ERISA does not allow a state to compel a self-insured group health plan to compile and report medical claims data for inclusion in a state-wide all-payer health care database, the U.S. Supreme Court has ruled in a landmark decision.

In Gobeille v. Liberty Mutual Insurance Co., the Supreme Court backed the contention of Liberty Mutual Insurance Co., sponsor of a self-insured group health plan covering thousands of lives in all 50 states, that Vermont’s requirement that it report medical claims data was unlawful and contrary to ERISA’s objective that employers be able to administer benefit plans in a uniform manner across state lines.

This is the latest in a long line of cases interpreting the scope of ERISA’s pre-emption of state law. A cornerstone of ERISA is that its substantive requirements constitute a uniform national law governing the administration of employee benefit plans, intended to allow plans to operate nationally without having to conform to a patchwork of conflicting state regulations. While ERISA does not preempt all state laws that could affect a benefit plan’s administration, the Court found that reporting, disclosure, and recordkeeping are ”principal and essential” features of ERISA’s uniform plan administration system and that Congress intended to preempt state data reporting laws, like Vermont’s. Although it recognized that Vermont’s purpose for requiring the data is unrelated to the purposes for which ERISA requires recordkeeping and reporting, the Court nonetheless viewed the law as inconsistent with ERISA’s uniform national scheme for ERISA recordkeeping and reporting.

The Court’s decision strikes a blow at state efforts to accumulate all-payer data to ascertain patterns of health care utilization, expenditures, and performance, and to identify reforms that may be effective in reducing health care costs. Vermont is one of 18 states that impose medical claims data reporting on health insurers. The Court’s decision will likely restrict the application of all such laws to self-insured group health plans and their third-party administrators.

The Court essentially adopted a bright-line rule that, at least with respect to recordkeeping and reporting, a plan’s burden is to be determined at the federal level, without regard to the actual additional burden imposed on the plan by the state law requirement.

The Court noted that ERISA imposes extensive reporting, disclosure, and recordkeeping requirements on plans, and empowers the Department of Labor to establish additional reporting and disclosure requirements, including the provision of data for statistical and research purposes similar to the purpose of the Vermont law. In a concurring opinion, Justice Breyer suggested that, while states cannot interfere with ERISA’s uniform scheme for benefit plan reporting, the Department of Labor may exercise its authority under ERISA to impose additional data reporting requirements at the federal level or even delegate the authority to collect relevant data to the state.

Attorneys in Ballard Spahr’s Employee Benefits and Executive Compensation Group assist employers with facilities in multiple states in designing and administering employee benefit plans. If you have questions about the Supreme Court’s decision and its implications, please contact the authors of this alert.