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ERISA does not pre-empt Michigan tax on health claims: Court


A 2011 Michigan law that imposes a 1% tax on paid health care claims is not pre-empted by the federal Employee Retirement Income Security Act, a federal appeals court has ruled.

Under that law, revenue generated by the tax, which is used to help fund the state's Medicaid program, is paid by health insurers offering fully insured plans and by third-party claims administrators in the case of self-insured plans.

The Self-Insurance Institute of America Inc. challenged the 2011 law, arguing that it is barred by a provision in the federal Employee Retirement Income Security Act that pre-empts state and local laws and rules that relate to employee benefit plans.

But first a U.S. District Court judge and now the 6th U.S. Circuit Court of Appeals in Cincinnati disagreed.

“For all of the pages that SIIA devotes to documenting ERISA's concern with uniformity, SIIA never actually explains how the (Michigan) act changes or interferes with plan administration,” according to Monday's 6th Circuit unanimous decision by a three-judge panel. “In reality, the act does not require a plan administrator to change how it administers the plan at all, and, thus, this argument fails,” according to the decision, which was written by Judge Karen Nelson Moore.

“SIIA fails to grasp that ERISA guarantees uniformity only with regard to the administration of employee benefit plans. Neither the (Michigan) act's definition of paid claims nor its reporting and record-keeping requirements conflict with” plan administrators' standard claims processing procedures and disbursement of benefits, the appeals court said.

SIIA President and CEO Mike Ferguson said the association is disappointed by the ruling and may appeal.

“On behalf of the many self-insured employer and Taft-Hartley plans adversely impacted by the Michigan law, we are obviously disappointed by the court's ruling and are currently considering an appeal to the U.S. Supreme Court,” he said.