America's Health Insurance Plans v. Ralph Hudgens
742 F.3d 1319
11th Cir.2014Background
- Georgia enacted the Insurance Delivery Enhancement Act of 2011 (IDEA), which amended Georgia’s Prompt Pay laws to (a) expand licensure to include third-party administrators (TPAs) of self-funded employer health plans, and (b) impose timing, interest, reporting, and penalty requirements for claim processing and payment.
- The 1999 Prompt Pay law had expressly excluded ERISA-governed self-funded plans and their administrators; IDEA removed that exclusion and added self-funded plans/TPAs into the statutory definitions and obligations.
- America’s Health Insurance Plans (AHIP), representing insurers and TPAs that administer self-funded ERISA plans, sued the Georgia Commissioner seeking a declaratory judgment that Sections 4–6 of IDEA, as applied to self-funded plans/TPAs, are preempted by ERISA and moved for a preliminary injunction to block enforcement before the statutes’ effective date.
- The U.S. District Court for the Northern District of Georgia preliminarily enjoined enforcement, finding the IDEA provisions preempted by ERISA § 514; the State appealed. The Eleventh Circuit affirmed.
- Key contested procedural issues were standing (AHIP asserted associational standing on imminent injury to members) and whether the Tax Injunction Act barred federal review; the court held AHIP had standing and the Act did not apply because IDEA is regulatory, not a tax.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AHIP has associational standing to challenge IDEA | AHIP: its members face imminent choice to comply (incurring costs) or face penalties; Commissioner publicly announced enforcement | Commissioner: AHIP’s evidence (Donahue decl.) is insufficient and discovery on standing was needed | AHIP has standing; district court did not err in denying discovery on standing |
| Whether the Tax Injunction Act bars the suit | AHIP: IDEA is regulatory, not a tax, so the Act does not apply | Commissioner: fees/fines are like taxes and can be litigated in state courts | Tax Injunction Act does not apply because IDEA is regulatory in purpose |
| Whether Sections 4–6 of IDEA are preempted by ERISA § 514 (express preemption) because they "relate to" ERISA plans | AHIP: IDEA’s timeliness, notice, penalty and administrator-licensing provisions have a connection with self-funded ERISA plans and interfere with ERISA’s uniform administrative scheme | Commissioner: IDEA is procedural and regulates TPAs/providers (non‑ERISA entities), so it does not "relate to" ERISA plans or unduly affect plan uniformity | IDEA Sections 4–6 "relate to" ERISA plans; they are preempted under § 514 because the Deemer Clause prevents state regulation of self-funded ERISA plans via insurance laws |
| Whether the Saving Clause saves IDEA from preemption (and whether the Deemer Clause defeats the Saving Clause) | AHIP: even if IDEA regulates insurance, the Saving Clause applies and protects the law | Commissioner: IDEA regulates insurance and therefore falls within the Saving Clause; Deemer Clause should not apply | Even assuming the Saving Clause applies, the Deemer Clause bars state regulation of self-funded ERISA plans; IDEA is preempted |
Key Cases Cited
- Egelhoff v. Egelhoff, 532 U.S. 141 (superseding state law that interferes with ERISA uniform plan administration)
- Shaw v. Delta Air Lines, 463 U.S. 85 (state law "relates to" ERISA if it has a connection with or reference to a plan)
- Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (ERISA goal of uniform administrative scheme)
- Ky. Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329 (test for when a state law "regulates insurance" under the Saving Clause)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (explaining relationship among preemption, Saving Clause, and Deemer Clause)
- Jones v. LMR Int’l, Inc., 457 F.3d 1174 (11th Cir.) (state law affecting relations among ERISA entities is preempted)