For those of you following developments in the health care subrogation arena, the Third Circuit has issued an important opinion reversing a decision reached by a federal district court in New Jersey. The district court had ruled that a New Jersey statute which prohibited the enforcement of health care subrogation claims was saved from preemption under ERISA’s insurance savings clause. The Third Circuit decision–Levine v. United Healthcare Corp.–held that the statute was preempted under ERISA and not “saved” from preemption under the ERISA insurance savings clause. The decision will apparently impact several class action lawsuits which are pending against major health care insurers in New Jersey, brought by plan participants seeking to recover amounts that insurers had recovered from plan participants who in turn had recovered against tortfeasors. The Third Circuit utilized the new factors set forth in the Miller case, and held that the New Jersey statute was not “specifically directed toward entities engaged in insurance” so that it did not fall within the “savings” clause of ERISA:
To avoid ERISA preemption a state law must be “specifically directed” toward the insurance industry. The New Jersey statute is not. Because the New Jersey statute could be applied to any contributor in any civil action, it is merely a statute that has a significant impact on the insurance industry. As in Pilot, this is not sufficient.
There is a very interesting dissent in the case which argued that the New Jersey collateral source statute was a “law specifically directed towards the insurance industry that has some bearing on noninsurers.”
Read more about ERISA preemption in previous posts which you can access here.
Also, you can access the DOL’s Amicus Brief in yet another well-known subrogation case–the QualChoice case–here. This article here from Law.com indicates the QualChoice case is one the U.S. Supreme Court will consider as a possibility for review.