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Federal pre-emption cases on upcoming Supreme Court docket

Few other business cases placed on the docket

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Federal pre-emption cases on upcoming Supreme Court docket

WASHINGTON—The U.S. Supreme Court opens its October term Monday with a docket unusually light on risk management- and insurance-related cases.

In fact, the docket contains relatively few business-related cases, as Robin Conrad, executive vp of the Washington-based National Chamber Litigation Center Inc., which handles litigation for the U.S. Chamber of Commerce, noted in a pre-term briefing late last month. As of late September, only 41% of the high court's docket consisted of business-related cases, compared with 45% at the same time last year.

Overshadowing risk management-related cases is the possibility that the high court will accept a case that could determine whether the health care reform law's requirement that individuals purchase health insurance can pass constitutional muster. The Obama administration last week declined to ask the full 11th U.S. Circuit Court of Appeals to review a 2-1 decision by a three-judge panel of that court in August that declared the provision unconstitutional. That opened the way for possible Supreme Court review, which the Obama administration requested last week.

But issues that have drawn risk management and insurer attention in past terms, such as limits on punitive damages, do not appear on the court's current docket.

However, the court will decide at least three cases dealing with federal pre-emption of state law. One of the most closely watched is a consolidated case from California known as Toby Douglas, Director, California Department of Health Care Services vs. Independent Living Center of Southern California Inc. et al., involving the federal Medicaid Act. The case, oral arguments of which are scheduled for Monday, is the first case the Supreme Court will hear this term.

Under the Medicaid Act enacted in 1965, states receive federal money to provide medical care for needy people. States that accept the money have to comply with certain federal regulations. California accepted the money, but then promulgated statutes that reduced payment rates to providers under the state's Medicaid program.

At issue in the case, and the other two with which it was consolidated—Douglas vs. the California Pharmacists Assn. et al. and Douglas vs. Santa Rosa Memorial Hospital et al.—is the scope of federal pre-emption of state law. The case revolves around whether the U.S. Constitution's supremacy clause allows the Medicaid providers and recipients affected by the rate reductions to seek injunctive relief on pre-emption grounds, and whether the California statutes that imposed the rate reductions conflict with the federal Medicaid Act and are therefore pre-empted by it.

Ms. Conrad said the issue of pre-emption is “all about preventing regulatory Balkanization.”

The other cases involving federal pre-emption issues are Gloria Kurns vs. Railroad Friction Products Corp. and National Meat Assn. vs. Kamala Harris. At question in Kurns is whether federal railroad safety acts—notably the Locomotive Inspection Act of 1911—pre-empt state tort law claims for failure to warn and design defects against manufacturers for parts that cause injury to workers repairing trains in maintenance shops. National Meat asks whether the Federal Meat Inspection Act pre-empts a California statute that prohibits the processing of “non-ambulatory swine.”

The court will deal with arbitration yet again in CompuCredit Corp. et al. vs. Wanda Greenwood et al. At issue is whether claims arising under the Credit Repair Organizations Act are subject to arbitration pursuant to a valid arbitration agreement.

The high court also agreed last week to determine the amount of weekly disability benefits employers are liable for under the Longshore and Harbor Workers' Compensation Act. Under the federal law, compensation for disabled maritime workers is capped at twice the fiscal year's national average weekly wage as determined by the U.S. Secretary of Labor. In Dana Roberts vs. Sea-Land Services Inc. et al., the Supreme Court will determine whether the national average wage provision applies for the year during which an employee suffers a disabling injury or for the year during which a formal compensation order is issued.