De Buono v. NYSA-ILA Medical and Clinical Services Fund

PETITIONER: De Buono
RESPONDENT: NYSA-ILA Medical and Clinical Services Fund
LOCATION: City Hall

DOCKET NO.: 95-1594
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 520 US 806 (1997)
ARGUED: Feb 24, 1997
DECIDED: Jun 02, 1997

ADVOCATES:
Donato Caruso - Argued the cause for the respondents
Edwin S. Kneedler - Department of Justice, on behalf of the United States, as amicus curiae, supporting the petitioners
M. Patricia Smith - Argued the cause for the petitioners

Facts of the case

New York's Health Facility Assessment (HFA) imposes a tax on gross receipts for patient services at diagnostic and treatment centers. The NYSA ILA Medical and Clinical Services Fund, which administers a plan subject to the Employee Retirement Income Security Act (ERISA), owns and operates New York treatment centers for longshore workers, retirees and their dependents. The Fund's trustees discontinued paying the New York tax and filed to enjoin the state from making future assessments and to obtain a refund. Lawyers for the Fund alleged that the HFA is preempted by the ERISA, as it applies to hospitals run by it. The District Court ruled that the HFA is not preempted because it is a tax of general application having only an incidental impact on benefit plans. In reversing, the Court of Appeals found that the HFA directly reduces the amount of Fund assets that would otherwise be available to provide plan members with benefits, and could cause the plan to limit its benefits or to charge plan members higher fees; therefore, the HFA was preempted by the ERISA.

Question

Does the Employee Retirement Income Security Act preclude New York's Health Facility Assessment from imposing a gross-receipts tax on the income of medical centers operated by ERISA funds?

Media for De Buono v. NYSA-ILA Medical and Clinical Services Fund

Audio Transcription for Oral Argument - February 24, 1997 in De Buono v. NYSA-ILA Medical and Clinical Services Fund

Audio Transcription for Opinion Announcement - June 02, 1997 in De Buono v. NYSA-ILA Medical and Clinical Services Fund

The opinion of the Court in No. 95-1594, De Buono versus NYSA ILA Medical and Clinical Services Fund will be announced by Justice Stevens.

Like the opinion that Justice Kennedy just announced, this case also involves an ERISA pre-emption question.

It's not nearly as complicated or difficult as the case he described, however, it involves a challenge to a New York tax on the gross receipts that the hospitals received for providing patients services at their medical centers.

The respondents of the trustees of the fund that is regulated by ERISA and instead of purchasing medical services, they own two hospitals of their own where they provide the services directly.

And because they're regulated by ERISA, they have argued that the tax “relates” to the federal regulation within the meaning of the stature and therefore is preempted.

The Second Circuit agreed with their contention but we find it unpersuasive.

We disagree with the contention find, there is no pre-emption and therefore reversed the judgment of the Court of Appeals for the Second Circuit.

Raising a jurisdictional question, Justice Scalia has filed a dissenting opinion joined by Justice Thomas.