Justices Order Second Look at Michigan Health Claims Tax

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

March 7 — Michigan's Health Insurance Claims Assessment Act will get another look by the U.S. Court of Appeals for the Sixth Circuit in light of a recent U.S. Supreme Court decision expanding the scope of ERISA preemption.

In 2014, the Sixth Circuit upheld the Michigan program—which imposes a 1 percent tax on medical claims paid within the state on behalf of state residents—from a legal challenge claiming that it was preempted by the Employee Retirement Income Security Act . On March 7 the Supreme Court ordered the Sixth Circuit to reconsider that decision in light of the high court's March 1 opinion in Gobeille v. Liberty Mut. Ins. Co., 2016 BL 60342 (U.S. 2016) .

In Gobeille, a 6-2 Supreme Court reaffirmed ERISA's broad power to preempt state laws in the course of striking down Vermont's attempt to seek claims data from ERISA-governed health plans.

Tax on Chopping Block

Because Gobeille interpreted ERISA's preemption provision broadly, the Michigan act's days may be numbered.

In particular, although the Michigan act differs from the Vermont program at issue in Gobeille by imposing taxes, both laws require employer-sponsored health plans to keep records of claims paid and submit those records to state authorities.

The Sixth Circuit's eventual reconsideration in this case won't be the first time it has considered the Michigan act in connection with the Vermont program struck down by the Supreme Court.

In its 2014 decision upholding the Michigan tax, the Sixth Circuit specifically distinguished the case from the brewing dispute in Vermont, which at the time had proceeded to an appellate court ruling finding ERISA preemption .

Specifically, the Sixth Circuit said it disagreed with the “literal approach to preemption” used by the U.S. Court of Appeals for the Second Circuit in that case. The Sixth Circuit also distinguished the purposes of the two laws—imposing taxes versus creating a health-care database—and noted that the Vermont program “actually affects the administration of the plans.”

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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