Saturday, August 5, 2017
It is one thing for a federal law containing federal remedies for wrongs to preempt state law. It is quite another for a federal law containing no substantive remedies to supplant state law containing substantive remedies. ERISA preemption poses problems in the legal world precisely because so many forms of employee welfare benefit plans cannot be substantively regulated by the states. As a result of ERISA’s substantive emptiness in this respect, employee welfare benefits go substantively unregulated. ERISA preemption is one of the underappreciated reasons (except by “insiders”) for the United States’ inability to achieve modern health care regulation. But except for some esoteric scenarios – such as those in play in the Oklahoma opt-out scenario – ERISA does not cause workers’ compensation regulators too many headaches. The reason? Plans created solely for the purpose of complying with state workers’ compensation laws are not covered by ERISA, and therefore may be regulated by the states.
The Airline Deregulation Act covers air ambulance services. It emptily preempts attempts by state workers’ compensation regulators to set rates—any rates—applicable to the ambulance carriers, who are apparently under the ADA’s jurisdiction. The ADA provides that states “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier ...” 49 U.S.C. § 41713(b). (The “related to” phraseology is reminiscent of ERISA’s preemption provision). In keeping with the Airline Deregulation Act's (ADA’s) aim to achieve maximum reliance on competitive market forces, Congress sought to ensure that the states would not undo federal deregulation with regulation of their own by including a preemption provision prohibiting states from enacting or enforcing any law related to a price, route, or service of an air carrier. Dan's City Used Cars, Inc. v. Pelkey, 569 U.S. 251 (2013). Thus, the ADA’s purpose is explicitly de-regulatory, while it might be argued that ERISA’s preemption of employee welfare benefit plans was less deliberately de-regulatory and motivated more by a desire to avoid conflict between regulatory regimes.
Although the recent air ambulance controversy in Texas, the Air Evac EMS matter, was temporarily grounded in state immunity questions, it underscores two pivotal points respecting all preemption litigation. The first pivotal point has to do with courts’ grappling with preemption provisions that are occasionally startlingly broad. It is interesting to observe avowed judicial textualists arguing that courts should not greet clear statutory language with an “uncritical literalism.” I thought the whole point of textualism is that text should be given its literal meaning if it can be ascertained. One may be perplexed by the phrase “related to,” but the consternation comes from knowing exactly what the words mean.
The second pivotal point has to do with the forum for the resolution of preemption questions. I think it is fair to say that one who intends to rely on preemption as a defense to the imposition of a substantive state remedy would prefer that a federal court decide the case. After all, state courts do not routinely hear preemption cases and may have great respect for their state legislatures’ policy objectives. The problem is that with very few exceptions (one of which is ERISA) preemption claims are “defensive” and may not be used offensively as a vehicle to create federal jurisdiction where none would otherwise exist. Thus, under the “well-pleaded” complaint rule, the plaintiff is master of both the complaint and the forum (federal-state) in which the controversy will be heard. Accordingly, a state court may be placed in the position of deciding (to borrow from a recent example) whether federal immigration law preempts state law. The defendant will not be surprised to hear that the state court’s answer is “no.” (Echoes of the Erie Doctrine here?). So, there is a struggle by the defendant to get into federal court and no effective, predictable way to appeal a determination that the matter must be heard in state court. (The primary exceptions to the rule are ERISA and section 301 LMRA preemption).
But what if one is not the defendant? The gambit in the Air Evac EMS case was for the plaintiff-parties to seek federal preemption by way of declaratory relief in federal court under the authority of Shaw v. Delta Airlines. Does this mean that in every case in which a party would be disallowed a federal court forum as a defendant, it could escape the outcome by becoming a plaintiff in a declaratory action? If so, I am left wondering if the same course might have been followed by Dillard’s. In any event, no doubt to the confusion of many onlookers, the preemption question in Air Evac EMS has not even been reached. There was simply resolution of a threshold jurisdictional question of whether the out-of state plaintiffs could sue state officials under the 11th Amendment. The answer is yes. To explain why will require another post, however, and I have miles to go before I sleep.
Michael C. Duff