Source: http://supreme.nolo.com/us/471/724/case.html
Timestamp: 2020-02-22 10:36:35
Document Index: 649034721

Matched Legal Cases: ['§ 514', '§ 47', '§ 47', '§ 47', '§ 514', '§ 1144', '§ 47', '§ 47', '§ 151', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 514', '§ 1144', '§ 1011', '§ 1012', '§ 47', '§ 514', '§ 1144', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 1011', '§ 47', '§ 7', '§ 8', '§ 157', '§ 47', '§ 1', '§ 151', '§ 514', '§ 1144', '§ 47', '§ 47', '§ 514', '§ 1144', '§ 47']

METROPOLITAN LIFE V. MASSACHUSETTS, 471 U. S. 724 - Volume 471 - 1985 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 471 > METROPOLITAN LIFE V. MASSACHUSETTS, 471 U. S. 724 (1985) > Full Text
1. Section 47B, as applied, is a law "which regulates insurance" within the meaning of § 514(b)(2)(A), and therefore is not preempted by
(d) There is no suggestion in the NLRA's legislative history that Congress intended to disturb the state laws that set minimum labor standards but were unrelated to the collective bargaining or self-organization processes. To the contrary, Congress in the NLRA developed the framework for self-organization and collective bargaining within the larger body of state law promoting public health and safety. When a state law establishes a minimal employment standard not inconsistent with the NLRA's general goals, it conflicts with none of the NLRA's purposes. Section 47B is an insurance regulation designed to implement the Commonwealth's policy on mental health care, and as such is a valid and unexceptional exercise of the Commonwealth's police power. Though § 47B potentially limits any employee's right to choose one thing by requiring that he be provided with something else, it does
General health insurance typically is sold as group insurance to an employer or other group. [Footnote 1] Group insurance presently is subject to extensive state regulation, including
While mandated benefit statutes are a relatively recent phenomenon, [Footnote 3] statutes regulating the substantive terms of insurance contracts have become commonplace in all 50 States over the last 30 years. [Footnote 4] Perhaps the most familiar are those regulating the content of automobile insurance policies. [Footnote 5]
Mandated benefit statutes, then, are only one variety of a matrix of state laws that regulate the substantive content of health insurance policies to further state health policy. Massachusetts Gen. Laws Ann., ch. 175, § 47B (West Supp.1985), is typical of mandated benefit laws currently in place in the majority of States. [Footnote 10] With respect to a Massachusetts
resident, it requires any general health insurance policy that provides hospital and surgical coverage, or any benefit plan that has such coverage, to provide as well a certain minimum of mental health protection. In particular, § 47B requires that a health insurance policy provide 60 days of coverage for confinement in a mental hospital, coverage for confinement in a general hospital equal to that provided by the policy for nonmental illness, and certain minimum outpatient benefits. [Footnote 11]
In addition, the Commonwealth concluded that the voluntary insurance market was not adequately providing mental health coverage, because of "adverse selection" in mental health insurance: good insurance risks were not purchasing coverage, and this drove up the price of coverage for those who otherwise might purchase mental health insurance. The legislature believed that the public interest required that it correct the insurance market in the Commonwealth by mandating minimum coverage levels, effectively forcing the good-risk individuals to become part of the risk pool, and enabling insurers to price the insurance at an average market, rather than a market retracted due to adverse selection. See Findings of Fact of the Superior Court, App. to Juris.Statement in No. 84-325, pp. 50a-53a. Section 47B, then, was intended to help safeguard the public against the high costs of comprehensive inpatient and outpatient mental health care, reduce nonpsychiatric medical care expenditures for mentally related illness, shift the delivery of treatment from inpatient to outpatient services, and relieve the Commonwealth of some of the financial burden it otherwise would encounter with respect to mental health problems. Ibid.
ERISA thus contains almost no federal regulation of the terms of benefit plans. It does, however, contain a broad preemption provision declaring that the statute shall "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." § 514(a), 29 U.S.C. § 1144(a). Appellant Metropolitan in No. 84-325 argues that ERISA preempts Massachusetts' mandated benefit law insofar as § 47B restricts the kinds of insurance policies that benefit plans may purchase.
Wholly apart from the question whether Massachusetts' mandated benefit law is preempted by ERISA, appellant Travelers in No. 84-356 argues that, as applied to benefit plans negotiated pursuant to collective bargaining agreements, § 47B is preempted by the National Labor Relations Act, 49 Stat. 449, as amended, 29 U.S.C. § 151 et seq. (NLRA), because it effectively imposes a contract term on the parties that otherwise would be a mandatory subject of collective bargaining. Unlike ERISA, the NLRA contains no statutory provision indicating the extent to which it was intended to preempt state law. Resolution of the NLRA preemption question, therefore, requires us to discern legislative intent from the general purpose of the NLRA, and not from any particular statutory language.
The complaint further asserted that the insurers had amended a number of policies in effect prior to January 1, 1976, but had failed to include the benefits mandated by § 47B in the amended policies, in violation of the law. App. 9-10. Finally, the Commonwealth asserted that the insurers refused to provide the mandated benefits in part on the ground that they believed ERISA and the NLRA preempted § 47B. App. 10. Though the insurers had not actually refused to provide the mandated benefits in any policy issued after January 1, 1976, within the Commonwealth, the insurers preserved their right to challenge the applicability of § 47B
Addressing first the ERISA preemption question, the court recognized that § 47B is a law that "relate[s] to' benefit plans," and so would be preempted unless it fell within one of the exceptions to the preemption clause of ERISA. 385 Mass. at 605, 433 N.E.2d at 1227. The court went on to hold, however, that § 47B is a law "which regulates insurance," as understood by the ERISA saving clause, § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), and therefore is not preempted by ERISA. 385 Mass. at 606-609, 433 N.E.2d at 1228-1230. [Footnote 14] It rejected appellants' claim that
Moreover, the court pointed out, Congress has indicated in the McCarran-Ferguson Act, 59 Stat. 33, as amended, 15 U.S.C. § 1011 et seq., that federal laws should not be construed to supersede state laws "regulating the business of insurance." § 1012(b). Section 47B operates upon insurance and insurance policies. The McCarran-Ferguson Act
The dissenting justice felt that the Shaw Court had made clear that the exemptions and exceptions to ERISA's preemption clause should be read narrowly in order to preserve nationwide uniformity in the administration of welfare plans.
Shaw v. Delta Air Lines, Inc., 463 U.S. at 463 U. S. 95. The narrow statutory ERISA question presented is whether Mass.Gen.Laws Ann., ch. 175, § 47B (West Supp.1985), is a law "which regulates insurance" within the meaning of § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), and so would not be preempted by § 514(a).
Nonetheless, the sphere in which § 514(a) operates was explicitly limited by § 514(b)(2). The insurance saving clause preserves any state law "which regulates insurance, banking, or securities." The two preemption sections, while clear enough on their faces, perhaps are not a model of legislative drafting, for while the general preemption clause broadly
Appellants assert that state laws that directly regulate the insurer, and laws that regulate such matters as the way in which insurance may be sold, are traditional laws subject to the clause, while laws that regulate the substantive terms of insurance contracts are recent innovations more properly seen as health laws, rather than as insurance laws, which § 514(b)(2)(A) does not save. This distinction reads the saving clause out of ERISA entirely, because laws that regulate only the insurer, or the way in which it may sell insurance, do not "relate to" benefit plans in the first instance. Because they would not be preempted by § 514(a), they do not need to be "saved" by § 514(b)(2)(A). There is no indication that Congress could have intended the saving clause to operate
Moreover, it is both historically and conceptually inaccurate to assert that mandated benefit laws are not traditional insurance laws. As we have indicated, state laws regulating the substantive terms of insurance contracts were commonplace well before the mid-70's, when Congress considered ERISA. [Footnote 19] The case law concerning the meaning of the phrase "business of insurance" in the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq., also strongly supports the conclusion that regulation regarding the substantive terms of
Nor is there any contrary case authority suggesting that laws regulating the terms of insurance contracts should not be understood as laws that regulate insurance. In short, the plain language of the saving clause, its relationship to the other ERISA preemption provisions, and the traditional understanding of insurance regulation, all lead us to the conclusion that mandated benefit laws such as § 47B are saved from preemption by the operation of the saving clause. [Footnote 21]
Nothing in the legislative history of ERISA suggests a different result. There is no discussion in that history of the relationship between the general preemption clause and the saving clause, and indeed very little discussion of the saving clause at all. [Footnote 22] In the early versions of ERISA, the general preemption clause preempted only those state laws dealing with subjects regulated by ERISA. The clause was significantly broadened at the last minute, well after the saving clause was in its present form, to include all state laws that relate to benefit plans. The change was made with little explanation by the Conference Committee, and there is no indication in the legislative history that Congress was aware of the new prominence given the saving clause in light of the rewritten preemption clause, or was aware that the saving clause was in conflict with the general preemption provision. [Footnote 23] There is a complete absence of evidence that Congress
We therefore decline to impose any limitation on the saving clause beyond those Congress imposed in the clause itself and in the "deemer clause" which modifies it. If a state law "regulates insurance," as mandated benefit laws do, it is not preempted. Nothing in the language, structure, or legislative history of the Act supports a more narrow reading of the clause, whether it be the Supreme Judicial Court's attempt to save only state regulations unrelated to the substantive provisions
The Court has articulated two distinct NLRA preemption principles. The so-called Garmon rule, see San Diego Building Trades Council v. Garmon, 359 U. S. 236 (1959), protects the primary jurisdiction of the NLRB to determine in the first instance what kind of conduct is either prohibited or protected by the NLRA. [Footnote 26] There is no claim here that
A second preemption doctrine protects against state interference with policies implicated by the structure of the Act itself, by preempting state law and state causes of action concerning conduct that Congress intended to be unregulated. The doctrine was designed, at least initially, to govern preemption questions that arose concerning activity that was neither arguably protected against employer interference by §§ 7 and 8(a)(1) of the NLRA nor arguably prohibited as an unfair labor practice by § 8(b) of that Act. 29 U.S.C. §§ 157, 158(a)(1) and (b). Such action falls outside the reach of Garmon preemption. See New York Telephone Co. v. New York Labor Dept., 440 U. S. 519, 440 U. S. 529-531 (1979) (plurality opinion). [Footnote 27]
More recently, a divided Court struggled with a feature of New York's unemployment insurance law that provided certain unemployment insurance payments to striking workers. New York Telephone Co. v. New York Labor Dept., supra. As in Machinists and Morton, the state law "altered the economic balance between labor and management." 440 U.S. at 440 U. S. 532 (plurality opinion). A majority of the Justices nonetheless found the state law not preempted, on the ground that the legislative history of the Social Security Act of 1935, along with other federal legislation, suggested that Congress had decided to permit a State to pay unemployment benefits to strikers. [Footnote 28]
Here, however, appellants do not suggest that § 47B alters the balance of power between the parties to the labor contract. Instead, appellants argue that not only did Congress establish a balance of bargaining power between labor and management in the Act, but it also intended to prevent the States from establishing minimum employment standards that labor and management would otherwise have been required to negotiate from their federally protected bargaining positions, and would otherwise have been permitted to set at a lower level than that mandated by state law. Appellants assert that such state regulation is permissible only when Congress has authorized its enactment. Because welfare benefits are a mandatory subject of bargaining under the
The question has been before the Court in the past, see Algoma Plywood Co. v. Wisconsin Board, 336 U. S. 301, 336 U. S. 312 (1949), and there is a surface plausibility to appellants' argument, which finds support in dicta in some prior Court decisions.
§ 1, 29 U.S.C. § 151. The same section notes the desirability of "restoring
The evil Congress was addressing thus was entirely unrelated to local or federal regulation establishing minimum terms of employment. Neither inequality of bargaining power nor the resultant depressed wage rates were thought to result from the choice between having terms of employment set by public law or having them set by private agreement. No incompatibility exists, therefore, between federal rules designed to restore the equality of bargaining power and state or federal legislation that imposes minimal substantive requirements on contract terms negotiated between parties to labor agreements, at least so long as the purpose of
Most significantly, there is no suggestion in the legislative history of the Act that Congress intended to disturb the myriad state laws then in existence that set minimum labor standards, but were unrelated in any way to the processes of bargaining or self-organization. To the contrary, we believe that Congress developed the framework for self-organization and collective bargaining of the NLRA within the larger body of state law promoting public health and safety. The States traditionally have had great latitude under their police powers to legislate as "to the protection of the lives, limbs, health, comfort, and quiet of all persons.'" Slaughter-House Cases, 16 Wall. 36, 83 U. S. 62 (1873), quoting Thorpe v. Rutland & Burlington R. Co, 27 Vt. 140, 149 (1855).
Federal labor law in this sense is interstitial, supplementing state law where compatible and supplanting it only when it prevents the accomplishment of the purposes of the federal Act. Hines v. Davidowitz, 312 U. S. 52, 312 U. S. 67, n. 20 (1941); Electrical Workers v. Wisconsin Employment Relations
Page 471 U. S. 757
Bd., 315 U. S. 740, 315 U. S. 749-751 (1942); Malone v. White Motor Corp., 435 U.S. at 435 U. S. 504. Thus, the Court has recognized that it
435 U.S. at 435 U. S. 504-505. [Footnote 32]
See Answer �� 8-14, App. 51-52. See also Stipulation �� 1-11, App. 459-462.
Section 47B also requires benefit plans that are self-insured to provide the mandated mental health benefits. In light of ERISA's "deemer clause," § 514(b)(2)(B), 29 U.S.C. § 1144(b)(2)(B), which states that a benefit plan shall not "be deemed an insurance company" for purposes of the insurance saving clause, Massachusetts has never tried to enforce § 47B as applied to benefit plans directly, effectively conceding that such an application of § 47B would be preempted by ERISA's preemption clause, § 514(a), 29 U.S.C. § 1144(a). See Stipulation � 12, App. 462. In a part of its decision that is not challenged here, the Supreme Judicial Court held that that part of § 47B which applies to insurers is severable from the preempted provisions pertaining directly to benefit plans. See 385 Mass. at 601-602, 433 N.E.2d at 1225.
Metropolitan, in its appeal No. 84-325, concerns itself with that part of the judgment that found no preemption under ERISA, while Travelers, in its appeal No. 84-356, separately emphasizes the part of the judgment that found no preemption under the NLRA. This division apparently was a tactical choice; the record indicates that both appellants have issued insurance contracts to plans that are the product of collective bargaining agreements subject to the NLRA, and that "[v]irtually all" insurance policies issued by both appellants to cover Massachusetts employees were issued to provide benefits for plans subject to ERISA. Most contracts technically were issued to employers. See Stipulation, �� 8, 11, 12, App. 461-462. We consolidated the appeals when we noted probable jurisdiction. 469 U.S. 929 (1984).
Nearly every court that has addressed the question has concluded that laws regulating the substantive content of insurance contracts are laws that regulate insurance, and thus are within the scope of the insurance saving clause. See, e.g., Wayne Chemical, Inc. v. Columbus Agency Service Corp., 567 F.2d 692, 700 (CA7 1977); Wadsworth v. Whaland, 562 F.2d at 77; Eversole v. Metropolitan Life Ins. Co., 500 F.Supp. 1162, 1168-1170 (CD Cal.1980); Insurers' Action Council, Inc. v. Heaton, 423 F.Supp. 921, 926 (Minn.1976); Insurance Comm'r v. Metropolitan Life Ins. Co., 296 Md. 334, 344-345, 463 A.2d 793, 798 (1983); Metropolitan Life Ins. Co. v. Whaland, 119 N. H. 894, 900-902, 410 A.2d 635, 639-640 (1979). Cf. American Progressive Life and Health Ins. Co. v. Corcoran, 715 F.2d 784, 787 (CA2 1983). But see Michigan United Food & Commercial Workers Union v. Baerwaldt, 572 F.Supp. 943 (ED Mich.1983), appeal docketed, No. 83-1570 (CA6 1983).
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