SUPREME COURT: Upholds ERISA Preemption In Maryland Case
The U.S. Supreme Court yesterday refused to consider Maryland's "plea that states be allowed to prevent companies from using self-insured health plans to evade state mandates on the type of benefit they must provide," the Baltimore Sun reports. The decision means that Maryland has lost its "bid to regulate the use of so-called 'stop-loss insurance' policies, which are designed to offset unexpected losses in covering health benefits." The state argued that companies were using stop-loss policies to evade "28 specific kinds of benefits" guaranteed under state law. While states "normally have no power to regulate self-insured" plans, the Sun notes that "states are allowed to regulate insurance policies that benefit plans buy to pay off employees' health claims."
To prevent companies from evading state benefit mandates by buying stop-loss policies, Maryland sought to impose a $10,000 minimum on stop-loss insurance claims. But the "4th U.S. Court of Appeals ruled last year that Maryland and other states cannot regulate stop-loss policies" because they fall under the federal Employee Retirement Income Security Act, which protects self-insured benefit plans from state regulation. The Sun reports that "[t]he Supreme Court gave no reason for declining to disturb" the lower court's ruling (Denniston, 6/23).