Supreme Court case helps self-insured Michigan employers

The U.S. Supreme Court is encouraging appellate courts to use a new Employee Retirement Income Security Act (ERISA) ruling to protect employers against state laws that might reduce the benefits law uniformity.

The Supreme Court today overturned a 6th U.S. Circuit Court of Appeals judgment on a Michigan ERISA case, Self-Insurance Institute of America v. Snyder, governor of Michigan, et al. (Case Number 14-741).

The Supreme Court told the 6th Circuit court to think about the Michigan case in light of the their most recent decision on Gobeille v. Liberty Mutual Insurance Company.

The drafters of ERISA hoped to save multi-state employers money and aggravation by putting regulation of their benefit plans under federal jurisdiction. A state can regulate an insurance company when the company sells the insurance used in an employer’s benefit plan, but ERISA normally “preempts,” or blocks, a state’s efforts to regulate the benefit plan itself.

In 2011, Michigan imposed a 1 percent health coverage claim tax to raise money for Medicaid. The state imposed the tax on administrators of self-insured employer plans as well as on health insurers.

The Self-Insurance Institute of America (SIIA) sued Michigan Gov. Rick Snyder and sought a judgment declaring that ERISA preempts the claim tax. A district court dismissed the SIIA suit, and a three-judge panel at the 6th Circuit upheld the district court decision that the Michigan Medicaid tax did not interfere with core ERISA functions.

A week ago, the Supreme Court held that ERISA does protect self-insured plans against conflicting state rules in a 6-2 decision on the Gobeille case. Most of the justices who sided with the majority emphasized — both in the main opinion and in concurring opinions — that they want to protect ERISA plan sponsors from conflicting or burdensome state requirements.