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Paul Zimmerman

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Supreme Court Protects Health Insurers From Onerous State Claims Reporting

On Tuesday, March 1, 2016, the Supreme Court issued a ruling in Gobeille v. Liberty Mutual, finding that states do not have the authority to require self-insured plans (like Liberty Mutual Insurance Co.) to collect and report data on health care costs, prices, quality, and the use of services to the state. My colleague Andrew H. Selesnick, had earlier posted a blog spotlighting the oral argument before the Supreme Court in the case. 

In Gobeille, Vermont and other states attempted to require insurance companies (including self-insured plans), to collect and report data regarding their health care costs, and provide that data to the states. The states would create a statewide database, termed an all-payer claims database (APCD).

Liberty Mutual, which operates a self-insured plan, argued that its plan was already subject to reporting requirements under the federal Employee Retirement Income Security Act (ERISA) and, therefore, a state cannot impose such a burden on ERISA plans. Essentially, Liberty argued that ERISA reporting to the federal government is extensive and integral to ERISA plans, while Vermont’s law would intrude on a fundamental ERISA function.

The courts agreed. The Second Circuit Appeals court sided with Liberty, and in a 6-2 decision, the Supreme Court affirmed the decision. Justice Anthony Kennedy wrote for the majority, with Justice Ruth Bader Ginsburg and Justice Sonia Sotomayor dissenting. The Court concluded that ERISA’s reporting requirement was designed to protect insurance companies from having to navigate a patchwork of onerous state regulations. The Court reasoned that Vermont’s APCD requirements are inconsistent with ERISA’s aim of providing a “single uniform national scheme for the administration of ERISA plans without interference from laws of the several States even when those laws, to a large extent, impose parallel requirements.”

This decision represents a major challenge to the operation of APCDs in the United States. Prior to the decision, eighteen states had or were implementing similar databases. States and healthcare professionals believe the databases are significant tools in health care cost control. In addition to health care price, quality, and utilization data for each patient encounter, some APCDs gather data on patient demographics, diagnoses, services rendered, charges, payments, and procedure codes.

Critics of the Court’s decision note that a lack of health insurance data transparency may result in an incomplete picture of health care spending and utilization, thus stalling industry research and potential reform. As I wrote in an earlier blog post, recent studies have shown that Medicare data alone provides only a partial view of healthcare spending and costs. 

For the future, it is unlikely that the nation’s private insurance companies will voluntarily submit information to state databases, at least in part, to support such research. However, both private health insurers and providers should anticipate a response from the states, as many states have indicated that they find such data both valuable and critical. Thus, states may get creative in how they obtain healthcare data, for example, requesting data information directly from providers. Expect to see policy changes flowing from this decision.

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.