FMC Corporation v. Holliday

PETITIONER: FMC Corporation
RESPONDENT: Holliday
LOCATION: District Court for the Middle District of Florida, Jacksonville Division

DOCKET NO.: 89-1048
DECIDED BY: Rehnquist Court (1990-1991)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 498 US 52 (1990)
ARGUED: Oct 02, 1990
DECIDED: Nov 27, 1990

ADVOCATES:
Charles A. Rothfeld - Argued the cause for the respondent
David L. Shapiro - On behalf of the United States, as amicus curiae, in support of the petitioner
H. Woodruff Turner - Argued the cause for the petitioner

Facts of the case

FMC Corporation (FMC) provided its employees with a self-funded health benefit plan (Plan). The daughter of an FMC employee, Gerald Holliday (Holliday), was seriously injured in a car accident and the Plan paid for a portion of her medical expenses. Holliday also received, in settlement of a negligence action he brought on behalf of his daughter, payment from the driver of the automobile in which his daughter was injured. FMC sought reimbursement under the terms of the Plan. Holliday obtained a declaratory judgment that Section 1720 of the Pennsylvania Motor Vehicle Financial Responsibility Law - which precludes reimbursement from a claimant's tort recovery for benefit payments by a program, group contract, or other arrangement - prohibited FMC's exercise of subrogation rights. The Third Circuit affirmed, holding that the Employee Retirement Income Security Act (ERISA), which applies to employee welfare benefit plans such as FMC's Plan, did not preempt Section 1720.

Question

Does ERISA preempt the Pennsylvania law precluding employee welfare benefit plans from exercising subrogation rights on a claimant's tort recovery?

Media for FMC Corporation v. Holliday

Audio Transcription for Oral Argument - October 02, 1990 in FMC Corporation v. Holliday

Audio Transcription for Opinion Announcement - November 27, 1990 in FMC Corporation v. Holliday

William H. Rehnquist:

The opinion of the Court in No. 89-1048, FMC Corporation against Holliday will be announced by Justice O'Connor.

Sandra Day O'Connor:

This case comes to the court on writ of certiorari to the United States Court of Appeals for the Third Circuit.

The petitioner, FMC Corporation, self-funded healthcare plans, paid a portion of the respondents medical expenses resulting from an automobile accident.

FMC then informed respondent that it would seek reimbursement under the plans subrogation provision from any recovery she realized in her Pennsylvania negligence action against the driver of the vehicle in which she was injured.

The respondent subsequently sought and obtained a declaratory judgment in Federal District Court that Section 1720 of Pennsylvanias motor vehicle financial responsibility law, which precludes reimbursement from a claimants tort recovery or benefit payments by a program, group, contractor, or other arrangements, prohibits FMCs exercise of subrogation rights.

The Court of Appeals affirmed holding that the Employment Retirement Income Security Act, ERISA which applies to employee welfare benefit plan such as FMCs, does not preempt the state statute.

In the opinion filed today, we examine the scope of Section 514b2b of ERISA otherwise known as the deemer clause.

The deemer clause sates that an employee benefit plan shall not be deemed to be an insurance company or other insurer or to be engaged in the business of insurance for purposes of any state law reporting to regulate insurance companies or insurance contracts.

We hold that this deemer clause excludes self-funded ERISA plans, such as FMCs plan, from the reach of state laws that regulate insurance.

Thus, Pennsylvanias Section 1720 is preempted.

The judgment of the Court of Appeals is reversed accordingly and the case is remanded for proceedings consistent with this opinion.

Justice Stevens has filed a dissenting opinion.

Justice Souter took no part in the consideration or decision of the case.