Source: http://www.law.cornell.edu/supremecourt/text/506/125
Timestamp: 2014-03-12 10:16:15
Document Index: 22276934

Matched Legal Cases: ['§ 514', '§ 2', '§ 514', '§ 514', '§ 3', '§ 3', '§ 4', '§ 4', '§ 4', '§ 514', '§ 514', '§ 2', '§ 514', '§ 2', '§ 2', '§ 2', '§ 514', '§ 514', '§ 514', '§ 2', '§ 36', '§ 3', '§ 3', '§ 4', '§ 514', '§ 2', '§ 4', '§ 514', '§ 204', '§ 514', '§ 4', '§ 4', '§ 2', '§ 514', '§ 4', '§ 514', '§ 514', '§ 514', '§ 36', '§ 2', '§ 4', '§ 3']

The DISTRICT OF COLUMBIA and Sharon Pratt Kelly, Mayor, Petitioners, v. The GREATER WASHINGTON BOARD OF TRADE. | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews The DISTRICT OF COLUMBIA and Sharon Pratt Kelly, Mayor, Petitioners, v. The GREATER WASHINGTON BOARD OF TRADE.
506 U.S. 125 (113 S.Ct. 580, 121 L.Ed.2d 513)
Held: Section 2(c)(2) is pre-empted by ERISA. A state law "relates to" a covered benefit plan for § 514(a) purposes if it refers to or has a connection with such a plan, even if the law is not designed to affect the plan or the effect is only indirect. See, e.g., Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, ----, 112 L.Ed.2d 474. Section 2(c)(2) measures the required health care coverage by reference to "the existing health insurance coverage," which is a welfare benefit plan subject to ERISA regulation. It does not matter that § 2(c)(2)'s requirements also "relate to" ERISA-exempt workers' compensation plans, since ERISA's exemptions do not limit § 514's pre-emptive sweep once it is determined that a law relates to a covered plan. See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 525, 101 S.Ct. 1895, 1907, 68 L.Ed.2d 402. Petitioners' reliance on Shaw, supra, is misplaced, since the statute at issue there did not "relate to" an ERISA-covered plan. Nor is there any support in Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728, for their position that § 514(a) requires a two-part analysis under which a state law relating to an ERISA-covered plan would survive preemption if employers could comply with the law through separately administered exempt plans. Pp. ____.
The District of Columbia requires employers who provide health insurance for their employees to provide equivalent health insurance coverage for injured employees eligible for workers' compensation benefits. We hold that this requirement is pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. 1001 et seq.
* ERISA sets out a comprehensive system for the federal regulation of private employee benefit plans, including both pension plans and welfare plans. A "welfare plan" is defined in § 3 of ERISA to include, inter alia, any "plan, fund, or program" maintained for the purpose of providing medical or other health benefits for employees or their beneficiaries "through the purchase of insurance or otherwise." § 3(1), 29 U.S.C. 1002(1). Section 4 defines the broad scope of ERISA coverage. Subject to certain exemptions, ERISA applies generally to all employee benefit plans sponsored by an employer or employee organization. § 4(a), 29 U.S.C. 1003(a). Among the plans exempt from ERISA coverage under § 4(b) are those "maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws." § 4(b)(3), 29 U.S.C. 1003(b)(3).
ERISA's pre-emption provision assures that federal regulation of covered plans will be exclusive. Section 514(a) provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA. § 514(a), 29 U.S.C. 1144(a). Several categories of state laws, such as generally applicable criminal laws and laws regulating insurance, banking, or securities, are excepted from ERISA pre-emption by § 514(b), 29 U.S.C. 1144(b), but none of these exceptions is at issue here.
Respondent Greater Washington Board of Trade, a nonprofit corporation that sponsors health insurance coverage for its employees, filed this action against the District of Columbia and Mayor Sharon Pratt Kelly seeking to enjoin enforcement of § 2(c)(2) on the ground that the "equivalent"-benefits requirement is pre-empted by § 514(a) of ERISA. The District Court granted petitioners' motion to dismiss. App. to Pet. for Cert. 21a. Petitioners conceded that § 2(c)(2) "relates to" an ERISA-covered plan in the sense that the benefits required under the challenged law "are set by reference to covered employee benefit plans." Id., at 22a. Relying on our opinion in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), however, the District Court held that § 2(c)(2) is not pre-empted because it also relates to respondent's workers' compensation plan, which is exempt from ERISA coverage, and because respondent could comply with § 2(c)(2) "by creating a 'separate administrative unit' to administer the required benefits." App. to Pet. for Cert. 24a (quoting Shaw, supra, at 108, 103 S.Ct. at 2905-2906).
We have repeatedly stated that a law "relates to" a covered employee benefit plan for purposes of § 514(a) "if it has a connection with or reference to such a plan." Shaw, supra, 463 U.S., at 97, 103 S.Ct., at 2900. E.g., Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990); FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, ----, 112 L.Ed.2d 356 (1990); Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 829, 108 S.Ct. 2182, 2185, 100 L.Ed.2d 836 (1988); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 1552-1553, 95 L.Ed.2d 39 (1987); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 2389, 85 L.Ed.2d 728 (1985). This reading is true to the ordinary meaning of "relate to," see Black's Law Dictionary 1288 (6th ed.1990), and thus gives effect to the "deliberately expansive" language chosen by Congress. Pilot Life, supra, 481 U.S., at 46, 107 S.Ct. at 1552. See also Morales v. Trans World Airlines, Inc., 504 U.S. ----, ----, 112 S.Ct. 2031, 2037, 119 L.Ed.2d 157 (1992). Under § 514(a), ERISA pre-empts any state law that refers to or has a connection with covered benefit plans (and that does not fall within a § 514(b) exception) "even if the law is not specifically designed to affect such plans, or the effect is only indirect," Ingersoll-Rand, supra, 498 U.S., at 139, 111 S.Ct., at 483, and even if the law is "consistent with ERISA's substantive requirements," Metropolitan Life, supra, 471 U.S., at 739, 105 S.Ct., at 2389.
Section 2(c)(2) of the District's Equity Amendment Act specifically refers to welfare benefit plans regulated by ERISA and on that basis alone is pre-empted. The health insurance coverage that § 2(c)(2) requires employers to provide for eligible employees is measured by reference to "the existing health insurance coverage" provided by the employer and "shall be at the same benefit level." D.C.Code Ann. § 36-307(a-1)(1) and (3) (Supp.1992). The employee's "existing health insurance coverage," in turn, is a welfare benefit plan under ERISA § 3(1), because it involves a fund or program maintained by an employer for the purpose of providing health benefits for the employee "through the purchase of insurance or otherwise." § 3(1), 29 U.S.C. 1002(1).
Such employer-sponsored health insurance programs are subject to ERISA regulation, see § 4(a), 29 U.S.C. 1003(a), and any state law imposing requirements by reference to such covered programs must yield to ERISA.
This conclusion is consistent with Mackey v. Lanier Collection Agency, which struck down a Georgia law that specifically exempted ERISA plans from a generally applicable garnishment procedure. 486 U.S., at 828, n. 2, and 829-830, 108 S.Ct., at 2184, n. 2, 2185-2186. It also follows from Ingersoll-Rand, where we held that ERISA § 514(a) pre-empted a Texas common-law cause of action for wrongful discharge based on an employer's desire to avoid paying into an employee's pension fund. Even though the employee sought no pension benefits, only "lost future wages, mental anguish and punitive damages," 498 U.S., at 136, 111 S.Ct., at 481 (internal quotations omitted), we held the claim pre-empted because it was "premised on" the existence of an ERISA-covered pension plan. Id., at 140, 111 S.Ct., at 482.
It makes no difference that § 2(c)(2)'s requirements are part of the District's regulation of, and therefore also "relate to," ERISA-exempt workers' compensation plans. The exemptions from ERISA coverage set out in § 4(b), 29 U.S.C. 1003(b), do not limit the pre-emptive sweep of § 514 once it is determined that the law in question relates to a covered plan. See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 525, 101 S.Ct. 1895, 1907, 68 L.Ed.2d 402 (1981) ("It is of no moment that New Jersey intrudes indirectly through a workers' compensation law, rather than directly, through a statute called 'pension regulation' "). Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), does not support petitioners' position. Shaw dealt, in relevant part, with a New York disability law that required employers to pay weekly benefits to disabled employees equal to " 'one-half of the employee's average weekly wage.' " Id., at 90, n. 4, 103 S.Ct., at 2896, n. 4 (quoting N.Y. Work.Comp. Law § 204.2 (McKinney Supp.1982-1983)). We held that this law was not pre-empted by § 514(a) because it related exclusively to exempt employee benefit plans "maintained solely for the purpose of complying with applicable . . . disability insurance laws" within the meaning of § 4(b)(3), 29 U.S.C. 1003(b)(3). See 463 U.S., at 106-108, 103 S.Ct., at 2904-2905. The fact that employers could comply with the New York law by administering the required disability benefits through a multibenefit ERISA plan did not mean that the law related to such ERISA plans for pre-emption purposes. See id., at 108, 103 S.Ct., at 2905. We simply held that as long as the employer's disability plan, "as an administrative unit, provided only those benefits required by" the New York law, it could qualify as an exempt plan under ERISA § 4(b)(3). Id., at 107, 103 ,S.Ct., at 2905. Thus, unlike § 2(c)(2) of the District's Equity Amendment Act, the New York statute at issue in Shaw did not "relate to" an ERISA-covered plan.
Petitioners nevertheless point to Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985), in which we described Shaw as holding that "the New York Human Rights Law and that State's Disability Benefits Law 'related to' welfare plans governed by ERISA." Id., at 739, 105 S.Ct., at 2388-2389. Relying on this dictum and their reading of Shaw, petitioners argue that § 514(a) should be construed to require a two-step analysis: if the state law "relates to" an ERISA-covered plan, it may still survive pre-emption if employers could comply with the law through separately administered plans exempt under § 4(b). See Tr. of Oral Arg. 16-17. But Metropolitan Life construed only the scope of § 514(b)(2)(A)'s safe harbor for state laws regulating insurance, see 471 U.S., at 739-747, 105 S.Ct., at 2388-2393; it did not purport to add, by its passing reference to Shaw, any further gloss on § 514(a). And although we did conclude in Shaw that both New York laws at issue there related to "employee benefit plans" in general, 463 U.S., at 100, 103 S.Ct., at 2901, only the Human Rights Law, which barred discrimination by ERISA plans, fell within the pre-emption provision. See id., at 100-106, 103 S.Ct., at 2901-2905. As we have explained, the Disability Benefits Law upheld in Shawthough mandating the creation of a "welfare plan" as defined in ERISA
did not relate to a welfare plan subject to ERISA regulation. Section 2(c)(2) does, and that is the end of the matter. We cannot engraft a two-step analysis onto a one-step statute.
The basic question that this case presents is whether Congress intended to prevent a State from computing workmen's compensation benefits on the basis of the entire remuneration of injured employees when a portion of that remuneration is provided by an employee benefit plan. By converting unnecessarily broad dicta interpreting the words "relate to" as used in § 514(a) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1144(a), into a rule of law, and by underestimating the significance of the exemption of workmen's compensation plans from the coverage of the Act, the Court has reached an incorrect conclusion in an unusually important case.
In today's world the typical employee's compensation is not just her take-home pay; it often includes fringe benefits such as vacation pay and health insurance. If an employee loses her job, by reason of either a wrongful discharge or a negligently inflicted physical injury, normal contract or tort principles would allow her to recover damages measured by her entire loss of earningsincluding the value of fringe benefits such as health insurance. If I understand the Court's reasoning today, a state statute that merely announced that basic rule of damages law would be pre-empted by ERISA if it "specifically refers" to each component of the damages calculation. Ante, at ____.
Workmen's compensation laws provide a substitute for tort actions by employees against their employers. They typically base the amount of the compensation award on the level of the employee's earnings at the time of the injury. In the District of Columbia's workers' compensation law, for example, an employee's "average weekly wages" provide the basic standard for computing the award regardless of the nature of the injury. D.C.Code Ann. § 36-308 (1988 and Supp.1992). Because an employee who receives health insurance benefits typically has a correspondingly reduced average weekly wage, the District decided to supplement the standard level of workers' compensation with a component reflecting any health insurance benefits the worker receives. The Court seems to be holding today that such a supplement may never be measured by the level of the employee's health insurance coverageat least if the state statutes or regulations specifically refer to that component of the calculation.
It is true, as the Court points out, that in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983), we stated that a law "related to" an employee benefit plan, "in the normal sense of the phrase, if it has a connection with or reference to such a plan." It is also true that we have repeatedly quoted that language in later opinions.
Indeed, it has been reiterated so often that petitioner did not challenge the proposition that the statute at issue in this case "related to" respondent's ERISA plan. It nevertheless is equally true that until today that broad reading of the phrase has not been necessary to support any of this Court's actual holdings.
Given the open-ended implications of today's holding and the burgeoning volume of litigation involving ERISA pre-emption claims,
I think it is time to take a fresh look at the intended scope of the pre-emption provision that Congress enacted. Let me begin by repeating the qualifying language in the Shaw opinion itself and by emphasizing one word in the statutory text that is often overlooked.
In deciding where that line should be drawn, I would begin by emphasizing the fact that the so-called "pre-emption" provision in ERISA does not use the word "pre-empt." It provides that the provisions of the federal statute shall "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title." 29 U.S.C. 1144(a) (emphasis added). Thus the federal statute displaces state regulation in the field that is regulated by ERISA; it expressly disavows an intent to supersede state regulation of exempt plans; and its text is silent about possible pre-emption of state regulation of subjects not regulated by the federal statute. Thus, if we were to decide this case on the basis of nothing more than the text of the statute itself, we would find no pre-emption (more precisely, no "supersession") of the District's regulation of health benefits for employees receiving workers' compensation because that subject is entirely unregulated by ERISA.
I would not decide this case on that narrow ground, however, because both the legislative history of ERISA and prior holdings by this Court have given the supersession provision a broader reading. Thus, for example, in Shaw itself we held that the New York Human Rights Law, which prohibited employers from structuring their employee benefit plans in a manner that discriminated on the basis of pregnancy, was pre-empted even though ERISA did not contain any superseding regulatory provisions. 463 U.S., at 98, 103 S.Ct., at 2900. State laws that directly regulate ERISA plans, or that make it necessary for plan administrators to operate such plans differently, "relate to" such plans in the sense intended by Congress. In my opinion, a State law's mere reference to an ERISA plan is an insufficient reason for concluding that it is pre-emptedparticularly when the state law itself is related almost solely to plans that Congress expressly excluded from the coverage of ERISA. It is anomalous to conclude that ERISA has superseded state regulation in an area that is expressly excluded from the coverage of ERISA.
The statute at issue in this case does not regulate any ERISA plan or require any ERISA plan administrator to make any changes in the administration of such a plan. Although the statute may grant injured employees who receive health insurance a better compensation package than those who are not so insured, it does so only to prevent a converse windfall going to injured employees who receive high weekly wages and little or no health insurance coverage.
Even if the District's statute did encourage an employer to pay higher wages instead of providing better fringe benefits, that would surely be no reason to infer a congressional intent to supersede state regulation of a category of compensation programs that it exempted from federal coverage. Moreover, by requiring an injured worker's compensation to reflect his entire pay package, the statute attempts to replace fully the lost earning power of every injured employee. Nothing in ERISA suggests an intent to supersede the State's efforts to enact fair and complete remedies for work-related injuries; it is difficult to imagine how a State could measure an injured worker's health benefits without referring to the specific health benefits that worker receives. Any State that wishes to effect the equitable goal of the District's statute will be forced by the Court's opinion to require a predetermined rate of health insurance coverage that bears no relation to the compensation package of each injured worker. The Court thereby requires workers' compensation laws to shed their most characteristic element: postinjury compensation based on each individual workers' preinjury level of compensation.
Instead of mechanically repeating earlier dictionary definitions of the word "relate" as its only guide to decision in an important and difficult area of statutory construction, the Court should pause to consider, first, the wisdom of the basic rule disfavoring federal pre-emption of state laws, and second, the specific concerns identified in the legislative history as the basis for federal pre-emption. The most expansive statement of that purpose was quoted in our opinion in Shaw. As explained by Congressman Dent, the "crowning achievement" of the legislation was the " 'reservation to Federal authority of the sole power to regulate the field of employee benefit plans. With the preemption of the field, we round out the protection afforded participants by eliminating the threat of conflicting and inconsistent State and local regulation.' " Id., at 99, 103 S.Ct., at 2901 (quoting 120 Cong.Rec. 29197 (1974)).
ERISA does not pre-empt § 2(c)(2) to the extent its requirements are measured only by reference to "existing health insurance coverage" provided under plans that are exempt from ERISA regulation, such as "governmental" or "church" plans, see ERISA §§ 4(b)(1) and (2), 29 U.S.C. 1003(b)(1) and (2).
"Welfare plans" include plans providing "benefits in the event of sickness, accident, [or] disability." § 3(1), 29 U.S.C. 1002(1).