The State of ERISA after 35 Years: Complex, Yet Arguably Simplistic, Which Federal Statute May Be Unraveled with a Touch of Supreme Common Sense

Article excerpt

  I. Introduction
 II. Generally, ERISA Pre-empts All State Laws That Relate to Employee
     Benefit Plans
III. While Broad in its Reach and Scope, ERISA's Pre-emption Clause Is
     Not Unlimited
 IV. ERISA and the High Court's Own ERISA Pre-emption Jurisprudence
     Has Left Much to be Desired
  V. Conclusion

I. INTRODUCTION

The United States Supreme Court has often observed the federal Employee Retirement Income Security Act is "a comprehensive and reticulated statute," (2) which the United States Congress adopted after a careful, decade-long study of private retirement pension plans. (3) Overall, the purpose of the Employee Retirement Income Security Act of 1974, most commonly known as ERISA, was "to provide a uniform regulatory regime over employee benefit plans." (4) As such, ERISA was enacted as the center piece of federal substantive law to be enforced and, thereafter, developed by the courts, through a federal common law of rights and obligations under ERISA-regulated welfare benefit plans. (5) Although the U.S. Supreme Court has determined that "ERISA's definition of an employee welfare benefit plan is ultimately circular," it has applied a "common [sense] understanding of the word 'plan.'" (6) "The federal Employee Retirement Income Security Act of 1974 ... as amended, 29 U.S.C. [section] 1001 et seq. (ERISA), comprehensively regulates employee pension and welfare plans." (7) An employee welfare-benefit plan or welfare plan is defined as one which provides to employees "medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability or death," whether these benefits are provided "through the purchase of insurance or otherwise." (8)

"In enacting ERISA, Congress's primary concern was with the mismanagement of funds accumulated to finance employee benefits and the failure to pay employees benefits from accumulated funds." (9) Effective January 1, 1975, (10) ERISA was intended to protect both the interests of participants in employee benefit plans and their beneficiaries. (11) "One of the principal goals of ERISA is to enable employers 'to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits.'" (12) In fact, "ERISA requires every employee benefit plan to be established and maintained pursuant to a written instrument, specifying the basis on which payments are made to and from the plan." (13)

   Insofar as Congress's intent, the ERISA

   [F]ederal statute does not go about protecting plan participants
   and their beneficiaries by requiring employers to provide any given
   set of minimum benefits, (14) but instead controls the
   administration of plan benefits as by imposing reporting and
   disclosure mandates, participation and vesting requirements,
   funding standards and fiduciary responsibilities for plan
   administrators. (15)

It is clear that ERISA was also intended to have a federal regulatory effect on "the health care industry, which is, by definition, the realm within which ERISA welfare benefit plans must operate," (16) even though Congress chose not to displace general health care regulation that has historically been a matter of state or local concern. (17) "To this end, ERISA includes expansive preemption provisions, which are intended to ensure that employee benefit plan regulation would be 'exclusively a federal concern.'" (18) "Therefore, any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted." (19) If a state law conflicts with the provisions of ERISA or operates to frustrate its object, that inquiry and affirmative answer, alone, will resolve the case. (20) "In the face of ... direct clash between state law and the provisions and objectives of ERISA, the state law cannot stand. …