STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6252

October 18, 1984

LABOR AND EMPLOYMENT:

Obligation of employer to provide unrestricted health care plan to employees

STATUTES:

Federal preemption of requirement that employers provide unrestricted health care plan

Legislation which would require employers to provide unrestricted health care plans would apply to those employers only who are exempt from the provisions of the Federal Employee Retirement Income Security Act (ERISA).

Hon. Richard D. Fessler

State Senator

The Capitol

Lansing, Michigan

You have asked my opinion whether 1984 Senate Bill No. 814 is 'unconstitutional' in light of federal regulation of employee benefit plans.

SB 814 requires employers who provide 'restricted health care plans' to also offer their employees the option of an 'unrestricted health care plan.' An 'unrestricted health care plan' permits a covered person to obtain health care from any health care provider licensed to provide the service.

The Employee Retirement Income Security Act of 1974, hereafter ERISA, Title I, Sec. 2 et seq; 88 Stat 832 (1974); 29 USC 1001 et seq, provides comprehensive federal regulation of employee benefit plans, including any plan established or maintained by an employer for the purpose of providing, inter alia, medical, surgical, or hospital care or benefits. 29 USC 1002(1).

ERISA provides for broad federal preemption of state laws which 'relate to' employee benefit plans. Section 514(a) of Title I of ERISA states:

29 USC 1144(a).

In Shaw v Delta Air Lines, Inc, ---- US ----; 103 S Ct 2890, 2900; 77 L Ed 2d 490, 501 (1983), interpreting this language, it was held that very broadly '[a] law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.'

Clearly SB 814 'relates to' employee benefit plans since its purpose is to prevent the exclusive offer of restricted health care plans. Thus, it would be preempted by ERISA unless it comes within the exceptions provided by the balance of ERISA, Sec. 514, supra.

The only possible exception to preemption which may apply to SB 814 is found in section 514(b)(2)(A) of ERISA, supra, which provides that any state law which regulates insurance is not preempted. 29 USC 1144(b)(2)(A). However, this exception has uniformly been found not applicable to statutes which apply to all employers, as would SB 814, in contrast with state insurance regulatory statutes, which are limited by their terms to insurance companies. See, e.g., Hewlett-Packard Co v Barnes, 425 F Supp 1294 (ND CA, 1977) aff'd 571 F2d 502 (CA 9, 1978), cert den 439 US 831, 99 S Ct 108; 58 L Ed 2d 125 (1978); Standard Oil Co of California v Agsalud, 633 F2d 760 (CA 9, 1980), aff'd 454 US 801; 102 SC 79; 70 L Ed 2d 75 (1981); General Split Corp v Mitchell, 523 F Supp 427 (ED Wis, 1981); and Dawson v Whaland, 529 F Supp 626 (NH, 1982).

However, this is not to say that SB 814 is 'unconstitutional.' ERISA preempts state law only 'insofar as it . . . relate[s] to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.' 29 USC 1144(a). Therefore, if SB 814 were to become law, in the form as introduced, it would be preempted by ERISA from application to employee benefit plans covered by ERISA, but would apply to employee benefit plans not subject to ERISA. It is to be noted that employee benefit plans established and maintained by a state or any political subdivision of a state, or any agency or instrumentality thereof, are not subject to ERISA. 29 USC 1003(b)(1) and 29 USC 1002(32). Similarly, church plans are not subject to ERISA. 29 USC 1003(b)(2) and 1002(33). The other exempted plans are described in ERISA Sec. 402, 29 USC 1003.

It is my opinion, therefore, that although ERISA preempts SB 814, as introduced, insofar as it relates to any employee benefit plan covered by ERISA, it is not thereby unconstitutional per se, and, accordingly, would be applicable to those employee benefit plans exempted from ERISA.

Frank J. Kelley