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Supreme Court orders review of Michigan law taxing health claims

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The U.S. Supreme Court Monday ordered a federal appeals court to reconsider its ruling upholding a 2011 Michigan law imposing a 1% state tax on paid health care claims for self-insured and other employers.

The Self-Insurance Institute of America petitioned the Supreme Court in December 2014 to overturn the decision earlier that year by the 6th U.S. Circuit of Court of Appeals.

In a brief one-paragraph statement, the nation's high court remanded the Michigan case to the Cincinnati appeals court “for further reconsideration in light of” the justices' 6-2 decision last month overturning a Vermont law requiring employers to turn over health care claims information to the state.

The Vermont law was challenged by Liberty Mutual Insurance Co., which said the requirement ran afoul of the Employee Retirement Income Security Act, which pre-empts state and local laws and rules that “relate” to employee benefit plans.

“The fact that reporting is a principal and essential feature of ERISA demonstrates that Congress intended to pre-empt state reporting laws like Vermont's,” Justice Anthony Kennedy wrote in the case brought by Liberty Mutual, which self-funds its health care plans.

Like Vermont's statute, the Michigan law also was challenged on ERISA pre-emption grounds.

The Michigan law, “grafts burdensome regulations onto the importation of ERISA health care plans without regard to existing plan requirements and procedures or the additional work and expense” the statute creates, the SIIA wrote in its petition to the high court.

SIIA officials welcomed the high court's move Monday.

“In light of the Liberty Mutual ruling, we think it is much more likely now that the appeals court will find that the Michigan law is pre-empted by ERISA,” SIIA President and CEO Mike Ferguson said in an interview.