New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.

PETITIONER: New York State Conference Of Blue Cross & Blue Shield Plans et al.
RESPONDENT: Travelers Insurance Co. et al.
LOCATION: Spendthrift Farm

DOCKET NO.: 93-1408
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 514 US 645 (1995)
ARGUED: Jan 18, 1995
DECIDED: Apr 26, 1995

ADVOCATES:
Craig P. Murphy - on behalf of the Respondents Travelers Insurance Company, et al
Edwin S. Kneedler - on behalf of the United States, as amicus curiae, supporting the Petitioners
Harold N. Iselin - on behalf of the Respondents New York State Health, et al
M. Patricia Smith - on behalf of the Petitioners
Patricia Smith - for petitioners

Facts of the case

Question

Media for New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.

Audio Transcription for Oral Argument - January 18, 1995 in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.

Audio Transcription for Opinion Announcement - April 26, 1995 in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.

William H. Rehnquist:

The opinion of the court in No. 93-1408, New York State Conference of Blue Cross and Blue Shield Plans v. Travelers Insurance Company and related cases will be announced by Justice Souter.

David H. Souter:

This case comes to us on Writ of Certiorari to the Second Circuit.

As part of a hospital rate setting scheme, New York requires hospitals to collect surcharges from patients covered by a commercial insurer but not from patients insured by Blue Cross Blue Shield Plan.

It also subjects certain health maintenance organizations the surcharges depending on the number of Medicaid recipients the HMO has enrolled.

Commercial insurers and HMO sued state officials, claming that the Federal Employee Retirement Income Security Act of 1974 or ERISA preempts the surcharges.

ERISA regulates employee benefit health plan some of which provide commercial health insurance or HMO membership as a means of resting the regulation of such plans away from the states.

The act provides the preemption of state laws that relates to any covered employee benefit plan.

The district court found that the New York surcharges just were preempted because they could lead to an increase in ERISA plan’s cost and that the purpose of the surcharge was to increase the relative attractiveness of ensuring a Blue Cross Blue Shield and to make membership in HMO that enroll only few Medicaid recipients relatively expensive.

The Court of Appeals agreed holding this purposeful interference for the choices that ERISA plan make for healthcare coverage triggered the preemption.

In an opinion filed with the clerk of court today, we reversed the judgment of the Second Circuit and hold that New York surcharges do not relate to ERISA plans.

To give content for the limitation on preemption, we look to ERISA’s objective and find that the principle purpose of preemption was to avoid multiplicity of regulations not to issue a national cost uniformly and that this purpose does not require a preemption of the surcharges.

Moreover, they hold that ERISA preempts New York surcharges would be inconsistent with Congress’ silence regarding substantial state efforts underway in 1974 to regulate healthcare cost and it would render a legal nullity, Congress’ approval just months after ERISA, a federal assistance to those state efforts.

The opinion is unanimous.