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Argument analysis: Justices spar over ERISA preemption of state health-care databases

About the only thing that seems clear after the argument in Gobeille v. Liberty Mutual Insurance Company is that the Court will not dispose of the case with a unanimous opinion. Although the case presents a question of preemption under the Employee Retirement Income Security Act of 1973 (ERISA), the argument presented a bench plainly preoccupied with the Affordable Care Act. Just as the Affordable Care Act has brought centralized attention to the costs of health care directly into the responsibility of state governments, the need for information about the costs and effectiveness of health care has become salient, if not pressing. It is no coincidence that several states – now more than a dozen – have enacted regimes for “all payer” databases that will provide comprehensive state-level information about the distribution and costs of health care services provided to a state’s residents. It can surprise nobody that the health plans governed by ERISA – no small share of health-care payers – would take the position that ERISA protects them from any obligation to contribute data to those databases. This case brings to the Court the Second Circuit’s decision invalidating Vermont’s all-payer database as preempted by ERISA.

In large part, it was a tale of two arguments. The presentations of Bridget Asay (representing Alfred Gobeille, the responsible Vermont official) and John Bash (representing the federal government, supporting Vermont) were hampered by caustic criticism from Chief Justice John Roberts and Justices Antonin Scalia and Samuel Alito. Those Justices made two general points. First, consuming much of Asay’s presentation, Scalia and Alito suggested that the collection of health-care data was a core ERISA function because of a provision added to the act by the ACA that gives the Secretary of Labor broad authority to collect such data. If the collection of the data is a core function of ERISA, then, at least in the view of Scalia and Alito, the state’s intrusion into that activity would be preempted. Asay emphasized the ACA provisions stating explicitly that its revisions to ERISA should not change the preemption standard. The insurer (respondent Liberty Mutual) more or less conceded that point in its briefs – but Scalia and Alito seemed wholly unpersuaded.

The Chief Justice engaged more directly with the arguments of the parties. Vermont’s strongest point was that the insurer failed to establish that the data collection required by Vermont was burdensome in any substantial way; Vermont contended (supported by the federal government) that the insurer’s administrator collected the data for its non-ERISA customers in any event and that the data is collected in a nationally standardized format that makes costs from inconsistency a minor irrelevancy. The insurer’s principal argument, by contrast, was that the data collection would become burdensome if numerous states established the databases and used inconsistent data requirements. The Chief Justice found the consequences of waiting for inconsistency to happen difficult to accept:

So we go through at one point – all of a sudden – the 11th State does this, and it’s the 11 different things, we say that’s a burden? Is that a sufficient burden? We say no. But then when 30 states do it, maybe it’s a different answer. That seems like a very odd preemption analysis.

Conversely, Justices Ruth Bader Ginsburg and Elena Kagan dominated the argument time of Seth Waxman on behalf of Liberty Mutual. From their perspective, the purposes of all-payer databases are so far removed from ERISA’s core goals that it makes no sense to impute to ERISA an intent to prevent the data collection. Emphasizing that prior cases have tolerated laws of general application that happened to burden ERISA plans in the same way that they burdened other enterprises, Kagan strongly supported Vermont’s position:

Mr. Waxman, I guess I just don’t understand this argument. I understand completely that there should be some restriction on overly burdensome State regulations of whatever kind. … But why is it that this regulation falls in a different category than taxes or childcare or anything else? Because the State here clearly is not attempting to [regulate], and is not regulating, payment of benefits. It’s doing something that has an effect on your operations, no doubt, but the State is operating in a completely separate area for completely separate purposes in a way that does not trump or conflict with, or anything else, the choices that ERISA has made as to payment of benefits.

In the same vein, Ginsburg found it incredible to suggest that ERISA could prevent something so obviously salutary as the state’s all-payer database: “You’re saying that the State simply cannot have an all-payer database. That’s out because ERISA precludes it, even though it’s going to leave a big hole in the information that the State has about the health care being given to its citizens.”

Between those two polar extremes, the two Justices in the center of the discussion were Justices Anthony Kennedy and Stephen Breyer. Kennedy explored much the same line of questioning as the Chief Justice, except that he seemed considerably less decisive. Thus, what he asked about, repeatedly, was how the analysis would change if instead of one state before the Court there were several states, all with different reporting requirements. He tended to preface his remarks with the view that the insurer had shown no burden here, but like the Chief Justice he was struggling with the idea that the legality of one state’s rule could turn on the enactments of other states.

It was Breyer, though, who spoke most frequently, staking out a position distinct from all the other Justices and, indeed, from all the counsel before him. To him, the possibility of burdensome inconsistency was too plain to be brushed aside. Indeed, it seemed to him so plain that – as he emphasized ominously to Asay – he could not understand why the Solicitor of Labor had agreed, through the Solicitor General, to support Vermont. He found the task of evaluating the consistency of state data-collection rules a task unsuited for judicial assessment, raising with counsel on both sides his view that the right answer was for the Department of Labor to adopt a regulation validating these databases, if it saw fit to do so, and specifying rules to limit the burdens of inconsistency. Thus, in his analysis, the Vermont rule would be preempted unless the Department of Labor adopted regulations validating it. As he put it, “I think the agencies have a lot of power there, and I think they have more capacity to decide this kind of thing than a group of judges.”

Breyer’s idea was controversial. Scalia scoffed at the idea that an agency can alter the preemptive effect of a congressional enactment. Understandably, Scalia’s skepticism made Asay and Waxman — with whom Breyer discussed his idea — reluctant to embrace it. Breyer seemed to accept the notion that his colleagues would not accept his view, so he well might have been planning a separate opinion staking out his own perspective.

I come away from the argument not at all sure of how this one will come out. Several Justices seem inclined to find Vermont’s scheme invalid, but others seem just as inclined to find it valid. But there are enough Justices who said very little and enough who seemed unsettled to make the majority view unclear. Combined with the certainty that the Justices will struggle to define the appropriate framework of preemption analysis, this case looks like a good candidate for a long gestation leading to a late spring opinion.

Recommended Citation: Ronald Mann, Argument analysis: Justices spar over ERISA preemption of state health-care databases, SCOTUSblog (Dec. 3, 2015, 11:26 AM),