Kentucky Assn of Health Plans v. Miller (00-1471)

April 2, 2003 Supreme Court Update
Greetings Court fans!
Just when you think the Court must spend all its time on big, sexy issues like affirmative action, they come down with an ERISA preemption case. Speaking of the affirmative action cases, I hope you had a chance to catch at least part of the arguments yesterday. (I tried, but had a fight with my computer so will try again tonight.) I'm told -- by a colleague who stood in line beginning at 3:45 am to hear the arguments -- that the arguments were great, and that news reports have done a decent job of capturing the tenor of the cases.
Enough on the fun stuff. Back to reality: ERISA preemption. In Kentucky Assn of Health Plans v. Miller (00-1471), the Court (Scalia for all 9) held that ERISA does not preempt Kentucky's "any willing provider" (AWP) statutes. As you may (or may not) know, ERISA preempts all state laws relating to employee benefit plans except (as relevant here) "laws . . . which regulate insurance." In this case, HMOs wanted to establish "preferred provider networks" in Kentucky, but Kentucky's AWP statutes, as their name suggests, require HMOs to contract with any willing provider. To get around these statutes, the HMOs argued that they were preempted by ERISA. The question in this case, then, is whether the AWP statutes "regulate insurance." The Court said yes (thus saving them from preemption) because the statutes satisfied a 2-part test: (1) The statutes were directed toward entities engaged in insurance, and (2) the statutes substantially affected the risk pooling arrangement between the insurer and the insured.
On the theory that you've read about all you can stand on ERISA preemption, I note only one more point on the opinion, a point of significant interest to those who litigate ERISA cases. In past decisions on ERISA preemption, the Court has looked to cases interpreting the McCarran-Ferguson Act, which in relevant part requires an inquiry into whether certain practices constitute "the business of insurance." Today, the Court expressly repudiated this line of analysis, candidly noting that the use of McCarran-Ferguson cases in the ERISA context "has misdirected attention, failed to provide clear guidance . . . and . . . added little to the relevant analysis." In other words, henceforth, don't cite McCarran-Ferguson cases on ERISA preemption. Kudos to the Court for recognizing when its own decisions create confusion, and taking the opportunity to provide direct, helpful guidance!
That's all for today. The Court will hand down an order list on Monday, and then be in recess until April 21. Thanks for reading!
From the Appellate Practice Group at Wiggin & Dana.
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