Opinion ID: 405004
Heading Depth: 1
Heading Rank: 3

Heading: Preemption under ERISA and the Hawaii Workers' Compensation Law

Text: 14 The district court found that the company's offset of appellees' workers' compensation benefits against their pension benefits violated Section 386-9 of the Hawaii Workers' Compensation Law which provides: 15 (N)o contract, rule, regulation, or device whatsoever shall operate to relieve the employer in whole or in part from any liability created by this chapter. 16 In reaching that conclusion, the court relied in part on a decision by the Labor and Industrial Relations Board of the State of Hawaii in the case of appellee Pascoe. The company had appealed the award of workers' compensation benefits to Mrs. Pascoe, claiming that the offset provision of the pension plan relieved it of any obligation to pay workers' compensation. The Board, however, rejected the appeal on the grounds the statutory policy behind the law prevents such a preemption of benefits. The district court, in turn, concluded that reduction of pension benefits by the amount of worker's compensation benefits was also prohibited under Hawaii law. 17 The parties dispute whether the district court correctly interpreted Hawaii law. However, that dispute is largely academic. If Hawaii law is as the district court interpreted, the result is still ruled by Alessi's holding that state workers' compensation laws prohibiting such offsets are preempted by ERISA. 18 In Alessi, a New Jersey workers' compensation statute prohibited pension benefit offsets of workers' compensation payments. But Congress had explicitly provided that ERISA would supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan. 29 U.S.C. § 1144(a). The Court concluded that the New Jersey statute was preempted by federal law since it eliminated integration of workers' compensation benefits as a method of calculating pension benefits, a result inconsistent with that permitted under ERISA. 451 U.S. at 524, 101 S.Ct. at 1906. 4 19 The Supreme Court specifically rejected the argument also made by appellees here that since the state law did not directly regulate pension plans and had only a collateral effect on them, it was not preempted: 20 It is of no moment that New Jersey intrudes indirectly, through a worker's compensation law rather than directly, through a statute called pension regulation. ERISA makes clear that even indirect state action bearing on private pensions may encroach upon the area of exclusive federal concern. 21 451 U.S. at 525, 101 S.Ct. at 1907. 22 Alessi applies here. To the extent the district court correctly held that the Hawaii Workers' Compensation statute prohibits offsetting workers' compensation payments intended to provide income replacement against pension benefits, that law is preempted by ERISA. 5 Accordingly, the judgment is REVERSED.