ERISA Preemption in New York

What Is ERISA Preemption?

Background

“Congress enacted ERISA in 1974 ‘to safeguard employees from the abuse and mismanagement of funds that had been accumulated to finance various types of employee benefits.’” (Harvey v. Members Employees Trust for Retail Outlets (2001) 96 N.Y.2d 99, 105-06 citing James v. Fleet/Norstar Financial Group, Inc. (1993) 992 F.2d 463, 465 [2d Cir.]).

ERISA is intended “to provide a uniform regulatory regime over employee benefit plans.” (Aetna Health Inc. v Davila (2004) 542 US 200, 208, quoting 29 USC § 1001 [b].)

“To this end, ERISA includes expansive pre-emption provisions ..., which are intended to ensure that employee benefit plan regulation would be exclusively a federal concern.” (Id.) “In particular, the provisions of ERISA ‘shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.’” (29 USC § 1144 [a].)

“Additional preemptive force is found in ERISA's " ‘comprehensive legislative scheme,’ which includes ‘an integrated system of procedures for enforcement.’”(Davila, supra, 542 US at 208, quoting Massachusetts Mut. Life Ins. Co. v Russell (1985) 473 US 134, 147.) ERISA preemption “is deliberately expansive, and designed ‘to establish pension plan regulation as exclusively a federal concern.’” (Rockmore v. Plastic Surgery Assocs., LLP (2020) 69 Misc. 3d 1222; Pilot Life Ins. Co. v. Dedeaux (1987) 481 US 41, 45-46, quoting Alessi v Raybestos-Manhattan, Inc. (1981) 451 US 504, 523.)

ERISA “does not go about protecting plan participants and their beneficiaries by requiring employers to provide any given set of minimum benefits.” (New York State Conference of Blue Cross Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 651.) “Rather, it ‘controls the administration of benefit plans’ by imposing, among other things, ‘reporting and disclosure mandates ... and fiduciary responsibilities for plan administrators.’” (Id.)

General Information for Complaints and Motions

Regarding “‘ERISA preemption’ OR ‘ERISA provisions’, ERISA provides an extensive and complex pre-emption scheme to facilitate the maintenance of a uniform national law governing employee benefit plan administration. The pre-emption provisions allow plan fiduciaries to administer employee benefit plans uniformly across State lines based upon the governing documents and instruments, while still allowing certain incidental State regulation of plans.” (Harvey v. Members Employees Trust for Retail Outlets (2001) 96 N.Y.2d 99, 105-06.)

State Law and ERISA Conflict

“[A]ny 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.” (Rockmore v. Plastic Surgery Assocs., LLP (2020) 69 Misc. 3d 1222.) Indeed, “the ERISA civil enforcement mechanism is one of those provisions with such ‘extraordinary pre-emptive power’ that it ‘converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule’” (Id., quoting Metropolitan Life Ins. Co. v. Taylor (1987) 481 US 58, 65-66.) This is referred to as complete preemption.(Id.)

Two-prong Test for ERISA Preemption

There is a two-prong test for assessing whether a state-law claim is completely preempted by ERISA.

preemption will be found if:

the person suing could have brought the claim under ERISA, and
no legal duty independent of the ERISA or the plan is alleged to have been violated.

(Rockmore, supra, id. citing Aetna Health Inc. v. Davila (2004) 542 U.S. 200, 209.)

In applying the first prong, courts must “consider whether the plaintiff is the type of party that can bring a claim pursuant to [ERISA]; and second, ... whether the actual claim that the plaintiff asserts can be construed as a colorable claim for benefits pursuant to [ERISA].” (Id.; see also, Montefiore Med. Ctr. v. Teamsters Local 272 (2011) 642 F3d 321, 328 [2d Cir.])

Conflict Preemption

The second form of ERISA preemption is known as conflict preemption. Under this doctrine, a state-law claim is preempted insofar as it “relate[s] to any employee benefit plan” subject to ERISA. ( 29 USC § 1144 [a] ). “Additionally, under the doctrine of conflict preemption, state laws that conflict with federal laws are preempted, and preemption is asserted as a federal defense to the ... suit.” (Montefiore Med. Ctr. v Local 272 Welfare Fund, 2018 WL 1665645, *9, 2018 US Dist LEXIS 28019, *28 [SD NY, Feb. 20, 2018, No. 09-CV-3096 (RA/SN)].)

Preemption of State Medical Malpractice Claims

“Nothing in the ERISA preemption provision suggests that it was designed to abrogate supervision of the practice of medicine by the several States.” (Nealy v. US Healthcare HMO (1999) 93 N.Y.2d 209,217-218.) “To the contrary, ‘[q]uality control of plan benefits received by participants ... ‘is a field traditionally occupied by state regulation (Jones v. U.S. Healthcare (2001)282 A.D.2d 347,358-59.) “As the Supreme Court has made clear, its decision in New York State Conference of Blue Cross Blue Shield Plans v. Travelers Ins. Co. [514 U.S. 645, 654-655] held that ‘health care [is] a subject of traditional state regulation’, indicating that ERISA does not preempt State medical malpractice claims absent ‘clear manifestation of congressional purpose.’” (Jones, 282 A.D.2d, at 359 citing id.)

ERISA in Relation to State Law

The Supreme Court of the United States has held that a State law relates to an ERISA plan ‘if it has a connection with or reference to such a plan.’” (Shaw v. Delta Air Lines, Inc. (1983) 463 U.S. 85, 97.) The forbidden connection has been found in State mandates that impose a particular benefit structure on ERISA -covered employee benefit plans. (See, Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 [“[T]he mandated benefit law as applied relates to ERISA plans and thus is covered by ERISA's broad pre-emption provision”];Harvey v. Members Employees Trust for Retail Outlets (2001) 96 N.Y.2d 99, 106 [finding “Insurance Law § 3221 ( l)(6)(A) and 11 NYCRR 52.16 (c) apparently have a ‘connection with’ the [defendant's] employee benefit plan because they similarly impose a basic benefit structure by dictating that the plan provide coverage for alcohol-related illnesses.”])

The Court’s Decision

New York Appellate courts “agree with the majority of Federal Courts which have decided the issue and have determined that ‘[p]olicies derived from ERISA plans continue to be governed by ERISA even after conversion upon termination of employment.’” (Logan v. Empire Blue Cross (2000) 275 A.D.2d 187, 19.)

ERISA's Anti-Alienation Provision

“The Court of Appeals has made clear that ‘[j]ust as ERISA's anti-alienation provisions do not preempt a valid QDRO from effecting a beneficiary designation, those provisions do not prevent a valid waiver of beneficiary interests.’” (In re Christie (2017) 59 N.Y.S.3d 421, 424 citing Silber v. Silber,99 N.Y.2d at 402, 757 N.Y.S.2d 227, 786 N.E.2d 1263 ).

Thus, “a claim of waiver can be asserted against a designated beneficiary" of survivor benefits under a pension plan provided that the waiver is ‘explicit, voluntary and made in good faith.’” (In re Christie (2017) 59 N.Y.S.3d 421, 424 citing Silber, id., at 404.)

Documents for ERISA Preemption in New York

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Fintegra Llc v. Digital Brewery Llc D/B/A DIGITAL BREWERY D/B/A DBNY, Amlan Das document preview

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FILED: NASSAU COUNTY CLERK 05/18/2024 11:53 AM INDEX NO. 608601/2024 NYSCEF DOC. NO. 5 RECEIVED NYSCEF: 05/18/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU _______________________________________________ FINTEGRA LLC, DEFENDANTS’ FIRST …

Case Name Fintegra Llc v. Digital Brewery Llc D/B/A DIGITAL BREWERY D/B/A DBNY, Amla…