A modest proposal for fixing Gobeille.

I’ve already groused about the Supreme Court’s decision in Liberty Mutual v. Gobeille, which reads ERISA to preempt state laws that ask self-insured plans to share claims data with all-payer claims databases (APCDs). Not only is the decision wrong, but it will hamper price transparency and frustrate health-care research.

Sensitive to the concerns, the Court toyed in its opinion with a workaround. What if the Labor Department collected the claims data itself and then shared it with the states? It’s a nice idea, but it’s got a big problem (as I explained here): the Labor Department has neither the resources nor the desire to run a massive, national claims database.

But is there an easier way? Could the Labor Department restore access to claims data from self-insured plans without creating a gigantic new IT infrastructure?

I think so—and although there are some legal risks, they’re risks worth running. The key to the legal argument is the fact that ERISA delegates to the Labor Department the power to resolve ambiguities about the scope of the statute’s reporting obligations. Among other things, for example, “the Secretary may by regulation exempt any welfare benefit plan from all or part of the reporting and disclosure requirements.”

Drawing on this authority, the agency could, through notice-and-comment rulemaking, clarify that ERISA’s reporting requirements do not extend to the granular price information that Vermont and other states seek to collect. At the same time, the Labor Department could offer its informed, considered view that state laws that seek such information pose no obstacle to achieving the “the objectives of the ERISA statute.”

In the rulemaking, the Labor Departments would have to articulate a safe harbor for permissible state reporting laws. Those that require the reporting of price information would be OK because employers remain free to create whatever sorts of plans they want and administer them how they please. But state laws that ask for anything more would be preempted. Otherwise, 50 different states could adopt 50 different reporting regimes, which would clash with ERISA’s purpose of “provid[ing] a single uniform national scheme for the administration of ERISA plans”

Would this be legal? Could the Labor Department, by regulation, effectively overrule Gobeille? Probably, but it’s not entirely clear. In National Cable & Telecommunications Association v. Brand X, the Supreme Court held that an agency gets Chevron deference when it exercises its delegated power to resolve a statutory ambiguity, even where a court previously construed the statute differently. “Only a judicial precedent holding that the statute unambiguously forecloses the agency’s interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction.”

In other words, the Labor Department unquestionably has the authority under Chevron and Brand X to determine the scope of ERISA’s reporting obligations, whatever the Supreme Court assumed about those obligations in Gobeille. What’s less clear, though, is whether the courts also owe Chevron deference to the Labor Department’s conclusion that ERISA doesn’t preempt state laws requiring the reporting of price information. (Breyer and Scalia sparred over that very question at oral argument.)

In the past, the Court has suggested that such deference would be appropriate. In 1988, for example, the Court held that,

even in the area of pre-emption, if the agency’s choice to pre-empt [or not, as the case may be] represents a reasonable accommodation of conflicting policies that were committed to the agency’s care by the statute, we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned.

More recently, however, the Court has been coy, saying that agency decisions about preemption are entitled to “some weight,” without saying how much. After all, who better than the agency to resolve hard preemption questions?

Congress has delegated to [the agency] authority to implement the statute; the subject matter is technical; and the relevant history and background are complex and extensive. The agency is likely to have a thorough understanding of its own regulation and its objectives and is uniquely qualified to comprehend the likely impact of state requirements. * * * In these circumstances, the agency’s own views should make a difference.

But how big a difference? Enough for the courts to give Chevron deference to Labor’s preemption determination, even if that determination runs contrary to the Supreme Court’s own conclusion in Gobeille? Or are questions about preemption ultimately for the courts to resolve, not federal agencies?

That’s a tough question. But agencies have an excellent track record when it comes to defending their preemption determinations in court. This is a fight the administration could win. Given the stakes, why not take a shot?


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