Opinion ID: 349214
Heading Depth: 2
Heading Rank: 4

Heading: The Deemer Clause.

Text: 22 The deemer clause simply provides that a state may not deem an employee benefit plan to be an insurance company, insurer, or in the business of insurance for the purposes of its insurance laws. Consequently, a state may not regulate an employee benefit plan simply because the plan serves as self-insurer on all of its benefits. Thus, the deemer provision prevents a state from subjecting a plan, as a business of insurance, to the state's general insurance laws or enacting special legislation regulating plans as a unique variety of insurance. Hewlett-Packard Co. v. Barnes, 425 F.Supp. 1294, 1300 (N.D.Cal.1977). However, on its face the deemer provision does not prohibit a state from indirectly affecting plans by regulating the contents of group insurance policies purchased by the plans. 23 We are unable to accept plaintiffs' contention that the deemer provision forbids the states from indirectly affecting employee benefit plans by regulating group insurance. In order to accept plaintiffs' construction, we would have to construe § 514 without its saving clause pertaining to state regulation of insurance. This we cannot do; we must interpret the statute as written. Congress was fully aware of the functions and scope of employee benefit plans 40 and, nonetheless, exempted state laws regulating insurance from preemption. We also find that plaintiffs' suggested construction is not required by the definition of State as any state agency which purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans covered by this title. ERISA § 514(c)(2). Such a construction would completely emasculate the saving clause. It is our duty when interpreting an act of Congress to construe it in such a manner as to give effect to all its parts and to avoid a construction which would render a provision surplusage. See, e.g., McDonald v. Thompson, 305 U.S. 263, 59 S.Ct. 176, 83 L.Ed. 164 (1938); Wilderness Society v. Morton, 156 U.S.App.D.C. 121, 479 F.2d 842 (1973), cert. denied, 411 U.S. 917, 93 S.Ct. 1550, 36 L.Ed.2d 309 (1973). 24 The plaintiffs' interpretation would greatly diminish the state's primacy in regulating insurance. It would nullify all state insurance laws concerning group insurance when the group policy is issued to an employee benefit plan. We do not find, absent a clear statement of intent, that Congress meant to so restrict a state's authority to regulate insurance. Cf. United States v. Bass, 404 U.S. 336, 350, 92 S.Ct. 515, 30 L.Ed.2d 488 (1971). 25 Our interpretation of the deemer provision comports with the national policy of state primacy in the regulation of insurance announced by Congress in the McCarran-Ferguson Act. 41 Under that Act, the only congressional enactment which may invalidate, impair, or supersede any state insurance law is an act which specifically relates to the business of insurance . . . . 42 This national policy is twice reaffirmed by ERISA in § 514: first with the saving clause, and again with subsection (d). 26 We conclude that ERISA does not preempt application of state law to group insurance policies when such policies are purchased by employee benefit plans. The argument that the plans would be detrimentally affected and might face bankruptcy or extinction cannot change the plain meaning of ERISA. Assuming such detrimental consequences exist, we note that Congress fully intended to appraise the implementation of the Act and to provide remedial legislation where necessary. 43 In any event such arguments are not best directed to the courts.IV. 27 Other Issues. 28 We briefly review the appellants' remaining arguments. The fund administrators challenge the application of Chapter 67 to employee welfare funds claiming it to be preempted by the National Labor Relations Act and in contravention of the Constitution of the United States. We find no merit to these claims and, as did the district court, we dispose of them summarily. 29 Plaintiffs argue that Chapter 57, since it indirectly affects employee welfare funds, is preempted by general provisions of federal labor law. As we have indicated, Chapter 57 does not relate to employee benefit plans and is not intended to affect labor relations or disputes. The record demonstrates that benefits under any insurance plan are not part of the terms or conditions of collective bargaining agreements. Similarly, it has been held that state regulation of pension plans is not preempted by federal labor law. White Motor Corp. v. Malone, 545 F.2d 599 (8th Cir. 1976). State regulations of group insurance policies purchased by employee benefit plans are peripheral to any federal labor law other than ERISA. 44 30 Plaintiffs additionally assert that Chapter 57 is an unconstitutional burden on interstate commerce. This claim is partially refuted by the fact that Congress fully intended in passing ERISA to retain regulation of insurance within the sphere of the state. There is no proof of any undue burden on commerce. 31 In State Board of Ins. v. Todd Shipyards Corp., 370 U.S. 451, 82 S.Ct. 1380, 8 L.Ed.2d 620 (1962), the Supreme Court held: The power of Congress to grant protection to interstate commerce against state regulation or taxation (citations omitted), or to withhold it (citations omitted) is so complete that its ideas of policy should prevail. Id. at 456, 82 S.Ct. at 1384 (emphasis added and footnote omitted). The Court further noted that with the McCarran-Ferguson Act Congress provided that the regulations and taxation of insurance should be left to the States, without restriction by reason of the Commerce Clause. Id. at 452, 82 S.Ct. at 1381. 32 Plaintiffs also challenge Chapter 57 on due process grounds. The district court found that New Hampshire law does not subject the fund administrators to any criminal penalty for noncompliance with Chapter 57. On this basis it determined that plaintiffs had no legal basis to attack the New Hampshire Act for vagueness. We agree. The essential purpose of the 'void for vagueness' doctrine is to warn individuals of the criminal consequences of their conduct. Jordan v. De George, 341 U.S. 223, 230, 71 S.Ct. 703, 707, 95 L.Ed. 886 (1951). 33 With regard to plaintiffs' equal protection argument, the district court found that, since they were not insurance companies, the plaintiffs lacked standing to challenge the New Hampshire Act as being in violation of the equal protection clause of the Constitution. We are hesitant to exclude plaintiffs' challenge on a finding of lack of standing. As Judge Stevens (now Mr. Justice Stevens) observed in Cotovsky-Kaplan Physical Therapy Ass'n, Ltd. v. United States, 507 F.2d 1363 (7th Cir. 1975): The test is not whether these plaintiffs are regulated by the statute but whether the interests asserted by them arguably fall within the zone of interests so regulated. Id. at 1366. 34 However, we need not decide the standing issue. Even assuming standing, we summarily hold that plaintiffs' argument that the statute denies equal protection since it discriminatorily favors Blue Cross-Blue Shield, to be without merit. See Travelers Ins. Co. v. Blue Cross, 481 F.2d 80, 86 (3d Cir. 1973). 45 35 The judgment is affirmed.