U.S. top court rules for Liberty Mutual over Vermont healthcare law

[March 02, 2016]  By Lawrence Hurley

WASHINGTON (Reuters) - The U.S. Supreme Court on Tuesday ruled that Vermont cannot compel health insurers to hand over data on the amount paid on medical claims, backing Liberty Mutual Insurance Co's [LBRTLI.UL] contention that federal law prohibited such requirements.

The court, in a 6-2 decision, found that a 2005 Vermont data collection law that was aimed at improving the quality of healthcare did not apply to self-funded insurance plans, which are most commonly used by large companies, and ran afoul of the U.S. Employee Retirement Security Act (ERISA).

The ruling is likely to put limits on similar laws in 17 other states.

The decision was one of two issued by the court on its first day of rulings since the Feb. 13 death of Justice Antonin Scalia.

Writing for the court's majority, conservative Justice Anthony Kennedy said that "reporting, disclosure and record-keeping are central to, and an essential part" of the federal law, meaning that it trumps the state's efforts to legislate on the same issue.

"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," Kennedy added.

Two of the court's liberal justices, Ruth Bader Ginsburg and Sonia Sotomayor, dissented.

Liberty Mutual, which runs a self-funded plan administered by Blue Cross Blue Shield of Massachusetts, had challenged a request made under the law. The company said the ERISA law exempted it from such requirements.

The Vermont law mandated that insurers provide the state data on the types of healthcare services they paid for and how much they paid in a bid to keep healthcare costs under control and improve the quality of care.

Vermont is one of 18 states with a data collection law.

Liberty Mutual and its supporters argued that such requirements were a particular problem for companies that operate nationally because they must meet multiple different mandates. The ERISA law is intended to protect employers from a patchwork of burdensome state regulations, Liberty Mutual said.

A federal appeals court backed Liberty Mutual's challenge to the Vermont law.

Self-funded plans provide insurance for 93 million Americans, according to the American Benefits Council. They are an alternative to plans in which companies contract with insurance companies, which assume the risk.

The Obama administration had supported Vermont in the case.

The case is Gobeille v. Liberty Mutual, U.S. Supreme Court, No. 14-181.

(Reporting by Lawrence Hurley; Editing by Will Dunham)

[© 2016 Thomson Reuters. All rights reserved.]

Copyright 2016 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.