Over the last few weeks, the business and legal press have been full of commentary on the impact of Supreme Court Justice Antonin Scalia’s death. Certainly, this has become a political hot potato - only time will tell how it will be resolved.
There are a couple of important employee benefit cases that could be impacted by the change in the complexion of the Supreme Court. As a very general comment, if a decision is split 4 to 4 among the Justices, the relevant circuit court holding will stand. Alternatively, the Justices could decide the re-hear the case, once the vacancy has been filled.
Of particular note, on March 23, 2016, the Supreme Court is scheduled to hear the combined case challenges to the Affordable Care Act’s contraceptive mandate, particularly as it relates to entities with a religious opposition to providing contraceptive services.
Two recent Supreme Court decisions bear mentioning.
A number of states have enacted laws requiring insurers and third party administrators (TPAs), and in certain instances, providers, to report a variety of health-related information to an essential source. The premise behind these so called all-payer claim data laws is to allow a state to gather relevant data so that they can analyze where health needs exist. As an aside, the All Payer Claims Database (APCD) Council maintains an on-line interactive map of programs in the 50 states. Vermont has such laws that require periodic reporting and disclosure by insurers, including self-funded plans, as well as health care providers of their health care costs, prices, quality, utilization, and claims data to a state agency. A lawsuit was filed challenging the state’s ability to mandate a self-funded plan to provide this type of information. In a nutshell, ERISA generally preempts state laws that attempt to regulate self-funded plans. The lower court found in favor of Vermont. The case was then appealed and the matter was found in favor of the insurer; hence, the matter arrived at the Supreme Court. The Justices rendered their opinion on March 1, 2016 [Gobeille v. Liberty Mutual Ins. Co., No. 14-181 (U.S. Mar. 1, 2016)]. In a 6-2 majority decision, the Supreme Court upheld the ERISA preemption of Vermont’s law. According to the Opinion, “preemption is necessary in order to prevent multiple jurisdictions from imposing differing, or even parallel, regulations, creating wasteful administrative costs and threatening to subject plans to wide-ranging liability”.
Another recent Supreme Court decision addressed the matter subrogation clauses that require a plan participant to reimburse a plan for medical expenses when the participant later recovers money from a third party for injuries resulting from an auto accident (Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan, No. 14-723 (U.S. Jan. 20, 2016)]. In this case, the plan paid for participant’s medical expenses he suffered as a result of the auto injury. The participant then sued the driver and obtained a settlement. In accordance with the plan’s subrogation clause, the plan administrator sought reimbursement from the participant by placing a lien on the participant’s settlement funds; however, the participant had already spent the settlement funds thus, rendering the lien unenforceable. The plan then sought to obtain reimbursement from the participant’s general assets. The Supreme Court held that when an ERISA-plan participant wholly dissipates a third-party settlement on non-traceable items, the plan fiduciary may not bring suit to attach the participant’s separate assets.
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