preemption

Every time a federal agency thinks the scope of a preemption clause in federal law is too narrow may it just write a regulation expanding it? That is the heart of the matter in Coventry Health Care of Missouri v. Nevils.

The question of most interest to state and local governments in this case, more technically, is whether Chevron deference applies to an agency’s regulation construing the scope of a statute’s express-preemption provision.

The question in Kindred Nursing Centers v. Clark is whether the Federal Arbitration Act preempts Kentucky’s rule that an “attorney-in-fact” may bind a principal to an arbitration agreement only if the power-of attorney document expressly refers to arbitration agreements.

A number of parents executed power-of-attorney documents designating one of their children “attorney-in-fact.” While some of these documents gave the children broad rights to act on their parent’s behalf (“to do and perform for me in my name all that I might if present”), none explicitly gave their children the authority to agree to arbitration (rather than a jury trial) to resolve disputes regarding their parent’s legal rights.

In a unanimous opinion in Hughes v. Talen Energy Marketing the Supreme Court held that Maryland’s program which guarantees a power plant generator a contractual rate rather than the “clearing price” wholesale rate set at a federally-approved capacity auction is preempted by the Federal Power Act (FPA).

The State and Local Legal Center filed an amicus brief arguing that Maryland’s program should not be preempted. At least one other state, New Jersey, has implemented a similar program.  

The Supreme Court held 6-2 in Gobeille v. Liberty Mutual Insurance Company that the Employee Retirement Income Security Act (ERISA) preempts Vermont’s all-payers claims database (APCD) law. Seventeen other states collect health care claims data. The State and Local Legal Center (SLLC) filed an amicus brief arguing against ERISA preemption, which Justice Ginsburg cited three times in her dissenting opinion.

ERISA applies to the majority of health insurance plans. Rather than guaranteeing substantive benefits, it mandates oversight over plans. ERISA preempts all state laws that “relate” to any employee benefits plan. Vermont’s APCD law requires health insurers to report to the state information related to health care costs, prices, quality, and utilization, among other things.

This term the Supreme Court has taken two cases from California involving arbitration clauses. One has been decided, the other will be decided later this term. Both cases are of interest to states as they involve preemption of state law by the Federal Arbitration Act.

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