Co-authored by Mr Robert L. Bronston & Mr Andrew H. Schapiro
The Supreme Court granted certiorari in five cases of potential interest to the business community, two of which have been consolidated. Amicus briefs in support of the petitioners are due on Monday, August 12, 2002, and amicus briefs in support of the respondents are due on Wednesday, September 11, 2002. 1. ERISA - Statutory Preemption - Any Willing Provider Statutes. The Employee Retirement Income Security Act of 1974 ("ERISA") preempts state laws that "relate to" an ERISA-governed employee benefit plan. 29 U.S.C. ß 1144(a). Any state law that "regulates insurance," however, is expressly exempt from preemption. Id. ß 1144(b)(2)(A). The Supreme Court granted certiorari in Kentucky Assoc. of Health Plans, Inc. v. Miller, No. 00-1471, to determine whether ERISA preempts state "any willing provider" ("AWP") statutes, which require health insurers to allow any provider to join the insurer's list of participating providers under the same terms offered by the insurer to other participating providers.
In 1994, the Kentucky legislature enacted the Health Care Reform Act, which included a provision that "[a] health insurer shall not discriminate against any provider who is located within the geographical coverage area of the health benefit plan and who is willing to meet the terms and conditions for participation established by the health insurer." Ky. Rev. Stat. ß 304.17A-270. The Act defined "insurers" broadly to include:
any insurance company; health maintenance organization; self-insurer or multiple employer welfare arrangement not exempt from state regulation by ERISA; provider-sponsored integrated health delivery network; self-insured employer-organized association, or nonprofit hospital, medical-surgical, dental, or health service corporation authorized to transact health insurance business in Kentucky.
Id. ß 304.17A-005(23). Kentucky subsequently passed another AWP provision addressed to contracts between HMOs and chiropractors. Id. ß 304.17A-171(2). In 1997, five HMOs and a nonprofit association of HMOs sued the Insurance Commissioner of Kentucky in federal district court, seeking to enjoin the enforcement of the Kentucky AWP provisions. The district court held that although the provisions "relate to" ERISA plans, they are not preempted because they "regulate insurance."
A divided panel of the Sixth Circuit affirmed. 227 F.3d 352 (2000). The court applied the analytical framework set forth in UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358 (1999), for determining whether a particular provision "regulates insurance." The majority found that "from a common sense view of the matter" the laws regulate insurance because they are specifically directed at the insurance industry and have the effect of giving insured persons greater freedom to choose health care providers. Id. at 364-368. The majority also concluded that the AWP laws satisfied the three McCarran-Ferguson Act factors for determining whether a regulation affects the "business of insurance." See id. at 368-372. Accordingly, the court concluded that ERISA does not preempt the AWP provisions.
The Fourth Circuit has reached the same conclusion as the Sixth Circuit. See Stuart Circle Hosp. Corp. v. Aetna Health Mgmt., 995 F.2d 500 (4th Cir. 1993). The Eighth and Fifth Circuits, in contrast, have ruled that ERISA preempts the similar AWP provisions enacted by Arkansas, Louisiana and Texas. See Prudential Ins. Co. v. National Park Med. Ctr., 154 F.3d 812 (8th Cir. 1998), Texas Pharmacy Ass'n v. Prudential Ins. Co. of Am., 105 F.3d 1035 (5th Cir. 1997); Cigna Healthplan v. Louisiana, 82 F.3d 642 (5th Cir. 1996).
As twenty-five states have enacted AWP laws, this case is important to all health insurers and managed-care entities.