 pronged Shaw test, as narrowed by Travelers presumption against preemption. 4 Under that test, we analyze whether a state law has an impermissible 5 connection with or reference to an ERISA plan. See, e.g., Hattem v. 6 Schwartzenegger, 449 F.3d 423, 428 (2d Cir. 2006). Despite paying lip service to the 7 Shaw test, the majority eschews a full analysis in favor of a talismanic recitation 8 of the word reporting. 9 There is No Improper Connection With ERISA Plans I agree with the majority that because the Vermont statute requires data 10 collection from entities other than ERISA plans, such as hospitals, health 11 insurers, and pharmacy benefit managers, it functions irrespective of the 12 existence of an ERISA plan and therefore does not make an improper reference 13 to ERISA plans. See Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., 14 N.A., Inc., 519 U.S. 316, 328 (1997) (internal quotation marks and ellipsis omitted). 15 The connection with prong, on which the majority hangs its hat, instructs us to 16 examine both the objectives of the ERISA statute as a guide to the scope of the 17 state law that Congress understood would survive and the effect of the state 18 law on ERISA plans. See Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 147 -6- 1 (2001) (internal quotation marks omitted); see also HMI, 266 F.3d at 148 2 ( Analyzing a state law s connection with ERISA plans requires the courts to 3 consider ERISA s objectives and the effect of the state law on ERISA plans. ). 4 This analysis leads to the conclusion that the Vermont statute is not preempted. 5 6 1. Objectives of ERISA The objectives of the ERISA statute are not in dispute. Congress enacted 7 ERISA in 1974 to respond to growing concerns about the risk of employers 8 defaulting on pension plans, which were increasingly widespread but little 9 regulated. See Mallory Jensen, Is ERISA Preemption Superfluous In the New Age of 10 Health Care Reform?, 2011 Colum. Bus. L. Rev. 464, 472 (2011) (internal footnotes 11 omitted); see also Brendan S. Maher and Peter K. Stris, ERISA and Uncertainty, 88 12 Wash. U. L. Rev. 433, 440 n.29 (2010) ( Few dispute that the statute was passed, 13 in part, as a response to several high-profile pension defaults that arose from 14 company failures that devastated the pensions of many workers. ) (citing J. A. 15 Wooten, The Most Glorious Story of Failure in the Business: The Studebaker-Packard 16 Corp. & the Origins of ERISA, 49 Buff. L. Rev. 683, 683-84 (2001)). Indeed, the 17 statute itself declares that, in passing ERISA, Congress sought to -7- 1 2 3 4 5 6 7 8 9 protect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts. 29 U.S.C. § 1001(b).1 10 These objectives are reflected in the ERISA reporting and disclosure 11 requirements, which are concerned with the mismanagement of funds and 12 failure to pay employee benefits, and seek information on plan assets or 13 allocation. See 29 U.S.C. § 1023 (requiring publication of annual report to include 14 a financial statement of assets and liabilities, changes in fund balance, disclosures 15 about changes made in the plan, and financial commitments, including loans, 16 leases, and transactions, and an actuarial statement). The plain language of the 17 ERISA reporting requirements shows that they are limited to the furnishing of a The Supreme Court has also noted that Representative Dent, the House sponsor of the legislation, represented that ERISA s fiduciary standards will prevent abuses of the special responsibilities borne by those dealing with plans, and that the disclosure and reporting requirements will enable both participants and the Federal Government to monitor the plans operations. Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 15 (1987) (quoting 120 Cong. Rec. 29197 and 29935 (1974)). Senator Williams, the Senate sponsor, stated that these fiduciary standards would safeguard employees from such abuses as self-dealing, imprudent investing, and misappropriation of plan funds. Id. (quoting 120 Cong. Rec. 29932). -81 1 summary plan description to plan participants and an annual report to the 2 Secretary. See 29 U.S.C. §§ 1021-30. The former is essentially a plain-English 3 summary of key plan terms, id. §§ 1021-22, while the latter is concerned with the 4 financial soundness of the plan, id. § 1023. Thus, under ERISA, plans must report 5 information that goes to the financial integrity of the plan. 6 It is important to recognize that, as Liberty Mutual conceded at oral 7 argument (Tr. at 9), the reporting required by ERISA is wholly distinct from 8 the reporting sought by Vermont. As the majority describes in some depth, the 9 Vermont statute seeks information on medical claims data, the services that have 10 been provided to beneficiaries, charges and payments for those services, and 11 demographic information about those receiving the coverage. (Maj. Op. at 26-29) 12 At bottom, the state seeks to collect the information it needs to fulfill its role of 13 providing health care to its citizens. Vermont does not seek information on plan 14 assets, and does not review the allocation or denial of benefits, see Reg. H-2008- 15 01, 21-040-021 Vt. Code R. § 5A(8) ( Denied claims shall be excluded from all 16 medical and pharmacy claims file submissions ), the topics on which ERISA 17 requires reports. Indeed, the Secretary of Labor, who oversees the reporting 18 requirements and is responsible for enforcing and administering Title I of ERISA, -9- 1 has advised us that the focus and purpose of Vermont s data collection is 2 different from the reporting requirements in ERISA. See Amicus Secretary of 3 Labor Br. at 12. 4 This contrast between the objectives and reporting requirements of ERISA 5 and those of the Vermont statute suggests that the Vermont statute is not of the 6 type that Congress intended to preempt. 7 8 2. Effect of the Vermont Statute on ERISA Plans We look next to the effect of the Vermont statute on ERISA plans. The 9 Vermont statute asks for after-the-fact information which plan administrators, 10 such as Blue Cross Blue Shield of Massachusetts ( BCBSMA ), already have in 11 their possession. See Tr. at 7-8. Indeed, by all accounts BCBSMA is happy to 12 provide the data Vermont has asked for, and it does so for other clients. Because 13 Liberty Mutual possesses all the information Vermont seeks, the only alleged 14 burden here is providing the data to Vermont in the requested format. 15 The majority finds that there is an obvious burden connected with the 16 formats and requirements specified by Vermont, although it does not explain 17 exactly how that burden manifests itself. Perhaps this is because Liberty Mutual 18 has failed to provide any details or showing of the alleged burden, arguing only -10- 1 that all regulations have their costs. Appellant s Br. at 28. See also Br. for 2 Amicus Chamber of Commerce at 9 (increased steps required by a TPA to fulfill 3 requirements) and 10 (arguing generally that additional requirements will cost 4 additional money ). 5 In as much as this burden is a financial one, as Liberty Mutual suggests, 6 we have stated clearly, as has the Supreme Court, that indirect financial costs 7 from a state law are not a concern unless they preclude uniform administration 8 practice or the provision of a uniform interstate benefit package. Travelers, 514 9 U.S. at 660. Indeed, our case law addressing statutes which impose added costs 10 on ERISA plans states clearly that an indirect economic impact is sufficient to 11 trigger preemption only if it produce*s+ such acute, albeit indirect, economic 12 effects as to force an ERISA plan to adopt a certain scheme of substantive 13 coverage or effectively restrict its choice of insurers. Travelers, 514 U.S. at 668; 14 see also Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 147 (2d Cir. 1989) (noting that 15 indirect economic and administrative effects are not substantial enough . . . to 16 persuade us that this is the type of law Congress intended to preempt and 17 upholding Connecticut escheat law requiring Aetna to pay all unclaimed benefits 18 to the State after three years, even though this would cause, inter alia, an increase -11- 1 in premiums to employers, lower benefits for employees, and lower profits for 2 Aetna).2 On the record before us, there is no basis to find that the Vermont 3 statute would cause Liberty Mutual to increase its costs more than a de minimus 4 amount to cover the cost of sending information to the state, much less that it 5 would cause a fiduciary to change a plan in any way. See DeBuono, 520 U.S. at 6 815 (noting that many state laws of general applicability will impose some 7 burdens on the administration of ERISA plans, but nevertheless do not relate to 8 them within the meaning of ERISA). 9 The majority also suggests the Vermont statute is inconsistent with ERISA 10 because of its supposed inconsistencies with other state reporting regimes. To 11 reach this conclusion, the majority relies on language from Fort Halifax Packing 12 Co. v. Coyne, 482 U.S. 1 (1987), suggesting that ERISA preempts laws which create 13 conflicting state record-keeping requirements. (Maj. Op. at 17-18) Fort Halifax 14 involved a preemption challenge to a Maine statute requiring an employer to 15 provide a one-time severance payment to employees under certain The majority claims that modest financial burdens are only tolerable when the state laws imposing them do not directly implicate an ERISA core concern, (Maj. Op. at 31 n.13) without citing to any authority. This statement is directly contradicted by Borges, where financial burdens were acceptable despite implicating one of the most central ERISA concerns: the payment of benefits. -122 1 circumstances. 482 U.S. at 3. The Supreme Court found that the statute 2 regulated employee benefits but did not regulate or establish an employee 3 benefit plan, and thus was not preempted by ERISA. Id. at 6-8. 4 The dicta in Fort Halifax on which the majority relies does not bear the 5 weight the majority places upon it. To the extent Fort Halifax suggests that a state 6 law may not require an ERISA plan to keep records it would not otherwise keep, 7 that concern is not implicated here. The Vermont statute does not require plan 8 administrators to keep any new records, it merely seeks access to the records that 9 are already kept. Fort Halifax does not say anything about when or how a state 10 11 may demand access to existent records. Moreover, the language in Fort Halifax describing the administrative 12 realities of employment benefit plans, does not relate to all administrative 13 concerns, but rather to the repeatedly articulated concern that there be 14 nationally uniform administration of employee benefit plans. Travelers, 514 U.S. 15 at 657 (emphasis added). See Fort Halifax, 482 U.S. at 9 (suggesting it is most 16 efficient for plans to have a uniform administrative scheme, which provides a 17 set of standard procedures to guide processing of claims and disbursement of 18 benefits. (emphasis added)). -13- 1 The distinction between general administration and administration of 2 plans, claims, and benefits is important. Many state laws may have an impact on 3 the administration of an ERISA plan for example, a work-place safety law, a 4 prevailing wage law, or a law that requires companies to report employment 5 data. Such laws may impose additional costs, or require additional 6 administrative resources. But none of these laws impact how benefits are 7 administered to beneficiaries and, therefore, they are not preempted by ERISA. See, 8 e.g., Dillingham, 519 U.S. 319 (upholding California prevailing wage law); HMI, 9 266 F.3d at 144 (upholding New York prevailing wage law); Burgio, 107 F.3d at 10 1003 (same). The reason for our focus on whether a state statute affects the 11 relationships among the core ERISA entities: beneficiaries, participants, 12 administrators, employers, trustees and other fiduciaries, see Gerosa, 329 F.3d at 13 324, is because the concern is about whether the administration of benefits to 14 beneficiaries is affected. The majority ignores this distinction and treats all 15 administrative burdens as weighing in favor of preemption. 16 The importance of separating any impact on the administration of benefits 17 from general impact upon any administrative concern is clearly articulated in 18 Egelhoff v. Egelhoff ex rel. Breiner, which involved a Washington state statute -14- 1 providing that the designation of a spouse as the beneficiary of a nonprobate 2 asset is revoked automatically upon divorce. 532 U.S. at 143. There, the 3 Supreme Court stated that while all state laws create some potential for a lack of 4 uniformity, the concern was specifically whether differing state regulations 5 affect*+ an ERISA plan s system for processing claims and paying benefits. Id. 6 at 150 (quoting Fort Halifax, 482 U.S. at 10). The Court noted that the Washington 7 statute at issue interfere*d+ with nationally uniform plan administration, as 8 administrators could not make payments simply by identifying the beneficiary 9 specified by the plan documents but instead had to familiarize themselves 10 with state statutes so that they c[ould] determine whether the named 11 beneficiary s status has been revoked by operation of law. Id. at 148-49. In 12 clear contrast to Egelhoff, there is no argument here that the Vermont statute 13 affects Liberty Mutual s system for processing claims and paying benefits. Id. 14 at 150 (internal quotation marks omitted). 15 It follows from these precedents that in order to show that the Vermont 16 statute has a legally relevant effect on ERISA plans, there must be evidence of a 17 burden on the system for processing claims. No such evidence has been 18 provided, and the majority points to none. The only possible conclusion on the -15- 1 record before us is that, other than through potential incidental costs, the 2 Vermont statute does not hinder the national administration of employment 3 benefit plans in any way. No new records need be kept, no distinction in benefits 4 between Vermont and any other state need be made. This ends the inquiry. 3 5 C. Reporting Requirements Upheld in HMI and Burgio 6 Using this same analysis, we twice concluded that ERISA did not preempt 7 the reporting requirements in New York s prevailing wage law. See HMI, 266 8 F.3d 142; Burgio, 107 F.3d 1000. In both cases, the New York statute at issue 9 required contractors and subcontractors to produce records showing their 10 compliance with the prevailing wage rate and supplements. See Burgio, 107 F.3d 11 at 1009; HMI, 266 F.3d at 151; N.Y. Lab. Law § 220. In HMI, we noted that 12 although there were indirect effects on ERISA plans, such as eliminating 13 incentives for them to pool supplement contributions, the state s inquiry did not Any support that the majority draws from Standard Oil Co. v. Agsalud, 633 F.2d 760, 763 (9th Cir. 1980), is misplaced. See Maj. Op. at 18-19. The Ninth Circuit opinion, which the Supreme Court summarily affirmed, does not even mention the reporting requirement in the Hawaii Prepaid Care Act. The Hawaii statute was found to be preempted because it directly and expressly regulated employers and the benefits they provided. The reporting requirement fell along with the rest of the statute without discussion. The fact that Congress did not amend ERISA to except reporting or disclosure requirements says nothing about whether a court asked to evaluate such requirements would find them to be preempted. 3 -16- 1 mandat*e+ a particular benefit structure for ERISA plans, require employers 2 or ERISA plans to provide specific benefits, or delve into the internal allocations 3 of benefits within the plan. 266 F.3d at 150-51; see also Burgio, 107 F.3d at 1009 4 (finding no preemption where law did not regulate . . . the terms and conditions 5 of employee benefit plans , prescribe[] . . . the type and amount of an 6 employer s contribution to a plan , or the nature and amount of the benefits 7 provided ). Rather, we said that information such as a list of plan participants, 8 payroll lists, the amount of an employer s contributions and the names of people 9 for whom the employer made contributions are appropriate areas of inquiry for 10 the state. HMI, 266 F.3d at 151. Both opinions make clear that a state may 11 properly seek information from ERISA plans for its own purposes without 12 triggering preemption so long as the request for information creates no 13 impediment to an employer s adoption of a uniform benefit administration 14 scheme, Burgio, 107 F.3d at 1009. As discussed above, the Vermont statute 15 creates no such impediment, and therefore survives under the same analysis. 16 The majority attempts to distinguish these cases based on the manner in 17 which Vermont asks to be provided information. But the fact that a particular 18 format is required, without more, is meaningless. The record contains no -17- 1 evidence that the burden of providing data to Vermont (and other states which 2 may ask for it) would keep plans from administering their benefits uniformly 3 and therefore trigger ERISA preemption. Likewise, the majority s statement that 4 the reporting requirement is time-consuming and risky (Maj. Op. at 26) even 5 if considered relevant under our precedent is nothing more than pure 6 speculation. There is no evidence to support such a finding. 7 8 9 CONCLUSION Returning, then, to the language that must guide our inquiry, our decision depends on the objectives of the ERISA statute and the effect of the state law on 10 ERISA plans. Although Congress intended to establish the regulation of 11 employee benefit plans as an exclusively federal concern, it did not intend for 12 health care to become the exclusive purview of the Federal Government. Rather, 13 it anticipated that the States would continue to be involved in providing health 14 care services to their citizens. 15 Liberty Mutual fails to overcome the presumption against preemption. 16 The Vermont statute regulates health care within that state, while imposing a 17 purely clerical burden on ERISA plans. I acknowledge that because Vermont 18 may not be the only state with this type of law, plans governed by ERISA may -18- 1 need to provide their records in different formats. But our case law does not 2 support a finding that this warrants preemption. Indeed, it says uniformly that 3 an economic burden imposed by a statute of general applicability, which does 4 not affect the benefits that beneficiaries receive or how they receive them, is 5 permissible. 6 7 Because the Vermont statute does not have an impermissible connection with ERISA plans, I respectfully dissent. -19-
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