Vermont Gets its Day in Court on ERISA: Supreme Court Agrees to Hear Gobeille v. Liberty Mutual Next Term

The Supreme Court granted certiorari in Gobeille v. Liberty Mutual, a case brought by Vermont challenging the Second Circuit Court of Appeals’ ruling on ERISA preemption that bars the state from requiring self-insured employer-sponsored health plans to submit claims data to Vermont’s all-payer claims database (APCD). In doing so, the Supreme Court is providing Vermont the day in court it was hoping for to revisit this decision.

As noted in previous blogs, Vermont brought this challenge to the Supreme Court, petitioning for review this term, but the Supreme Court instead asked the U.S. government to weigh in on whether certiorari should be granted. The government filed it’s brief in May writing that, although they believed the Second Circuit’s opinion on the scope of ERISA’s preemption was wrongly decided and that the case presented an issue of national importance, the Supreme Court should not take the case because it didn’t present enough of a direct conflict to warrant review. After that brief was filed, it wasn’t clear whether the Supreme Court would want to hear the case, so the Court’s decision today comes as a bit of a welcome surprise.

While the Court never gives a rationale for it’s decision to grant review, the fact that it will hear and decide this case within the next year is clearly good news for Vermont and the two other states (New York and Connecticut) in the Second Circuit. If the Court had denied review, these states would have been barred from mandating claims data submission from at least half of their private group health insurance market unless and until the Supreme Court heard another case reversing that opinion. While it’s unclear whether Vermont will win this case, waiting for a conflicting Circuit Court’s ERISA decision to percolate through the courts to reach the Supreme Court would have likely affected these states for many years to come. As Vermont’s attorneys eloquently argued in the state’s supplemental brief supporting their Petition for Writ of Certiorari to the Court,

State governments cannot afford the luxury of “percolation.” Health care costs continue to escalate at hyperinflationary rates while legislatures attempt to balance budgets and human services agencies strive to ensure adequate access to care. The Court should grant review and decide this important question now.[1]

Importantly, the Court may have decided to take this case to offer a new interpretation of ERISA that more clearly preempts state authority, as some suggest the Court should.

Whatever the decision, this case will have the most immediate implications for the 19 states that have either already implemented or are working to implement an APCD, but the case could have broader implications for state authority to implement broad health reform plans and manage their markets. States that are engaged in multi-payer payment and delivery system reforms or contemplating comprehensive all-payer initiatives will want to mind this case and the Court’s emerging views on ERISA’s preemption to better understand its implications for future state policy options.

We will all know the final decision by a year from now when the Court finishes issuing its opinions from this next term. Until then, NASHP and states will be watching carefully as the case unfolds.

[1] Supplemental Brief for Petitioner, Alfred J. Gobeille, In His Official Capacity as Chair of the Vermont Green Mountain Care Board v. Liberty Mutual Insurance Company, On Petition for Writ of Certiorari to the United States Court of Appeals for the Second Circuit, No. 14-181, p. 7.