William H. Rehnquist: We'll hear argument first this morning in Number 93-1408, New York State Conference of Blue Cross & Blue Shield v. Travelers Insurance Company, and the consolidated cases. Ms. Smith.
M. Patricia Smith: Mr. Chief Justice, and may it please the Court: In an effort to contain rising health care costs and assure wide availability of affordable health insurance, New York has long regulated hospitals and other providers in the health care marketplace. New York has traditionally regulated differing segments of the marketplace differently. While these laws may affect the prices which ERISA plans and others pay for health care services, they do not relate to plans. Any other result would severely limit the State's effort to regulate in the health care marketplace, since much State regulation affects costs and therefore may affect choice. In superseding State laws that relate to employee benefit plans, there is no indication that Congress intended to displace traditional State authority over the regulation of health care, creating a regulatory vacuum. However, if these types of laws do relate to plans, two of the assessments in this case which are imposed upon hospital bills regulate insurance within the meaning of ERISA's insurance savings clause, because they are designed to moderate insurance rates of certain insurers in order to support the underwriting and rate-setting practices of open enrollment and community rating which New York has determined allows health insurance to be more widely available at a lower cost. Traditionally, New York has treated different segments of the health care marketplace differently. Blue Cross, even before the State regulated hospital rates, was used by the State as the insurer of last resort. They traditionally practiced community rating and open enrollment. They enrolled people without regard to whether or not their age, their sex, or their health, and they community rated. They had one rating pool for a large number of people, thereby people with high risks whose insurance would be very expensive would be able to obtain insurance at lower costs.
Sandra Day O'Connor: Ms. Smith, New York's scheme applies to hospitalizations that are covered by ERISA plans as well as those that aren't.
M. Patricia Smith: Yes, Your Honor, they--
Sandra Day O'Connor: It's a law of general applicability.
M. Patricia Smith: --Yes. They apply--
Sandra Day O'Connor: What percentage of the patients in New York are covered by ERISA plans, would you think?
M. Patricia Smith: --Your Honor, there's nothing in the record. The Hospital Association's brief has quoted a citation of 25 percent of the total hospital bills covered--
Sandra Day O'Connor: And what if the effect of New York's law were to sweep in only people covered by ERISA plans? Would your argument change at all?
M. Patricia Smith: --Your Honor, if somehow New York's law had a disproportionate impact on ERISA plans, in other words somehow ERISA plans were singled out or treated differently from other purchasers of hospital services, then that would be a different case. That would be a much more difficult case. But in this case, all of the categories of the patients in all of the payor rates cover both ERISA plans and non-ERISA plans.
Sandra Day O'Connor: Now, some ERISA plans are self-insured, I believe.
M. Patricia Smith: That's correct, Your Honor.
Sandra Day O'Connor: Do you think this law can be applied to ERISA plans that are self-insured?
M. Patricia Smith: Yes, Your Honor.
Sandra Day O'Connor: It's a very direct effect, is it not?
M. Patricia Smith: Your Honor, the effect on ERISA plans that are self-insured is that it may raise their hospital bills over what they would have been if the law was exactly the same but the payor differentials were taken out. I think it's appropriate--
Sandra Day O'Connor: Well, it does even more than that. In the 9-percent HMO case, for instance, it would have the effect of trying to require them to cover Medicaid patients.
M. Patricia Smith: --No, Your Honor. HMO's are not self-insured plans, they're--
Sandra Day O'Connor: They can't be?
M. Patricia Smith: --They can't be. They're totally different entities, so when... a regulation of a health maintenance organization has nothing to do with self-insured plans. New York is not in any way attempting to force self-insured groups, whether they be ERISA plans or not, to enroll Medicaid recipients.
Antonin Scalia: Ms. Smith, one way New York could have achieved the purpose it has in mind here is simply to require everyone to purchase health insurance, if at all, from the Blues and from no other... from no commercial insurance company. That would achieve the same result. Now, suppose New York did that. The only health insurance that anyone can purchase is from Blue Cross and Blue Shield. Would that relate to ERISA plans?
M. Patricia Smith: Your Honor, if the marketplace was such that there were... that would be... if the marketplace was such that there were many other insurers out there, and that New York made a rule that said all small groups must go to Blue Cross, that would relate to ERISA plans. That, however, Your Honor, is not the effect of this particular law.
Antonin Scalia: Yes, well, you know what the next question is going to be. New York doesn't say you have to go with Blue Cross and Blue Shield, but you pay, you know, an exorbitant surcharge if you go with anybody else--
M. Patricia Smith: Your Honor--
Antonin Scalia: --which is effectively a prohibition.
M. Patricia Smith: --You--
Antonin Scalia: Would that be bad, too?
M. Patricia Smith: --You pay a surcharge if you do go with Blue Cross and Blue Shield. You pay the surcharge of the added cost of open enrollment and community rating. What New York is trying to do is to--
Antonin Scalia: No, but you're jumping ahead of me. I just want an answer to that question. Suppose New York just puts a heavy surcharge on the purchase of health insurance from anybody except Blue Cross and Blue Shield, would that relate to ERISA?
M. Patricia Smith: --No, that would not relate to ERISA plans.
Speaker: That would not relate. So--
M. Patricia Smith: That would not relate to ERISA plans.
Antonin Scalia: --I see, so I can't prohibit going somewhere else absolutely, but I can make it effectively impossible by imposing an enormous penalty. You see a distinction between those two?
M. Patricia Smith: One is a regula... is a requirement, and one is an incentive in the marketplace.
Antonin Scalia: I see. Well, that's an interesting... interesting way to get things done. Don't prohibit them, just make them exorbitantly expensive.
M. Patricia Smith: But keep in mind, Your Honor, that the facts of this case are not, in an effect, a requirement. It is not--
Antonin Scalia: I know that. That was going to be my next question. If exorbitantly... but you answered the wrong way. I mean, if exorbitantly expensive-- [Laughter] If exorbitantly expensive is bad, why isn't moderately expensive bad?
M. Patricia Smith: --Your Honor--
Antonin Scalia: Why doesn't that relate, as well?
M. Patricia Smith: --Exorbitantly expensive... I believe I answered exorbitantly expensive was not prohibited.
Ruth Bader Ginsburg: Yes. I thought you made a distinction that at some point an inducement could become a requirement. I thought that was the position you took in your brief.
M. Patricia Smith: The... but it is... at some point--
Ruth Bader Ginsburg: You did say that if enrollment in Blue Cross were required, that would relate to ERISA plans.
M. Patricia Smith: --Yes.
Ruth Bader Ginsburg: And isn't there, in reality, a point where the toll is so heavy that it becomes, in effect, a requirement?
M. Patricia Smith: There is a point where you're no longer dealing with economic incentives but that it is regulation in disguise, or it is a regulatory requirement. I don't think that point is simply based on the numbers, whether it's 10 or 20 or 1,000, but there may become a point where, looking objectively at this statute, it becomes clear that there is no other choice for anyone in the marketplace.
Ruth Bader Ginsburg: So if it were sufficiently exorbitant, then you would give Justice Scalia a different answer to his-- --Exorbitantly exorbitant... yes. [Laughter]
M. Patricia Smith: It is not a question of the numbers. It is not a question of how exorbitant it is, it's a question of looking at the statute and seeing if there's some... if there is some point where it simply is a sham. It is regulation in disguise. But it's not a question of, is it 1,000 percent, or 10 percent, or 20 percent.
Antonin Scalia: But why isn't this regulation in disguise? Isn't this essentially simply a means of getting anyone who buys insurance to in effect subsidize the costs of the uninsurable? If that isn't regulation, I don't know what is.
M. Patricia Smith: Your Honor--
Antonin Scalia: There are many ways to do it. You can say, everybody has to buy from the same insurer, or you can say, well, you can buy from some other insurer, but you're going to help us subsidize the uninsurable by paying a surcharge if you do that. That sounds like regulation to me.
M. Patricia Smith: --Your Honor, historically the insured have always subsidized the uninsured, whether or not it's in the bad... whether or not it's the fact that the uninsured, when they're cared for in the hospital, end up on the bad debt and charity rolls, and everyone's hospital costs are increased to support the hospital overhead. In unregulated markets, the insured subsidize the uninsured. Because the Federal Government in the Medicaid program pays the hospitals generally at less than cost, then the insured subsidized the elderly. The phenomenon of cost-shifting in the hospital market is an old one, and it exists in all kinds of regulated or unregulated markets. One of the purposes of the New York statute was to minimize the cost-shifting. The cost-shifting that occurred prior to the statute, the differential between Blue Cross and the commercial insurers, was 25 to 40 percent, and one of the main purposes of this was to equalize that.
Antonin Scalia: But you're just justifying the regulation. I'm not suggesting it's not justified. It may well be just doing something that would be done by private ordering anyway, but private ordering is not covered by the relating-to clause, and public ordering by law is, so you know, it may well be that it's doing something that the private system would otherwise achieve anyhow.
M. Patricia Smith: Your Honor, the--
Antonin Scalia: But the issue is whether this public ordering relates to ERISA plans.
M. Patricia Smith: --The result of that would be the displacement of all hospital rate regulation, because all hospital rate regulation has in their components some, whether it's cost-shifting for the uninsured, or cost-shifting for other patients. In New York's regulatory system, which is not challenged here, for instance, besides a bad debt and charity component, which one could consider be cost-shifting, there's a component that for excess malpractice, which could be considered to be cost-shifting to protect doctors who have committed malpractice, there's a component for rural initiatives, which would be considered cost-shifting from... to hospitals where there are... to rural hospitals. So if the result is that New York may not cost-shift in any manner, then it's going to be very difficult for New York to regulate in the hospital area. It will be difficult for any State to regulate in this area if--
Anthony M. Kennedy: Suppose you take the facts in Metropolitan and Shaw... pregnancy benefits and mental health. Suppose New York had a very substantial, very heavy surcharge on plans that did not cover pregnancy benefits, or did not cover mental health, would that be permissible? Would that be a way to get around the Shaw-Metropolitan holding?
M. Patricia Smith: --Yes, that would... if there was a surcharge, instead of restricting the plans' choice of not having a policy without mental health, or not having a policy without pregnancy, if the State put a surcharge... let the plans have their choice. They could structure their plans any way they wanted, but if you didn't want to cover mental health coverage there would be a surcharge in order for... to support the State psychiatric hospitals.
Anthony M. Kennedy: So it's a formalistic analysis rather than a pragmatic economic analysis that governs us in determining whether there's preemption?
M. Patricia Smith: What governs you is the purpose of ERISA preemption, which is to provide that plans may be able to choose on a multi-State basis their structure and administration. So long as the State is not dictating or restricting the choices, they may place economic incentives when they regulate in the marketplace so long as--
Anthony M. Kennedy: But in order to determine whether or not the State is dictating the choice, we make a formalistic or juridical inquiry, rather than a pragmatic economic inquiry.
M. Patricia Smith: --Yes.
Anthony M. Kennedy: That seems to be what you're saying.
M. Patricia Smith: Unless... unless the pragmatic economic inquiry is such that the State, although it appears that its incentive is in the marketplace, is actually foreclosing everyone's choice.
Antonin Scalia: But-- --But if that's all that Congress meant, which is a very narrow thing, it could have expressed that by the choice of a much different phrase than relating to. As we've said in our opinions, that is an enormously broad phrase. If they wanted to say, you know, no law that will coerce the administration of a plan, they could have said that. They prohibited, though, any laws that relate to ERISA plans.
M. Patricia Smith: They did say that, Your Honor, in the legislative history. It is quite clear in the legislative history, in describing the meaning of "relate to"--
Speaker: That they didn't mean it.
M. Patricia Smith: --that they... they were concerned with laws that impose requirements on plans' structure and administration, but they--
Sandra Day O'Connor: Well, your position boils down to saying, any law of general applicability which has only an indirect economic effect on ERISA plans is okay.
M. Patricia Smith: --Yes.
Speaker: I mean--
M. Patricia Smith: So long as that--
Sandra Day O'Connor: --It's as simple as that.
M. Patricia Smith: --So--
Sandra Day O'Connor: Regardless of whether, in fact, the State is trying to get plans to offer certain types of coverage rather than others.
M. Patricia Smith: --In--
Sandra Day O'Connor: That could be behind the State scheme, but it's okay as long as it is carried out only indirectly by an economic effect.
M. Patricia Smith: --So long as it's regulating in the marketplace, and it's treating everyone in the marketplace the same, and it's not singling out plans for different treatment than any other consumer of health care.
David H. Souter: But don't you have an easier case in a Shaw situation than you do in the hypothetical that Justice Kennedy gave you? I mean, in the Shaw situation... I don't mean you have an easier case, but in the Shaw situation the effect of the regulation is to determine the subject matter of coverage.
M. Patricia Smith: Yes.
David H. Souter: In this case, what you're concerned with is simply what is paid for a given coverage, whether... if, indeed, that coverage is written. Isn't this an easier case than Shaw?
M. Patricia Smith: Yes, that is, Your Honor.
Stephen G. Breyer: If I didn't agree with you on the formalistic thing... suppose I think it isn't supposed to be formal. The figures I read here in the SG's brief are that somewhere over 60 percent or so of all the buyers of this thing... of all the buyers, the relevant buyers of insurance are ERISA plans. Not 25 percent, but 60 percent. And also, suppose that I... I mean, in other words, if I don't think it should be formal, I think it should be practical, on this point, then, do I have to be against you, or is there... I mean, is--
M. Patricia Smith: Because 60 percent--
Stephen G. Breyer: --I mean, it looks like 25... they're increasing the thing enormously, that their purpose in increasing the charge is to make the ERISA plans, who constitute 60 percent of the buying public, along with the other 40 percent, switch to the Blues, that that's the purpose of this big increase, or restructure the commer... what they buy, and therefore, if I don't think formally but think practically, I'd have to be against you on this. I'm asking you, is that right?
M. Patricia Smith: --No, Your Honor.
Speaker: Okay, good.
M. Patricia Smith: Whether or not ERISA plans are 25 percent or 60 percent or 88 percent of the marketplace shouldn't make a difference in this case. ERISA plans are there not by operation of law but because this is a benefit area, and under that sort of theory that the larger percentage they are of the marketplace the less the State is able to regulate ERISA plans, sort of as, by the dint of their collective purchasing power occupy the marketplace and therefore displace the State from regulation, I don't think there was any intent that Congress when it passed ERISA, and ERISA plans were a larger percentage of the economic health care marketplace then, was intending to displace the States from health care authority because they constituted a large percentage of the marketplace. They do... are a large percentage of the health care marketplace. In 10 years they may be a large percentage of the day care marketplace.
Stephen G. Breyer: No, but it's not just that. It's that they have... they're a large percentage of the marketplace, and the very object of this plan is in a significant way to effect a decision of a matter that's at the heart of their very existence, what kind of insurance they buy, or what... who they buy it from. That is, there's nothing more important than that to them, and the purpose of the New York law is significantly to affect that choice. That's the argument that this has a big practical impact.
M. Patricia Smith: Two points, Your Honor. First of all, the point of New York law is not to... and its objective purpose, the way it works, is not to drive everyone to Blue Cross, it is to level the playing field. It is to make Blue Cross as competitive as anyone else, not more competitive than anyone else.
David H. Souter: Do we have a record that allows us to judge whether in fact the act is carrying out an equalization purpose rather than a shifting purpose?
M. Patricia Smith: Yes, you do, Your Honor.
David H. Souter: What do we know... what do we know about the resulting rates? I mean, is... presumably you're going to say, well, Blue Cross is higher anyway, so that the surcharge does not have the effect of driving people away as it would if the rates were equal, to start with. Do we have that in the record?
M. Patricia Smith: What we know in the record is that commercial insurers, even after the surcharges, offer lower rates. The other thing that we can see in the record is that in years where the commercial insurance rates were going up, again with the surcharges, 7.5 percent, Blue Cross rates were going up 28 percent.
Antonin Scalia: Maybe they're very inefficient. Maybe they're enormously inefficient, and the reason people are buying this other insurance is they do a better job. They charge... I mean, that's how any businesses compete in the marketplace. We can provide it for less because we're better. We do it more efficiently.
M. Patricia Smith: The record also shows that the commercials do it more efficiently and better because when you exclude the high risks you save 30 percent on your premiums, so that the reason that the Blues' rates are higher are because they do insure the higher risks.
Antonin Scalia: Is there something in the record that shows that is the only reason for the differential between the Blues and the commercial insurers?
M. Patricia Smith: The commercial insurers have indicated that the reason for the differential is to pay Blue Cross for the added costs of open enrollment and community rating.
Antonin Scalia: Well, I'm sure that's the purpose, but is there anything in the record that shows that it doesn't go beyond what is necessary to achieve that purpose?
M. Patricia Smith: I would think that the... the record shows that it didn't achieve the purpose, and that's why the State felt it necessary to impose for the 1-year period the 11 percent.
Ruth Bader Ginsburg: Is your essential point that New York is attempting to regulate health care, ERISA plans happen to be a large part of that market, but that New York would be doing essentially the same thing in that... were there no ERISA plans, and that if you read related-to as any time that it's going to have an impact on ERISA plans you essentially take New York out of the business of regulating health care costs. Is that--
M. Patricia Smith: Yes, Your Honor.
Ruth Bader Ginsburg: --the nub of your argument?
M. Patricia Smith: Yes.
William H. Rehnquist: Thank you, Ms. Smith. Mr. Kneedler, we'll hear from you.
Edwin S. Kneedler: Mr. Chief Justice, and may it please the Court: This Court has stated on several occasions that ERISA preemption analysis must be guided by the respect for the separate spheres of governmental authority under our Federalist system. ERISA... the ERISA preemption clause is designed to identify the separate sphere that is carved out in this context for Federal law and not State law. In Shaw, this Court addressed extensively the background and the legislative history of the preemption clause, which shows that it was intended to preempt the field of benefit... employee benefit plan regulation and to prevent employee benefit plans from conflicting and inconsistent regulation. As a matter of both common sense and tradition, the field or sphere of benefit plans is distinct from the field or sphere of health care or related health insurance. This--
Antonin Scalia: Why is that? Can I question that? I... it seems to me that perhaps the... certainly the most significant, and I would imagine close to the most expensive portion of any employee benefit plan is health insurance. I mean, it is absolutely central to ERISA plans.
Edwin S. Kneedler: --Yes, in the sense that an... so in the sense that an employee benefit purchase... purchases health insurance, there is a transaction between them, but that does not make the State law relate to the ERISA plan--
Speaker: Well, it's not--
Edwin S. Kneedler: --in a relevant sense.
Antonin Scalia: --just that it happens to purchase it, it's that the purchasing of it is central to the whole function of a benefit plan.
Edwin S. Kneedler: It is, but it's... as we understand the way the ERISA preemption clause operates, it is primarily designed to preserve for Federal regulation the things that speak to ERISA plans themselves, their internal operations, their internal selection from among the choices that are made available to them under State law or the market, but it's not intended to reach outside that sphere and regulate the choices that are made available to--
Antonin Scalia: What about Metropolitan Life?
Edwin S. Kneedler: --In Metropolitan Life, that statute operated directly on the choice being made by the insurance plan, or the ERISA plan, when it purchased insurance.
Antonin Scalia: And so does this. It operates directly on the choice. If you pay one insurer, you pay more. If you pick the other, you pay less.
Edwin S. Kneedler: No, in our view, the effect here is both indirect and economic, and for that reason it is not preempted, and--
Anthony M. Kennedy: So do you agree with cocounsel that if the State had put a very, very heavy surcharge on plans that do not have pregnancy benefits or mental health benefits, that that would have been not preempted?
Edwin S. Kneedler: --I think that would raise a more difficult question, for this reason, in that the surcharge would be designed to affect the internal operation of insurance or coverage that plans and others offer. In this case--
Anthony M. Kennedy: Well, why isn't this intended to operate the internal selection of which plan to enroll in?
Edwin S. Kneedler: --But without regard to choices of coverage, without regard to whether certain benefits will be covered at all. What it does is simply regulate--
Anthony M. Kennedy: It would seem to me that this would be a greater infringement on the autonomous choice of the plan than the pregnancy benefit hypothetical.
Edwin S. Kneedler: --But going back to a question that was asked earlier, whether a State law that required all... that basically reserved the health care market for Blue Cross, it is not evident that that would relate to plans. It would be saved by the insurance savings clause. But what it does is, it constricts, perhaps, the choices available to the ERISA plan when it is going out into the market, but it does not reach into the ERISA plan and dictate the choice or create impermissible incentives for the ERISA plan to choose among the options that are made available in this instance here.
Antonin Scalia: Are you sure about that? Is it the case that every type of coverage that is offered by commercial insurers is also offered by the Blues?
Edwin S. Kneedler: It--
Antonin Scalia: May it not be that if you want to get Blue Cross coverage it has to be a certain type of coverage?
Edwin S. Kneedler: --It may well be, but again, that impact is without... is irrespective of the existence of ERISA plans, which is an important test for whether a law is one of general applicability. What this State regulation may well do, historically Blue Cross, as distinct from HMO, as distinct from commercial insurance, in those segments of the market, Blue Cross has a lot of ERISA plans, but the availability of those various options is important to ERISA plans, but it also is a variety of choices for other--
Sandra Day O'Connor: But what about a self-insured plan? There, the effect is hardly indirect--
Edwin S. Kneedler: --Right.
Speaker: --is it?
Edwin S. Kneedler: In our view, self-insured plans do present distinct questions for exactly that reason.
Sandra Day O'Connor: And what should we do there, in your view?
Edwin S. Kneedler: Well, in our view the Court should remand... if the Court concludes the statute does not relate as a general matter, the Court should remand to the court of appeals, because it's not clear whether the self-insured plans are included in the case.
Anthony M. Kennedy: Mr. Kneedler, are the parties... and I take it the Court, when it write the opinions, thrust in different directions when they argue first that it doesn't relate to insurance and second, that even if it does, it's saved by McCarran... by the insurance exemption?
Edwin S. Kneedler: Well, we think respondents are... meet themselves coming and going on that because--
Anthony M. Kennedy: Everybody... don't they--
Edwin S. Kneedler: --Well, we think... if the objection is that the State laws somehow have an impact on... among plan choices, in other words impact on insurance coverage, then that... then to that extent it is a law regulating insurance within the meaning of the insurance savings clause, in our view. But in our view, you don't have to get to that point, because it doesn't relate to... because that is... even though there may be a differential effect on different sorts of insurance coverage, it is still indirect and economic. And I would like to, if I could, tie that point to this Court's test for determining whether something relates to an ERISA plan, and that what this Court has said is something relates to if it refers to or has a connection with. The court of appeals here said there was no reference to, so the question is whether there's a connection to. Connection means joined with, or linked together. Under this scheme and its general application, there is no joining or linking of the hospitals whose rates the surcharges are attached to and the ERISA plans. In fact, there is a disconnect, because in the general run of cases, except for self-insured plans, there is an intermediary, the insurer, who stands between the ERISA plan that is furnishing coverage to its members and the hospital, so--
Ruth Bader Ginsburg: --The impact is primarily felt by ERISA plans. At least, that seemed to be the theory of one of the judges who has written in these cases. Is that enough?
Edwin S. Kneedler: --No. Impact on ERISA plans is not enough, particularly since the statute is one of general operation that operates with... irrespective of ERISA plans. Each of the--
Ruth Bader Ginsburg: One could read the words, relate to, to mean, have an impact on, couldn't one?
Edwin S. Kneedler: --Perhaps, but we think that in Shaw, where the Court looked to the dictionary definition, there is... the dictionary definition in total suggests a joining together, an association between the two. And again, we think an indirect market impact, which is what the State regulation causes, really breaks the connection, and particularly when one goes back to the purpose, which this Court has emphasized, of the ERISA preemption clause, which is to preser... which is not to impose conflicting regulations directly on the plan itself, so a plan perhaps operating interstate would be subject to different plan structures, or different choices internally imposed on it by State law. There's no... nothing having the force of law that bumps up against an ERISA plan in this case. The impact is solely economic in terms of what the insurer intermediary may choose to pass on.
Ruth Bader Ginsburg: Didn't you say, in answer to the question that Justice Scalia asked Ms. Smith, that... I thought you said in your brief that there could come a point where the toll was so exorbitant that you couldn't tell the difference between a requirement and an inducement, and in that case you might say it's preempted?
Edwin S. Kneedler: Well, that would turn on whether the... whether, if the State prohibited it outright, it would be preempted, and it's not clear that a law that required... that preserved the insurance market for Blue Cross, for example, would relate to ERISA plans. It's a very ERISA-centered view to say that that will--
David H. Souter: Are you saying that Justice Scalia's exorbitant-exorbitant example, then, would never change your answer?
Edwin S. Kneedler: --No. I think if the exor... first of all, that's not this case, because there isn't--
Speaker: I realize that--
Edwin S. Kneedler: --But... but--
David H. Souter: --but if we've got to draw a line, I want to know how we're going to draw it.
Edwin S. Kneedler: --Right. The exorbitant-exorbitant would matter, of course, if what the State was trying to drive the ERISA plan to do was something that it couldn't do directly, and in that case, yes, a State plan is designed to reach into an ERISA plan and effect what benefits it offers to its employees would be--
Speaker: No, but isn't--
Edwin S. Kneedler: --would be preempted.
David H. Souter: --Doesn't that criterion get us in kind of an open-ended world, because under the insurance savings clause it can do a lot of things directly, and if I understood what you were just saying, you're saying, if they could do it directly, which would include under the insurance savings clause, they can do it by this kind of regulation. Do you stand by--
Edwin S. Kneedler: I meant directly, not by virtue--
David H. Souter: --But not by virtue of the clause.
Edwin S. Kneedler: --of the insurance savings clause, although we do say... take the position in our brief that this law is saved by the insurance savings clause.
William H. Rehnquist: Thank you, Mr. Kneedler. Mr. Murphy.
Craig P. Murphy: Mr. Chief Justice, and may it please the Court: When Congress enacted ERISA, it made a determination that ERISA plans, the type of benefits they offer and the systems that an employer uses to deliver those benefits, should be left to the decision of the employer. Congress therefore, when it enacted ERISA's preemption clause, used a very broad formulation, the formulation being, does a State law relate to any ERISA plan? I think Justice Souter's exorbitant-exorbitant formulation would be a question that might have some interest and meaning in this case in the context of a regulating formulation, but Congress made the decision here not to preempt only those laws which regulate ERISA plans, which in my view any kind of an exorbitant-exorbitant surcharge would, but made the determination to preempt any law which relates to an ERISA plan. The State's entire argument in this case comes down to the point that to fall within ERISA's relating-to clause, a law has to restrict or dictate plan choice. In Morales... and I speak to Morales with some trepidation, realizing the Court today issued another airline deregulation case which I haven't had a chance to read, but in Morales, this Court made it abundantly clear that under a relating-to formulation the test is not whether a law relates... excuse me, whether it dictates or restricts, it's whether the law has a connection with the thing that... the subject matter.
David H. Souter: Well, I suppose regulating wage rates has a remote connection. What would your position be there?
Craig P. Murphy: I'm sorry, regulating--
Anthony M. Kennedy: I suppose a law regulating wage rates which would affect hospital charges would have that kind of a connection.
Craig P. Murphy: --Your Honor, in the end, what this Court has to--
Anthony M. Kennedy: No, but you wouldn't argue in that case--
Craig P. Murphy: --Of course not.
David H. Souter: --that it's preemption.
Craig P. Murphy: And let me explain why.
David H. Souter: And how do you... tell us how you want us to draw the line.
Craig P. Murphy: Okay. In each case, what this Court has to do is examine the nexus between the law at issue and ERISA plans. If you're talking about the regulation of what a hospital pays for wage rates, what it does with its medical waste, what it does in terms of the licensing of its physicians, what kinds of taxes the physicians pay on their income, you are dealing with things--
Ruth Bader Ginsburg: How about the taxes imposed on the hospitals--
Craig P. Murphy: --Well, if you're talking--
Speaker: --on their gross receipts, for example?
Craig P. Murphy: --If you're talking about the taxes on the benefits which an ERISA plan pays, then I believe you do have a relation to--
Ruth Bader Ginsburg: I'm talking about a tax on the gross receipts of hospitals which will include in part payments they receive because of ERISA plans.
Craig P. Murphy: --ERISA... section 514(a) preempts laws only insofar as they relate to ERISA plans. That law, the tax, to the extent it was imposed on revenue paid by ERISA plans, would relate to plans, in my view.
Stephen G. Breyer: Okay. Mr. Murphy, would you go... you were giving a series of examples--
Craig P. Murphy: Yes.
Stephen G. Breyer: --when Justice Ginsburg added one to the series, but what is the... kind of what is your general statement that distinguishes those examples from what we've got?
Craig P. Murphy: My general statement is, with regard to those things what the State is doing is, they are regulating an upstream supplier of ERISA plans in a way which simply has an indirect impact on the plan. In this case, what they are doing is fundamentally different. What the State of New York is doing here is, it is imposing an assessment on the amount a plan pays in hospital benefits, and it's making the amount of that assessment turn on the very plan... the very form the plan adopts to deliver its benefits. Under subdivision 1, section 3 of ERISA, an ERISA plan is defined to be an arrangement, through the purchase of insurance or otherwise, by which an employer provides his employees with hospital care, among other benefits. The two essential characteristics of an ERISA plan are its delivery of hospital care through an arrangement, insurance or otherwise, and in this case, these statutes impose a surcharge on the very benefit, hospital care, which makes a plan a plan, and makes the amount of that assessment turn on the fundamental decision of the plan as to how best to deliver its benefits. What we're dealing with here is simply a State which has decided to try to drive the conduct of ERISA plans by using a system of economic sanctions rather than direct regulation.
Ruth Bader Ginsburg: According to New York, they're trying to regulate the availability of medical care to patients, even high risk patients, even Medicaid patients, and the... and to control costs. Are we to say... to second-guess that that was New York's purpose?
Craig P. Murphy: Your Honor, that was their purpose, although I disagree with the statement that they were trying to control costs when they imposed what are in effect taxes on hospital services, but the way they tried to provide hospital care to the needy here was by making ERISA plans operating in New York use New York's financially distressed Blue Cross-Blue Shield system. They can't do that directly by mandating it, nor, under a relating-to formulation, can they do the same thing by imposing a series of economic sanctions.
Ruth Bader Ginsburg: Did that in fact result? Did they make ERISA plans switch to Blue Cross en masse?
Craig P. Murphy: Well, that was the purpose of the laws. In fact, if Your Honor reads the appendix here and looks at the affidavits from the State officials and the Blue Cross people who were responsible for these laws, there's no doubt that was the purpose. They clearly acknowledged that was the purpose, that the purpose of these laws was to drive ERISA plans... what was happening, Your Honor, is, in the late 1980's, Blue Cross was experiencing a financial crisis. We can argue and debate what the cause of that crisis was, whether it was mismanagement, as Justice Souter noted, or some other things. The fact is, ERISA plans--
Ruth Bader Ginsburg: I thought the purpose was to make Blue Cross a more viable choice, not to make it the... in effect, to require Blue Cross in lieu of commercial insurers.
Craig P. Murphy: --That is correct, Your Honor, but the way New York chose to make it more viable was to give ERISA plans an incentive to switch their coverage from either self-insurance or commercial insurance to Blue Cross.
Anthony M. Kennedy: Could they have done it in a different way, simply by requiring all insurers, commercial, including those who insure ERISA, simply to adopt those characteristics of Blue Cross which had broadened the coverage and hence made it difficult for Blue Cross, the community rating and open enrollment, and so on?
Craig P. Murphy: Your Honor, effective April 1st, 1993, New York did precisely that, which is, they required that every insurer operating in New York State engage in community rating and open enrollment in the small group market, which was the only market in which Blue Cross and Blue Shield ever did this and, in fact, even though they did that, they continue to impose the surcharges on--
Stephen G. Breyer: Is that your next case up here?
Craig P. Murphy: --What's that?
Stephen G. Breyer: Is that your next case up here? [Laughter]
Craig P. Murphy: Well, we will see.
Speaker: I was going to ask you--
Craig P. Murphy: I have to see how I do today before-- [Laughter]
Stephen G. Breyer: --I was going to ask you to argue it now. Do you concede that that may be done under the savings clause?
Craig P. Murphy: Well, no... which is... what may be done under the savings clause, open enrollment and community rating?
Speaker: That's right.
Craig P. Murphy: Yes. I don't think there's any issue under the savings clause that New York State says to an insurer, you have got to provide coverage to the people who meet the following characteristics. That satisfies all of the elements of this Court's tests under the savings clause.
Stephen G. Breyer: Well then, why doesn't this, too, because if your basic argument, which I think personally is a very strong one, is that the whole purpose of this thing, you just said, was to affect in a very significant way the ERISA's plans' and others' choices of which insurance company to buy from, or at least to force the commercial companies to adopt the characteristics like open enrollment, et cetera, then why doesn't that very argument, insofar as it's accepted, require us also to think that what's happening is the regulation of insurance?
Craig P. Murphy: Well, because when you deal with open enrollment and community rating, or the law in New York, what the State has said to insurance companies is, this is what you have to do. In this case... and, you know, I'll just call your attention to the Metropolitan Life case, where this Court pointed out that mandated mental health benefits was a regulation of insurance, 1) because it established the terms of the insurance contract and 2) because it imposed requirements only on insurance companies--
Stephen G. Breyer: Yes, and this is a regulation of insurance because it makes certain kinds of policies much more expensive, and therefore it affects the consumer choices as to whether this insurance company or that insurance company. If that isn't regulation of insurance, what is? Wasn't price regulation what insurance regulation was about?
Craig P. Murphy: --First of all, Your Honor, this... these laws do not make any insurance policy more expensive. What these laws do is, they impose a surcharge on hospital rates on the basis of the form of the ERISA plan. This Court has repeatedly held in cases under the savings clause and under the McCarran-Ferguson Act that in order to regulate insurance... and let me emphasize that word.
Speaker: You understand what--
Craig P. Murphy: I understand what your point--
Stephen G. Breyer: --My question is, basically you're arguing that the reason it affects ERISA plans is because it will make certain policies a lot more expensive, and therefore they'll switch.
Craig P. Murphy: --And it affects insurance companies for the same reason.
Stephen G. Breyer: Exactly, so why is--
Craig P. Murphy: But the savings clause doesn't preserve laws which relate to insurance companies, it only preserves laws which regulate insurance companies--
Speaker: --Yes.
Craig P. Murphy: --and this... these laws are not regulating insurance companies. They don't impose a single requirement on any insurance company in the State of New York to do anything. What these laws do... and if there's any doubt on that, let me just call your attention to page 10, footnote 10, of the State's reply brief, where the State concedes that the surcharge laws don't obligate any insurer to pay anything to any hospital.
David H. Souter: So you have to say that this law does not regulate... when we're on the preemption prong, you have to say that this law does not regulate the conduct of ERISA plans.
Craig P. Murphy: That is correct, Your Honor. This law relates to ERISA plans, which is a much broader formulation, as this Court noted in Morales.
Antonin Scalia: I suppose that the same result does not necessarily ensue from New York's decision to do what it attempted to do here in the different manner of requiring all insurers to carry these high risk subscribers. If they did that, the plan would still be able to choose among various insurers who, although subject to the same regulation in that respect, might be more efficient. I mean, there... it may well be that some of the high cost of the Blues is due not merely to their carrying these special clients but to their inefficiency, and if you regulated insurance, that would display itself in variable rates by the different companies, I assume.
Craig P. Murphy: I believe it would, but again, Your Honor, what this Court has made clear in its cases under both the ERISA savings clause and under the McCarran-Ferguson Act, that the purpose of the exception we're dealing with here was not to make the States supreme in all matters relating to insurance companies. The purpose was to give the States regulatory authority on... over the actual contract of insurance.
Stephen G. Breyer: Why is that? I mean, you have quite a good answer, actually, but I thought that if you're reading the words ERISA. Look at that practical thing. Why wouldn't you read the word "regulate" exactly the same, that as a practical matter, this has the effect of raising insurance rates? That's its very object... its very object, and therefore, for the same practical reason as to the one, you'd read the other. Now, why not?
Craig P. Murphy: Well, first of all, Your Honor, you have to look at the plain meaning of the words Congress has used here. The term "relate to" means to refer or have a connection with. The term "regulate"... the term "regulate" means, as the State states in their reply brief when they quote it, it means to either restrict or dictate choice.
Stephen G. Breyer: Yes, but that only means that not everything that regulates also relates to, but some things that relate to may regulate, and the question is, when they have that practical effect, why don't we regard them as regulation?
Craig P. Murphy: Well, because the practical effect you're having here is, is not on an insurance company. The practical effect you are having here is on the ERISA plan. You are moving the ERISA plan to the insurance company. If--
Stephen G. Breyer: I thought your argument was that you were affecting the insurance company, and for that reason you were affecting the choice of the ERISA plan.
Craig P. Murphy: --Well, I think what you are--
Stephen G. Breyer: That's enough, I would suppose.
Craig P. Murphy: --I think what you are doing, Your Honor, is you are imposing a surcharge on the hospital benefits paid by the ERISA plan, and let me give you an example. In the case of a self-insured fund, you're dealing with an entity that is uninsured, is not in the insurance marketplace, you are imposing a surcharge on the benefits with the view that that will make the cost of self... the self-insured status of the plan sufficiently expensive that the plan will make the decision to move over to New York's Blue Cross system as one of the amici did in this case, the NYSA-ILA plan, which an amici brief made that determination as a result of the surcharges.
Sandra Day O'Connor: Well, maybe self-insured plans are different here, as the Solicitor General appears to concede. Are they actually involved in this suit, do you know?
Craig P. Murphy: Yes, I do know, and they are definitely involved in this suit. In fact, I can give you the--
Sandra Day O'Connor: The record is clear--
Craig P. Murphy: --Your Honor--
Stephen G. Breyer: --and you wouldn't have to be concerned about that?
Craig P. Murphy: --in the complaint in this case, the Travelers' suit as a fiduciary of an insured plan and a self-insured plan, the district court concluded that the savings clause couldn't save the laws as to self-insured plans because of the deemer clause. In the Second Circuit, the Blues in their brief argued that this conclusion was wrong, that the self-insured funds, as to self-insured funds the laws were also saved despite the deemer clause, and in fact the Blues in their reply brief admit that the issue is before this Court. Having been... having signed the complaint in this action--
Ruth Bader Ginsburg: But Mr. Murphy, if the Second Circuit thought that there was preemption, total preemption, then they never focused on perhaps the self-funded plans are different, so--
Craig P. Murphy: --That is correct, Your Honor--
Speaker: --So it's--
Craig P. Murphy: --and that was why--
Ruth Bader Ginsburg: --So if... it would be an academic question, if we agreed with your position. It becomes a live question which was never treated below only if we disagree with your position with respect to the private... with respect to the nonself-funded plans.
Craig P. Murphy: --Your Honor, it becomes a live question only if you disagree with me on the relating-to issue. Then, only then, under the Solicitor General's formulation, will the separate status-- I would like to return to the issue of the savings clause for one moment, recognizing that my time is running short here. In determining whether a law falls within the savings clause, this Court has essentially done two things. First, they have looked at whether or not the law dictates any of the terms of the insurance policy. For instance, Metropolitan Life, the law fell within the insurance savings clause because it imposed the terms of the insurance contract. FMC, same thing. What it did was, it knocked out any antisubrogation provision. Pilot Life, on the other hand, the Mississippi law of bad faith provided a damage remedy for any insured whose claim was denied in bad faith. Despite the fact that that law was intimately associated with the relationship of the insurer and the insured, this Court held it was not a regulation of insurance because it didn't actually set the terms of the contract. The other thing... and in response to the question you asked earlier, Justice Breyer, let me explain why the courts have focused on the contract of insurance. In 1869, this Court decided a case... Paul v. Virginia. In that case, it held that the insurance contract was a transaction outside of interstate commerce and couldn't be regulated by the Federal Government. In 1944, in the Southeast Underwriters case, this Court overruled that decision, and held the transaction, the transaction being the contract of insurance, was in commerce. In enacting the McCarran-Ferguson Act, all Congress wanted to do was to give back to the States their regulatory authority over the contract of insurance, and this Court has repeatedly held, in National Securities and a number of other cases, that the States do not have regulatory authority with regard to all matters affecting insurance companies. In fact, in Royal Drug, this Court held that the relationship between the insurance company and the supplier of medical services, in that case pharmacies, was not within the business of insurance that was saved, and if you look at this case, what we're dealing with here are laws that govern the relationship--
Speaker: Yes, but--
Craig P. Murphy: --between the hospital and the patient. They're even one step removed from Royal Drug.
Stephen G. Breyer: --I see that formally, but at the heart of Southeastern Underwriters and the McCarran Act is the question of the price charged the customer, and so here, you have a regulation designed directly to affect that, though at one remove. Why should the one remove make a difference?
Craig P. Murphy: Well, Your Honor, again, because under ERISA's savings clause and the McCarran-Ferguson Act, what you're doing is, you're making the States supreme with regard to the regulation of insurance, and again, in Royal Drug... and let me just emphasize this. When you say something is the business of insurance, it means not only that the States... it falls within ERISA's savings clause and therefore by that act States can regulate ERISA plans. It means that the conduct at issue is exempt from the antitrust laws, and it also means, under section 2(b) of the McCarran-Ferguson Act, that any time there is a conflict between Federal and State law, State law prevails. In other words, the normal rules of preemption are reversed. For all of those reasons, the savings clause has been construed narrowly, and again, I will just note, Your Honor, in Royal Drug, the practice at issue was completely about regulating the costs of an insurance company, what it paid under its pharmacy agreements, so that it could make insurance more available at a lower price, and this Court held that the agreements were not the business of insurance because they did not dictate the terms of the insurance contract. Thank you very much, Your Honors.
William H. Rehnquist: Thank you, Mr. Murphy. Mr. Iselin.
Harold N. Iselin: Mr. Chief Justice, and may it please the Court: Unlike the 13-and 11-percent surcharges, the 9-percent assessment that is imposed exclusively on HMO's and on the employee benefit plans they serve has nothing to do with New York State's hospital reimbursement system or the rates that are paid to hospitals. Thus, even if petitioners' concerns about the effect this case might have on the State's hospital reimbursement system were relevant to the issue of ERISA preemption, such concerns are clearly irrelevant to the issue of whether the 9-percent assessment is preempted. What is more, the State has conceded that the savings clause does not apply to the 9-percent assessment. Thus, the only question the Court must address is whether the 9-percent assessment relates to employee benefit plans. Where the 9-percent assessment is similar to the 13-and 11-percent surcharges is that all three interfere with one of the most basic decisions an ERISA plan makes, namely, how best to provide health care coverage to employee benefit plans. The 9-percent assessment interferes with this decision by imposing on HMO's, and only on HMO's, a penalty calculated at 9 percent of the cost of non-Medicaid in-patient care. Basically, what the statute requires is for the HMO to calculate all of its costs on in-patient hospital care, then Medicare and Medicaid get subtracted out, and what is left is multiplied by 9 percent and paid directly to the State outside the hospital reimbursement system.
William H. Rehnquist: And that's different from the other surcharges?
Harold N. Iselin: That is different from both other surcharges, both of which go to the hospitals. One is kept by the hospital, the 13. The 11 is cycled through the hospital back to the State. The exclusion of Medicaid is particularly significant because that's the piece the State pays, so the State said, well, we'll take ourselves out, and basically once you do that calculation, all that's left are essentially ERISA plans. There may be a few individual subscribers, but well in excess of 95 percent are employer benefit plans. In other words, the 9-percent assessment targets one form of health care coverage and increases its cost relative to other systems of coverage for reasons having nothing to do with the actual costs of the care provider. In the case of the 9-percent assessment, this interference is particularly egregious because of the unique relationship that employee benefit plans have with HMO's. When an employee benefit plan contracts with an HMO for health care coverage, it is purchasing a system of care. That differs substantially from indemnity insurance. An HMO by definition is charged with maintaining the health of its members, not simply indemnifying them for treatment that's provided after the member becomes ill and needs services. Thus, every HMO has a network of primary care physicians who have the responsibility for monitoring and maintaining the health of the members, where they have the emphasis on preventive care. That primary care network is integrated with specialists and hospitals, and the whole web of doctors, hospitals, and members are all subject to a range of rules that are intended to ensure that care is coordinated and delivered in the most efficient manner.
Ruth Bader Ginsburg: Mr. Iselin, maybe I misperceive it, but isn't there a big difference between the first... what we heard from the commercial insurers, the attempt to influence the ERISA plans' choice... here, the effort is not to affect the ERISA plan's choice, but to get the HMO's to do something, to get the HMO's to service a larger number of Medicaid patients, and if the HMO's respond that way, that's it. It's not attempting to get the ERISA plans to choose Blue Cross over Travelers, for example.
Harold N. Iselin: Well, Your Honor, the purpose, the stated purpose of the statutes may be somewhat different, but the effect is identical, because both sets of cases have the State imposing surcharges that are interfering with the decisions ERISA plans want to make as to how best to provide health care, and one of the things, again, that the statute itself talks about, is delivering hospital, medical, or surgical benefits through the purchase of insurance or otherwise. Now, surely the HMO's, to other types of coverage that are different from insurance. That is a choice that is specifically identified in the statute, so that even if the State's purpose with the 9 percent may be somewhat different, the effect on ERISA plans remains the same.
Ruth Bader Ginsburg: Which... so you're saying, because there's an impact on ERISA plans, New York simply cannot regulate the HMO's to require them to take on more Medicaid patients?
Harold N. Iselin: They can't regulate them in a way that would... that would relate to, and that would... relate to ERISA plans and interfere with the choice ERISA plans make.
Ruth Bader Ginsburg: Can't require them to take on more Medicaid patients, or impel them to or induce them to, as long as they have... as they're used by ERISA plans. That's essentially your argument.
Harold N. Iselin: That they can't require them, again, in a manner that would interfere with the choices or the quality of care that's provided by the HMO, which could also happen if the State required HMO's to enroll Medicaid recipients in a manner that overburdened the delivery system of the HMO, which can--
David H. Souter: Well, to some extent could it directly mandate that HMO's take on a different class of patients?
Harold N. Iselin: --No, Your Honor, I don't believe it could, for the reason--
David H. Souter: The equivalent of open enrollment--
Harold N. Iselin: --Well, I think they could require open enrollment, but open enrollment is very different from what the State has done here with targets, and I think any system that relies on targets and compels HMO's to take Medicaid recipients in that manner is problematic, because again, HMO's have a limited capacity to deliver care. Some may--
David H. Souter: --The effect of your argument is that the HMO's, by virtue of the relating-to-ERISA-plan language, really escape virtually all the regulation on the subjects that we're talking about, whereas the insurance companies would not.
Harold N. Iselin: --No, Your Honor, because what we have here for HMO's is the Federal HMO Act, and the Federal HMO Act on many of these issues acts as a sort of HMO savings clause because it specifically authorized States to conduct regulation of HMO's in many aspects similar to what we talked about earlier, community rating being one very good example. Now, that act was passed just 1 year before ERISA, and I think when you read the two together, the Federal HMO Act preserves for the States actually a fairly high level of regulation of HMO's, but it does not preserve differing assessments on what HMO's pay, thereby interfering with employee benefit plans. There are four specific ways that the 9-percent also very directly interferes with the choice, and since my time is running short, I'd like to talk about one in particular, and one result, when you increase costs in this way and it gets passed through from the HMO to employee benefit plans, is not just that the plans pay more, but they also can restructure benefits, increase copayments and, particularly important, sometimes plans drop coverage altogether. This is particularly common with small businesses, who might be right at the margin of whether they even provide coverage. An HMO tends to be the lowest cost option in the market. Thus, when we think about the impact, it's not enough just to think about it as increasing costs, which it certainly does here, but also reducing benefits, which is very analogous to Met Life, and in fact causing some employee benefit plans to just say, we have no more money to pay this added cost. We can't increase our coinsurance or our copayments because they're at the maximum, we can't strip away any more benefits because we're at the minimum level of benefits that we can provide through the HMO. The only choice we have left now is to discontinue coverage. And one of the ironic things of the State's position is that at the same time that it's trying to increase coverage, and is arguing for that as a justification for these assessments, the actions may have the exact opposite effect, which is to price some employee benefit plans, and particularly those of small business, right out of the market. Finally, I'd like to touch briefly on the Metropolitan Life case, because as some have noted, it's directly analogous here, particularly on the compelling versus inducing point, and again, one of the options in Metropolitan Life, faced with having to pay for the mental health benefit at issue, was that plans had two choices. They could either move to self-insurance, which was directly recognized in that decision, or they could take this other option which I just described, which is to simply drop coverage. The law in Metropolitan Life, which the Court recognized related to employee benefit plans, was no more compulsory than the assessments at issue here. Plans still retained options, and they could have chosen to exercise those options, just as ERISA plans here may have some theoretical options.
William H. Rehnquist: Thank you, Mr. Iselin. The case is submitted.


William H. Rehnquist: We will hear arguments next in No. 85-2099, Pennsylvania against Finley. Mrs. Barthold, you may proceed whenever you're ready.
Gaele M. Barthold: Mr. Chief Justice, and may it please the Court: Twenty years ago this Court imposed strict and unique briefing requirements on appointed attorneys seeking to withdraw because they concluded that a client's first appeal was frivolous. In addition, reviewing courts, charged with hearing such appeals, were charged with the responsibility of conducting an independent review of the record to determine whether the appeal was in fact frivolous. This issue presented by this case is whether those procedures, those prophylactic rules as articulated by this Court in Anders v. California, should be held applicable on collateral review. It is our position that they should not be held applicable, and that in the collateral review context, a no merit letter, with notice to the client and an opportunity to proceed pro se, is a constitutionally acceptable alternative. Now before detailing our reasons in support of that conclusion, I would like rather briefly to address the respondent's claim that this Court is without jurisdiction to decide that issue because the opinion below rests on an adequate and independent state basis. The opinion is, of course, a Pennsylvania Superior Court opinion; although that is an intermediate appellate court, it is the highest court in which the decision could be had in this case. The respondent is a state prisoner having been convicted in 1975 of second degree felony murder and related offenses. She was represented by appointed counsel during his trial, and during her unsuccessful direct appeal to the Pennsylvania Supreme Court. She next sought collateral review under the State Post Conviction Hearing Act statute, and counsel was not appointed for her because the claims that she raised were finally litigated under Pennsylvania law. The Pennsylvania Supreme Court, however, held that under its supervisory rules, its rules of criminal procedure, that any defendant is entitled to counsel on a first PCHA petition, or on a subsequent petition raising new issues. When counsel was appointed for Mrs. Finley, he reviewed the record and concluded that he had no arguable issues to raise. He, as a result, after consulting with his client, filed a no merit letter with the Post Conviction Hearing Act court, and detailed in that letter the additional claims which Mrs. Finley wanted raised on her behalf. Based on that letter and his own independent review of the record, the Post Conviction Hearing Act judge dismissed the petition and allowed counsel to withdraw.
Harry A. Blackmun: Have you any knowledge as to exactly what his review of the record consisted of? Was he looking at the notes of testimony or what?
Gaele M. Barthold: We know from his letter that he looked at the notes of testimony.
Harry A. Blackmun: Is that enough?
Gaele M. Barthold: Judge Blake indicated in his opinion that he looked at the entire record. We also know that he consulted with his client. So I think we are reasonably certain that he did the kind of conscientious review that he should have done, and which this Court, of course, in Strickland, has said that counsel is presumed to do their job and to be competent. Now when the Pennsylvania Supreme Court reversed because Anders' prophylactic requirements on direct appeal had not been complied with, they said, among other things, since Anders has been applied in similar circumstances, we hold, quote unquote, Anders is applicable here. And in addition, they noted that the Pennsylvania law with respect to the withdrawal of counsel is derived from... and those were their exact words... Anders v. California. I think those two statements by the Superior Court make it very clear that there is not an independent state basis for this opinion. That conclusion is underscored by the fact that there is no clear statement in the opinion saying we used the Federal authority only for purposes of guidance. And of course in this Court's opinion, Michigan v. Long, you made clear to state courts that if they wanted to make such a statement, they could. So I think there's no question but that this Court has jurisdiction to consider the very significant issue which is presented here. Now, I think the starting point for that consideration is twofold. First, it must be recalled that collateral review is in fact a procedure which is three, if not four, steps removed from the trial court process. By that point in the proceedings, a defendant has had the opportunity to raise matters in post trial motions. A defendant has had a direct first appeal. A defendant, in a majority of jurisdictions, has had the opportunity to either have or to seek discretionary review. Collateral review is three or four steps removed, and it's a procedure which is intended to identify those rare cases in which there is error that has not been previously identified. Secondly, it is of course very important that there is no general constitutional right to counsel on collateral review. Nonetheless, the respondent claims that since counsel was given, although only under a supervisory rule, not under a constitutional basis, and so far as we can determine, there is no state in the country that gives counsel on collateral review based on a state constitutional basis, the respondent contends that since the right to counsel is there, all of the procedures that are given with respect to the right to counsel on a first appeal should be given; in other words, that Anders should be applied even though we are only talking about a supervisory right to counsel. And I think respondent has really three misconceptions. First, respondent assumes that an Anders brief is in fact an advocate's brief. And of course, an Anders brief is not that. What it is is a device to determine, to monitor, whether counsel has in fact conducted the sort of conscientious and thorough review of the case to be certain that the appeal is in fact... or the petition is in fact... frivolous. I think counsel does not take account of the fact that when you get to collateral review, you are getting to a procedure that is so far removed that there simply are cases without arguable issues by the time you get to collateral review. And I think finally the respondent assumes that Anders is the only way of being sure that attorneys do their job. And I think that is just not so. Attorneys do their job. Attorneys are presumed to be competent. Attorneys have an obligation not to clog the courts with frivolous arguments. And I think that you need not apply the precise procedures of Anders on collateral review to see that counsel do what they're charged to do, which is to do their job. Now, the important considerations are: fundamental fairness; meaningful access; and the fact that there are not the invidious discrimination, the fact that arbitrary obstacles not be put in a defendant's way so that--
John Paul Stevens: May I just interrupt for a second? Is it correct in your view that if Pennsylvania... the Pennsylvania courts decided they would like to apply Anders as a matter of state law, you would agree they would have the power to do that?
Gaele M. Barthold: --Oh, absolutely, Justice Stevens.
John Paul Stevens: But your view is that when they refer to the Pennsylvania law in this area, it is derived from Anders, that they thought they were compelled by Anders to apply the Anders rule in collateral proceedings?
Gaele M. Barthold: That is our position.
John Paul Stevens: Has any other state so read Anders, as far as you know?
Gaele M. Barthold: Yes, the District of Columbia has so read Anders; has applied Anders on collateral review. Iowa has. I believe it's Arkansas has, and Texas has. Illinois has not.
John Paul Stevens: In Iowa, Arkansas, and Texas, do you understand they did it because they thought Anders compelled them to do it?
Gaele M. Barthold: Yes, I believe so.
John Paul Stevens: I see.
Gaele M. Barthold: I could be in error, but I believe so. And we have about three other states that have found Anders inapplicable on collateral review: Illinois, Arizona, and I believe Utah. And only three circuits have spoken on this point. The Second and Fifth Circuits have found Anders applicable, and I believe the Seventh Circuit has not.
Thurgood Marshall: xxx prohibited from going further than Anders, is it?
Gaele M. Barthold: Oh, absolutely not, Justice Marshall. Absolutely not. So it's our point that--
Sandra Day O'Connor: Mrs. Barthold, while you're interrupted, may I inquire whether the record reflects whether the respondent was sent a copy of the attorney's no merit letter?
Gaele M. Barthold: --The no merit letter indicates a carbon copy to the respondent. There has been no evidence to rebut the fact that it was received. The respondent speaks in terms of, quote unquote, apparent lack of notice. But that notice has not been rebutted, and there are, I think, a number of arguments to be made, which perhaps I'll reserve, which would demonstrate that even if you want to assume for the sake of argument that the notice was not received, that there was no prejudice to this particular defendant because of the peculiarities of both this case and of Pennsylvania practice. So if you take the fundamental fairness, the meaningful access, and the no invidious discrimination concepts, and I think apply the balancing test which this Court has articulated in Matthews v. Eldridge, and then applied in Ake v. Oklahoma, what we should look at is the individual interest, which is, here, the accuracy of the criminal proceeding itself; the governmental interest, which would be the cost to the criminal justice system of applying Anders; and finally, what value is to be derived from applying the procedure here sought, Anders, whether it is more likely than not that cases would be identified that would otherwise be lost in the shuffle, so to speak. And I would submit that when you apply that balancing test, the line should be drawn to say that Anders is not applicable on collateral review. The chances of it resulting in the identification of cases on collateral review that truly have even arguable issues, I think, is just not likely. I think that the Court should look at the strains on the criminal justice system, if you conclude that Anders should be applied on collateral review. Because we are talking about post conviction hearing remedies and petitions which are burgeoning out of all proportions, at least in the states, and I would assume in the federal system too. We are talking about a complete change in the role of the courts, who are not sitting as courts, but are required to conduct this independent review of records, which puts a great strain on one of our scarcest resources at this time, which is the time of our judges.
Sandra Day O'Connor: Mrs. Barthold, what do you think the Federal Constitution requires, at a minimum, through its due process clause, when the state has granted an avenue for state post conviction review?
Gaele M. Barthold: I think--
Sandra Day O'Connor: Must the state afford counsel at all to indigent defendants in that situation?
Gaele M. Barthold: --I think, Justice O'Connor, that they need not afford counsel except in those rare cases where, as a matter of due process, counsel is necessary, which is a statistically insignificant number of cases, I believe, even in the federal system. I think a no merit letter with... which states that counsel has conducted a meaningful and thorough review, with notice to the client and an opportunity for the client to proceed pro se, so that the client is in substantially the same position as they would have been had counsel not been appointed.
Sandra Day O'Connor: Well, you say the facts of this case are at least enough to meet it. But at bottom, what must the state provide?
Gaele M. Barthold: The state must provide access to the courts. The... if they have collateral review, as do all states, they must allow counsel... or indigent defendants to file their petitions; to not have fees which would keep them out of court; to give them, if they are incarcerated, the benefit of law libraries, under Bounds v. Smith; the use of their jailhouse lawyers, if necessary, under Johnson v. Avery--
Sandra Day O'Connor: And in some cases, it must provide counsel?
Gaele M. Barthold: --I think that would be a very rare case where it would be an idiosyncratic case where a court with prescreening would discover that there was something that would make it only possible for counsel to handle this matter. I know the rule in the Federal courts usually is if there is an evidentiary hearing on Federal habeas, they give counsel. We have at least--
Sandra Day O'Connor: Well, in Pennsylvania, it is the practice to provide counsel uniformly for indigent defendants, I take it, in post... state post conviction review proceedings?
Gaele M. Barthold: --On any first petition. Any first post conviction hearing at petition, or any subsequent petition that raises new issues.
Sandra Day O'Connor: And given that as a factor, then what do you think due process requires, above and beyond that?
Gaele M. Barthold: I think due process requires that the attorney conduct a conscientious and meaningful review of the case and the record. So that having given that indigent an attorney, they have the benefit of that attorney's best review of the record. If the attorney then determines that there is nothing even arguable to raise, I submit that it is appropriate for him to be allowed to withdraw from the case. I mean, we are talking about at least 23 states, as nearly as we can determine, that have very liberal policies with respect to the appointment of counsel far more liberal than the federal system. And the strain of requiring all 23 of these states to superimpose Anders on top of what they're giving, above and beyond what they must, will, I submit, put a very great strain on the criminal justice system.
William H. Rehnquist: Of course, Pennsylvania has control of that in its own hands. It can simply stop affording counsel.
Gaele M. Barthold: Yes, and I believe that that is something that might well occur, if not in Pennsylvania, in some of the other 23 states, if it is held by this Court that Anders must be applied on collateral review. And I would submit, Mr. Chief Justice, that it would be unfortunate if that should happen. Because these states have determined, for either... for one reason or another to give indigents counsel when it's not necessary for them to do so constitutionally. And I think we should encourage that, but not superimpose other procedures which will make that burdensome on the states. Now turning to this defendant's, this respondent's case, she undoubtedly will argue to you that there was no notice, therefore, she must necessarily win the case; and secondly, that her appointed PCHA attorney was ineffective because he did not raise certain arguably meritorious issues. We have addressed both of those in our reply brief. With respect to the so-called issues, I have dealt with them in a footnote, and I truly believe that they are in fact frivolous issues. With respect to the notice matter, even if we want to assume for the sake of argument that Dorothy Finley did not receive the no merit letter... and as I indicated, it shows a carbon copy to her... she still had the benefit, in this particular case, of having the time consuming independent review of the record, which was conducted by the Post Conviction Hearing Act judge. And he concluded, independently, that there was nothing there. And finally, under the peculiarities of Pennsylvania practice, she is not barred from filing yet another Post Conviction Hearing Act petition, and raising whatever issues she would want to. So I would in conclusion, Your Honors, urge you to hold that Anders does not apply on collateral review. And I would urge you to reverse the Pennsylvania Superior Court decision.
William H. Rehnquist: Thank you, Mrs. Barthold. We'll now hear from you, Ms. Harper.
Catherine M. Harper: Thank you, Mr. Chief Justice Rehnquist, and may it please the Court. First, let me address Ms. Barthold... some of the issues that she had raised, before getting into my argument. In response to Justice O'Connor's question, in this case my client told me that she never received that letter. Since we didn't get the hearing that the Superior Court had awarded to us, that's a question of evidence that is still open. I would argue that she didn't receive the notice that was required under Anders in this case. Secondly, the district attorney repeatedly characterized collateral review as three or four steps removed from the actual trial. That's not exactly accurate. In Pennsylvania, as I would imagine in most jurisdictions, the only issues which can be raised in the higher courts are those which were raised in post trial motions. Therefore, we're actually one step removed, if you consider that there was... if there was an issue that was not raised in post trial motions, neither the Superior Court nor the Pennsylvania Supreme Court had that issue before it when they were deciding the direct appeal. Thirdly, I'd like to note that the district attorney points to this case as a case of fundamental fairness. I agree with that. I think that what happened--
John Paul Stevens: May I ask you on that question, a matter that was not raised on direct appeal of course wouldn't have gone to the Supreme Court of Pennsylvania. Does Pennsylvania have a rule in its collateral proceedings that issues which could have been raised on direct appeal but were not raised are barred from collateral review?
Catherine M. Harper: --I don't believe it's a matter of what could have been raised. I think the PCHA says that matters that were already litigated to a final determination are barred.
John Paul Stevens: That means it was litigated in the trial court and no--
Catherine M. Harper: And on appeal.
John Paul Stevens: --And on appeal?
Catherine M. Harper: The distinction I'm drawing, Justice, is not... is between issues that were raised and which could have been raised. I believe Pennsylvania--
John Paul Stevens: On appeal, or in the direct proceeding? I mean, say it was raised in the trial. For example, there's a motion to suppress evidence, but no appeal was taken from the adverse ruling. In Pennsylvania practice, could that be raised in collateral proceeding?
Catherine M. Harper: --Only through the back door. You'd have to argue, Your Honor, that--
John Paul Stevens: Ineffective assistance of counsel?
Catherine M. Harper: --Exactly. You'd have to argue that the counsel on appeal was ineffective for failing to raise that earlier. And then you could get to it. Yes, Justice Marshall?
Thurgood Marshall: xxx that should have been raised?
Catherine M. Harper: Well, Justice Marshall, I believe in my brief, at footnote 7, I've listed several issues of arguable merit. But I don't believe that Anders requires me to show prejudice at this stage. And I would ask this Court not to put that burden on me.
Thurgood Marshall: But the judge went through the record.
Catherine M. Harper: The PCHA court says that they... yes, the court went through the record.
Thurgood Marshall: No, no. He did go through the record.
Catherine M. Harper: Yes, Your Honor. My problem is, Your Honor, that on collateral review, court appointed counsel should look beyond the record; should not only scour the record to determine whether there are issues that should have been raised, but should also consult with the petitioner, and should perhaps even look into investigation beyond that based on whatever the petitioner tells him is there.
Thurgood Marshall: If there's nothing there?
Catherine M. Harper: If there's nothing there, which is not this case, Your Honor, he should follow Anders.
Thurgood Marshall: Would you make the same argument if there were 86 eyewitnesses?
Catherine M. Harper: Your Honor, that's a tough question.
Thurgood Marshall: Would you?
Catherine M. Harper: I guess you're asking me whether there is a case where there are no arguable--
Thurgood Marshall: Would you make the same argument, if there were 86 eyewitnesses who testified that this person committed the crime?
Catherine M. Harper: --I would make the argument that Anders applies. I would not have the liberty or good grace to be able to say that there are issues.
Thurgood Marshall: I see.
Catherine M. Harper: But I would make the argument that Anders applies, and one should file an Anders brief.
Thurgood Marshall: [inaudible]
Catherine M. Harper: And in this case--
Thurgood Marshall: Can you leave me off at 85?
Catherine M. Harper: --Yes, I will, Your Honor. The argument of the respondent basically is that since Pennsylvania does provide a post conviction hearing act procedure, and it does provide counsel, and it explicitly provides effective counsel, that when counsel seeks to withdraw from a PCHA petition, then due process considerations come into play. And the Fourteenth Amendment says you can't arbitrarily deprive a petitioner of counsel without following due process. When counsel seeks to withdraw, due process means the Anders procedure.
William H. Rehnquist: Well, what do you think the constitutional basis of the Anders case is, Ms. Harper?
Catherine M. Harper: I believe that Anders does rest on the fact that there was a constitutional right to counsel in that case; but I don't think it was necessary for the holding. I think that this Court obviously handed down that case, knowing that there was a constitutional right to counsel. But that's not really discussed in the opinion, and I can only assume--
William H. Rehnquist: I just read the opinion and I had a hard time figuring out what the basis for the right was.
Catherine M. Harper: --Well, I didn't see it discussed there explicitly either, Your Honor. I think the Court simply assumed that it was a right. Now, the question is, what do we do when the counsel wants to withdraw, assuming the right exists. Which is the same in this case. I'm not arguing that there is a constitutional right to an attorney on collateral review, because I don't have to. There is a very clear Pennsylvania right to a lawyer, and to an effective lawyer. Conversely, the no merit letter that--
Antonin Scalia: Well, wait, it's just a Pennsylvania right we're talking about. Why couldn't Pennsylvania... suppose the Pennsylvania statute had been very clear and had said, the only right we're giving here is the right to have a member of the bar, in good standing, look over this case, and in his or her judgment, decide whether there's anything worth arguing. Suppose that's how it read. Would there be anything wrong with that? Would that be unconstitutional?
Catherine M. Harper: --I guess Pennsylvania could give that limited right, and the question would be whether that limited right is entitled to due process; am I understanding you correct?
Antonin Scalia: xxx there. I mean, so long as you give it to a lawyer whose in good standing, you've complied with the Pennsylvania statute and treated everyone alike.
Catherine M. Harper: This would be a different case if that were the Pennsylvania practice. But this is not... that's not Pennsylvania practice.
Antonin Scalia: Why is this Pennsylvania statute different?
Catherine M. Harper: First of all, the Pennsylvania statute explicitly calls for counsel. Secondly, there's a criminal rule for civil... a rule of criminal procedure that calls for counsel, and there's case law that says, the right to counsel means the right to the effective assistance of counsel, not only to make arguments, but also to marshall the facts and go through th record and see what else might be there. For that reason, even petitioners who raise... who draft their own petitions and name things that have already been litigated on a first PCHA are entitled to counsel, the reasoning being not only that they're entitled to an advocate, but also because an attorney can better explore the issues.
Antonin Scalia: So you're saying although Pennsylvania need not provide for effective assistance of counsel, it could just provide to have some lawyer look over your case, if it does provide for effective assistance of counsel, whether the assistance is in fact effective is a federal constitutional question?
Catherine M. Harper: That's correct. I think that you cannot withdraw the effective assistance of counsel without due process. So I think that that would contemplate that there might be a constitutional issue raised if counsel were very ineffective. It's not necessary to get to that, though, because Pennsylvania's own collateral review procedure provides for ineffective assistance of counsel questions to be raised right in our Commonwealth courts, and to be taken care of there. For that reason I'd also take issue with the idea that applying Anders in collateral review cases would clog the courts. I think, on the contrary, applying Anders in these cases would make sure that the court more readily reached the merits of the case, and if it is frivolous, got rid of it. Rather than... of have a no merit letter, which I think would encourage the petitioner to go to the federal courts with a habeas petition saying that they weren't dealt with fairly.
John Paul Stevens: Ms. Harper, may I interrupt again? Because one of your responses to Justice Scalia puzzled me. Do you think that the holding of the Pennsylvania Supreme Court in this case is based on its view that this procedure in Pennsylvania is mandated by the federal Constitution?
Catherine M. Harper: No, I do not. I think that... my argument in the alternative is that it rests on independent and adequate state grounds. I think that the Pennsylvania Court did not feel compelled to apply Anders, but merely applied Anders because it's a very sane, fair, humane approach to this problem, and because Pennsylvania has had 20 years experience with Anders; because very shortly after this Court handed down Anders, it was applied in Pennsylvania in direct appeal cases. So the Pennsylvania courts are familiar with it; had 20 years practice with it; and the opinion indicates that Pennsylvania law is derived from Anders, but it doesn't say it's constitutionally compelled by it.
Antonin Scalia: It doesn't say, modelled after; it says derived from. I think that that's normal language to indicate that you feel that one case requires a legal rule in this case.
Catherine M. Harper: I respectfully disagree, Justice Scalia. And I point out that it also relies--
Antonin Scalia: You wouldn't say it's at least ambiguous?
Catherine M. Harper: --No, I would not. I think it's very clear. I perhaps would wish for a better scrivener of the opinion. But I think it's better clear that "derived from" is different from "is constitutionally compelled by". I don't think this opinion indicates that it... that the Court felt compelled by the federal courts to do this.
Antonin Scalia: You don't think if I said this rule is derived from Marbury v. Madison, that it couldn't be read to mean that I think Marbury v. Madison requires this rule in the present case? Maybe not, must, but could.
Catherine M. Harper: No, Your Honor, I think that this... I think this opinion's clear.
John Paul Stevens: But your point is that they said, this Pennsylvania rule was derived from Marbury v. Madison.
Catherine M. Harper: This is a Pennsylvania law, is derived from, is what it says. Thank you. But it also points to criminal rules of procedure in its opinion--
Sandra Day O'Connor: But, counsel, haven't we said, in Michigan v. Long, that when the court doesn't make that clear, we're going to assume that they mean it's required by federal law, when the opinion cites federal authority and doesn't make it clear.
Catherine M. Harper: --That is what Michigan... that is what Michigan v. Long says. Apparently Justice Scalia and I have a disagreement on whether or not it's clear. I think the opinion is clear that it relies on Pennsylvania law. I kept trying to say that--
Sandra Day O'Connor: Well, suppose that we disagree with you. And we have to face up to what we do here.
Catherine M. Harper: --Well, then, if you disagree with me, it's not necessary to find that this rests on adequate and independent state grounds. Then I go back to my due process argument. If a state grants an important right, the state can't willy-nilly take it away without providing due process. Anders is the measure of due process for withdrawing attorneys. So it's not necessary to find that this rests on adequate and independent state grounds.
William H. Rehnquist: No, Ms. Harper, I didn't see any reference to due process in the Anders opinion. There's certainly reference to the Sixth Amendment, to equal protection. But the Anders opinion itself isn't grounded on the view that you can't withdraw an attorney because of due process considerations, is it?
Catherine M. Harper: It wasn't necessary in Anders, because it rested... arguably rested on a constitutional right. It wasn't necessary to talk about the Goldberg and Kelly type of cases where the state does grant a right, even if it's not granted constitutionally. I think there's a clear line of cases with the Griffin/Douglas line of cases that would provide support for that. And Evitts v. Lucey is very close to this case, and rests on due process grounds. Although of course I'm also arguing equal protection, because I have an indigent who is, with a court appointed attorney, forced to take whatever the state gives her. Pennsylvania law gives no right to the indigent to complain about which attorney she gets. And the indigent has to take whichever attorney it is and can't request them. I think for equal protection reasons, it would probably be reasonable for the Court to more closely scrutinize court appointed counsel's conduct in this regard, and to make sure that the poor defendant, petitioner, gets the same justice that the wealthier one can afford to get. So my argument rests both on due process and on equal protection. The no merit letter, by contrast, does violence to both due process and equal protection. The district attorney has suggested that there may be other ways to deal with this problem. I can conceive that there may be other ways. I don't think the district attorney has suggested anyway that we can deal with it, but there may be other ways. The no merit letter is not the way to deal with it. This Court specifically disapproved of the no merit letter in the Anders case. I see no reason to distinguish between direct appeal and collateral review when talking about the sufficiency of the no merit letter. It has the terrible handicap that it forces the court appointed counsel to argue against his own client, and it puts the petitioner in the position of having the state give her a lawyer who thereafter briefs the case for the prosecution. I think the no merit letter is affirmatively bad in that respect, and is not a substitute for Anders. It may be that there's another state in the union that has come up with a better way to deal with this problem, but the district attorney hasn't suggested one, and the no merit letter is not that case. As I also stated--
Thurgood Marshall: What would you do with another lawyer?
Catherine M. Harper: --In this case?
Thurgood Marshall: Uh-huh.
Catherine M. Harper: I think what should have been done is apply Anders, so that--
Thurgood Marshall: So that... go ahead.
Catherine M. Harper: --So that the court could get to the merits of the case with the benefit of an advocate's marshalling of the facts and evidence. And the court would not be compelled to do it on its own.
Thurgood Marshall: I see.
Catherine M. Harper: So I think Anders would be the proper solution here, and that's what the Pennsylvania courts decided was the proper solution.
Thurgood Marshall: And what do you think Anders says? That the lawyer has to file a brief?
Catherine M. Harper: Yes, I think Anders requires a brief.
Thurgood Marshall: And he has to say more than he said in that letter?
Catherine M. Harper: He has to say not only more than he said in that letter, but he has to avoid making an argument against it. I think Anders calls for citations to the record and to legal authority. It doesn't... and I think that it affirmatively disapproves of the idea that you can write out what the petitioner wants raised, and then say, but it's a terrible argument, or it won't fly, or don't pay any attention to this, court. Because that places in the lawyer the job that belongs to the court. In the adversary system it's a spirit of give and take--
Thurgood Marshall: What would you do--
Catherine M. Harper: --Pardon?
Thurgood Marshall: --What would you do if the client said that my ground for appeal was that I was sentenced on count two before I was sentenced on count one; and that's the only grounds that I have for appeal?
Catherine M. Harper: And counsel had conducted a careful review?
Thurgood Marshall: And I warn you in advance that there's an actual case that that happened.
Catherine M. Harper: I can conceive of that case. I guess what--
Thurgood Marshall: And what would you do in that case?
Catherine M. Harper: --I guess what counsel should do in that event is simply set out that she was sentenced on count two before count one; point the court to the appropriate sentencing rules and whatever cases construe them in their fairness; and point to whatever position there is in the record that might support the argument on behalf of the advocate; and let the court decide. And if it gets thrown out, then that's the way the adversary system works.
Thurgood Marshall: Well, what's the difference between that and this letter here, except that it doesn't have all the detail in it?
Catherine M. Harper: Well, that's a big difference, because... there's a couple of differences. First of all--
Thurgood Marshall: Well, in this case, is it--
Catherine M. Harper: --I was able to find arguable issues that don't appear in that letter.
Thurgood Marshall: --Is it true that her only defense was an alibi?
Catherine M. Harper: It is true that her defense was an alibi. But--
Thurgood Marshall: That's what you say.
Catherine M. Harper: --It is true... no, it is true that her defense was an alibi. But you have to remember that the most important witness at her trial was a prosecution witness who received two years' probation for his part in this. And after the trial, Dorothy Finley asked to speak to the court. After she was convicted... it was a bench trial... she asked to speak to the court, and the court permits her, and she begins to tell why the prosecution witness would have other reasons to be biased against her, and would be unfairly disposed, for his own reasons, to give testimony that would benefit the prosecution. None of that's in this case, because that wasn't raised by the PCHA counsel.
Thurgood Marshall: But you did raise that her defense was an alibi. You put that in footnote 7.
Catherine M. Harper: That is correct. That is a portion--
Thurgood Marshall: And we are bound by that, aren't we?
Catherine M. Harper: --That is the course chosen. I wouldn't take footnote 7 to be a statement of all the reasons that could be raised in this case. You have to remember, first of all, that when I got this case, I was in the Superior Court. I had no right to raise evidentiary issues. I merely raised them for illustrative purposes, and the court let me do that. You also have to remember that I only had the record that was available in the court... which by the way didn't include the suppression motions and other pieces of paper that I think counsel should look at before they make a determination on collateral review. So I would not... I would ask this Court not to take footnote 7 as anything other than illustrative of the issues that could have been raised and should have been raised by counsel. I'd like to state in summary, then, that where the state grants a valuable right to its citizens, in this case, the right to the effective assistance of counsel in collateral review, that right cannot be taken away without giving the affected citizens due process. The Anders procedure is the due process that is required in this case. Because this is a case involving a court appointment, I would also ask Your Honors to consider that there are equal protection considerations as well; and that is because she cannot choose her own attorney, she has to take what the state gives her. And also, because the court wants to ensure that the indigent prisoners get the same equal protection and due process as wealthier individuals. I'd also ask the Court to consider that the alternative in this case... and what we are really talking about here is a procedure, the no merit letter... is not sufficient under due process or equal protection guidelines for the reasons ably stated in Anders. And in the alternative, I'd argue that this decision of the Superior Court rests on adequate and independent state grounds, and that this Court can decline to accept jurisdiction and let the Pennsylvania's court choice to deal with this difficult problem stand. If there are no further questions, thank you.
William H. Rehnquist: Thank you, Ms. Harper. Ms. Barthold, you have 12 minutes remaining.
Gaele M. Barthold: If there are no questions, I see no reason to use my 12 minutes.
William H. Rehnquist: Thank you, Ms. Barthold. The case is submitted.