Facts
- Massachusetts enacted Mass. Gen. Laws ch. 175, § 47B, requiring specified minimum inpatient and outpatient mental health benefits in certain group health insurance policies covering Massachusetts residents.
- Metropolitan Life Insurance Company and Travelers Insurance Company issued group health insurance policies in Massachusetts, including policies purchased in connection with employee benefit plans.
- The Commonwealth sued in Massachusetts Superior Court to enforce § 47B against the insurers.
- The trial court issued an injunction requiring the insurers to provide the mandated coverage.
- The insurers contended that § 47B was preempted by ERISA when applied to policies purchased for ERISA-covered employee benefit plans and preempted by the NLRA when applied to policies obtained through collective bargaining agreements.
Issues
- Whether § 47B is preempted by ERISA § 514(a) as a law that “relate[s] to” employee benefit plans, or instead is saved from preemption as a state law that “regulates insurance” under ERISA § 514(b)(2)(A).
- Whether § 47B is preempted by the NLRA because it effectively imposes a substantive term in an area otherwise subject to mandatory collective bargaining.
Decision
- The Supreme Court affirmed the Massachusetts Supreme Judicial Court in a 5–4 decision.
- The Court held that § 47B, as applied to insurance contracts purchased for ERISA plans, is a law that “regulates insurance” within ERISA’s savings clause and is not preempted by ERISA § 514(a).
- The Court held that § 47B is not preempted by the NLRA when applied to insurance policies obtained pursuant to collective bargaining agreements.
- The injunction requiring insurer compliance with § 47B remained in effect.
Legal Principles
- ERISA’s preemption clause is broad, but it is limited by the savings clause preserving state laws that “regulate insurance.”
- Mandated-benefit statutes directed at insurers and the content of insurance policies constitute regulation of insurance for purposes of ERISA’s savings clause.
- ERISA’s deemer clause prevents a state from treating an employee benefit plan itself as an insurer, but it does not bar state regulation of insurers and insurance contracts purchased by ERISA plans.
- In determining whether a law regulates insurance, courts may consider traditional features of insurance regulation, including regulation of policy terms, the insurer-insured relationship, and risk spreading.
- State minimum labor-related standards may apply in unionized settings without NLRA preemption when they do not regulate the collective bargaining process or conflict with federal labor policy.
Conclusion
The Court upheld Massachusetts’s mandated mental health benefits law as applied to insured group policies, concluding it was saved from ERISA preemption as insurance regulation and did not conflict with the NLRA’s collective bargaining framework.