Insurance Board v. Muir
819 F.2d 408
Brief Filed: 8/86
Court: United States Court of Appeals for the Third Circuit
Year of Decision: 1987
Read the full-text amicus brief (PDF, 570KB)
Whether employee benefit plans issued by private employers but administered by fiscal intermediaries are subject to ERISA or constitute the business of insurance, thus saving the state benefits laws from preemption (the main issue for psychology was whether ERISA exempts insurance carriers from complying with freedom of choice laws and mandated mental-health benefit laws
The plaintiffs, a self-insured plan of Bethlehem Steel and their plan administrators, Pennsylvania Blue Shield, and Blue Cross of Western Pennsylvania, sought a declaratory judgment against the Commonwealth of Pennsylvania contending that ERISA preempted Pennsylvania from enforcing certain state mandated benefit laws, including coverage for psychological testing services and coverage for certain health care providers. The issue was whether contractual arrangements between Bethlehem Steel and the Blues concerned the business of insurance so that the benefit plan could be regulated by the state even though the plan itself was subject to the provisions of ERISA. The district court concluded that it was the business of insurance and therefore subject to state insurance regulations. The main issue for psychology was whether ERISA exempts insurance carriers from complying with certain state- mandated mental health benefit laws, including coverage for psychological testing and recognition of certain health care providers (freedom of choice laws).
APA submitted an amicus brief arguing that: (1) the states have traditionally regulated all aspects of the business conducted by Blue Cross/Blue Shield; (2) the savings clause in ERISA preserves the full scope of the states' authority over insurers; and (3) the deemer clause does not exempt insurance companies from state regulation when they contract with self-insured plans.
The Third Circuit disagreed with APA's position and reversed the district court. Thus, the self-insured plan was not subject to regulation by state insurance law.