Hartland Lakeside Joint No. 3 Sch. Dist. v. WEA Ins. Corp., No. 13-3787 (7th Cir. 2014)Annotate this Case
The Patient Protection and Affordable Care Act, 42 U.S.C. 18002, provides $5 billion to reimburse employers and their proxies for outlays on early retirees’ medical care. WEA, which administers health-care programs on behalf of Wisconsin school districts, told them that it would collect on their behalf. It decided to use the money to reduce future premiums. The school districts claim that WEA should have rebated premiums for the years in which the retirees received the medical care that led to the federal payments. The difference matters to school districts that want to switch carriers. WEA’s plan to cut future rates, rather than provide rebates, gave it a competitive advantage. Districts filed suit, characterizing WEA’s choice to allocate no money to districts, that switch carriers as a form of conversion. All of the claims arise under state law and all litigants are citizens of Wisconsin. WEA removed to federal court, contending that the Act and its implementing regulations are the crux of the litigation. The Seventh Circuit ordered the case returned to state court, reasoning that the suit does not necessarily raise any issue of federal law and that the McCarran-Ferguson Act, 15 U.S.C. 1011–15, gives states preeminence in the domain of insurance regulation.