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SIIA Describes NCOIL Model Law As Violation of ERISA Preemption
WASHINGTON, D.C., October 24, 2008 – The Self-Insurance Institute of America, Inc. (SIIA) today described a model law that is intended for possible adoption by states as a “violation of the federal preemption clearly intended for self-insured employee group health plans under ERISA,” according to Dick Goff, President of SIIA.
The model law relating to contracting provisions between PPO networks and providers was approved this week by the Health, Long-Term Care, Health Retirement Issues Committee of the National Conference of Insurance Legislators (NCOIL) for possible ratification by the full NCOIL membership. The committee approved the model law without exclusion for self-insured ERISA plans as requested by SIIA and which would be necessary to comply with Federal law.
“ERISA clearly prohibits any state laws that relate to employee benefit plans operated under ERISA,” Goff said. “We don’t understand why this advisory organization would controversially attempt to overturn federal law that has been repeatedly upheld by the courts. They would be putting state legislatures that adopt this model law at risk of facing immediate legal challenges,” Goff added.
The now controversial model is apparently intended to satisfy concerns by special interests representing factions of the medical provider community over the use of PPO “rental networks.” Some medical providers asked for regulation of so-called “silent PPOs” that may be formed when a PPO sells or rents negotiated discounts to non-related third parties such as TPAs, which are then able to utilize the discounts in providing administrative services to their clients.
“Some in the medical community voiced their opinion that regulating contracts of self-insured employee group health plans would not be a violation of ERISA, but that is clearly not the case,” Goff said. “Citing clear Congressional intent, Federal courts, including the Supreme Court, have maintained a broad interpretation of ERISA’s preemption of state laws,” he said. He cited the case of Shaw v. Delta Air Lines, Inc. in which Supreme Court said ERISA preempts any state law “having a connection with or referring to” an employee benefit plan. The Court upheld this standard in DC v. Washington Board of Trade, and further maintained the intent of national uniformity in Egelhoff v. Egelhoff.
SIIA is a non-profit trade association that represents companies involved in the self-insurance/ART industry. Information about the organization is available at www.siia.org. ### |
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