Virginia: Special Cases – a Lawyer’s ERISA

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On February 23, 2015, the United States Supreme Court denied writ of certiorari in Wurtz v. The Rawlings Co., LLC, 761 F.3d 232 (2d Cir. 2014), cert. den. No. 14-____ (Feb. 23, 2015). Significantly, that denial upheld the opinion by the Second Circuit Court of Appeal that ERISA does not preempt the state’s anti-subrogation statute. 761 F.3d at 245.

Wurtz principally turns on its interpretation of ERISA’s “insurance saving clause,” ERISA §514(a)-(b), 29 U.S.C. §1144(a)-(b). “ERISA expressly preempts any state law that ‘relate[s] to any employee benefit plan,’ but not if that law ‘regulates insurance’.” 761 F.3d at 240.

Wurtz concluded that New York’s anti-subrogation law, N.Y. Gen. Oblig. Law §5-335, “is ‘saved’ from express preemption as a law that ‘regulates insurance’”. Id. It relied upon the United States Supreme Court’s opinion in FMC Corp. v. Holliday, 498 U.S. 52, 60-61 (1990), which pronounced “there is no dispute that the Pennsylvania [anti-subrogation] law falls within ERISA’s insurance saving clause” and is “saved” from express preemption. 761 F.3d at 240.

Wurtz also found that the state anti-subrogation statute was not subject to “complete preemption”: “ERISA says nothing about subrogation provisions. ERISA neither requires a welfare plan to contain a subrogation clause nor does it bar such clauses or otherwise regulate their content.” Id. at 243, 245.

Wurtz expressly recognizes it “is in some tension with holdings of the Third, Fourth, and Fifth Circuits in similar antisubrogation cases, albeit decided before [Aetna Health, Inc. v. Davila, 542 U.S. 200, 210 (2004)],” including Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278, 291-92 (4th Cir. 2003)(holding a claim under Maryland antisubrogation statute to be completely preempted). Id. at 243-44. It’s time for a Virginia test case in the Fourth Circuit.