842 F. Supp. 2d 373
D. Me.2012Background
- MEABT is a Maine VEBA health plan formed in 1993 by MEA, governed by a nine-member board of trustees, and covers about 65,000 individuals statewide.
- MEABT insures participants via Anthem under a July 1, 2011–June 30, 2012 contract; MEABT itself determines eligibility through local labor contracts and bargaining units.
- MEABT uses community-rated pricing to pool risk across districts, subsidized by better-risk participants, and avoids district-by-district experience rating.
- Loss information and claims history are treated as confidential assets of the Trust; Anthem is contractually barred from releasing district-specific loss data without MEABT's consent; MEABT asserts ownership and trade-secret status over such data.
- LD 1326 (An Act to Allow School Administrative Units to Seek Less Expensive Health Insurance Alternatives) was enacted June 2011 and amended sections 2803-A and 1001(14)(D) to mandate district access to loss information for bids, potentially fragmenting the MEABT pool.
- MEABT filed suit on October 12, 2011 seeking a declaration that LD 1326 is invalid; the Amended Complaint asserts five counts, with Counts I, III, IV targeted by the motion to dismiss, and Count II and V remaining at issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ERISA express preemption vs savings clause | MEABT argues LD 1326 improperly saves a state insurance law from ERISA preemption | Cioppa contends the law regulates insurers and affects risk pooling, thus saved by the savings clause | LD 1326 saved from express preemption under ERISA |
| ERISA conflict preemption with HIPAA § 1182 | LD 1326 conflicts with HIPAA's non-discrimination provisions | MEABT can comply with both § 1182 and Maine loss-data statutes; no genuine conflict | LD 1326 not preempted by conflict preemption; no plausible impediment to federal objectives |
| Substantive due process challenge to LD 1326 | Plaintiffs allege LD 1326 is arbitrary and irrational in regulating health insurance | Legislation affecting insurance regulation is entitled to rational basis review | LD 1326 passes minimal rationality; due process claim dismissed |
| Contract Clause impairment (Contract with Anthem) | LD 1326 impairs MEABT's contracts to obtain and control loss data | Regulated insurance context allows reasonable public purpose and minimal impairment | No substantial impairment; Contract Clause claim dismissed |
Key Cases Cited
- Kentucky Ass'n of Health Plans v. Miller, 538 U.S. 329 (2003) (savings clause; regulation of insurers may save state law from preemption)
- Barber v. Unum Life Ins. Co., 383 F.3d 134 (3d Cir. 2004) (remedial nature of bad-faith statute; not controlling here)
- Spellman v. United Parcel Service, Inc., 540 F.Supp.2d 237 (D.Me. 2008) (insurer regulation with substantial effect on risk pooling)
- Texaco, Inc. v. Short, 454 U.S. 516 (1982) (contracts cannot be impaired if not in existence at enactment)
- Concrete Pipe & Prods. v. Constr. Laborers, 508 U.S. 602 (1993) (substantive due process presumption in economic regulation)
- Tenoco Oil Co. v. Dep’t of Consumer Affairs, 876 F.2d 1013 (1st Cir. 1989) (minimal rationality standard for economic regulation)
- Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1983) (impairment level and public purpose balancing under Contracts Clause)
- Houlton Citizens’ Coalition v. Town of Houlton, 175 F.3d 178 (1st Cir. 1999) (respect for state public purpose; deference to legislative judgment)