TO: MEMBERS OF THE ASSOCIATION OF BENEFIT ADMINISTRATORS
FROM: BOARD OF DIRECTORS
DATE: February 13, 2023
RE: Tenth Circuit’s U.S. Amicus Request in PCMA v. Mulready —
IMMEDIATE ACTION REQUESTED
We would like to bring to your attention a case on appeal before the 10th Circuit Court of Appeals and ask that your Fund and/or Union and its International take immediate action to request that the US Department of Labor file an amicus brief supporting ERISA preemption in the Mulready case: Pharmaceutical Care Management Association v. Mulready, No. 22-6074. (Also, see link below to Talking Points prepared by the National Labor Alliance of Health Care Coalitions.)
This case involves PCMA’s challenge to certain provisions of Oklahoma’s “Patient’s Right to Pharmacy Choice Act” (“the Oklahoma Law”) that restrict the ability of employers and union sponsors to structure health plans and provider networks that advance their quality, cost, and accessibility goals. Due to the importance of the issues in Mulready, and the significant negative impact that erosion of ERISA preemption would have on worker beneficiaries nationwide, we suggest that you consult with counsel and/or other advisors to inquire whether your Union should reach out to the Department of Labor (“DOL”) asking that it take a position supporting ERISA preemption in Mulready.
Congress enacted ERISA to protect beneficiaries, and ERISA’s preemption provision is intended to prevent states from interfering with the national administration of ERISA plans or intruding on benefit designs. The Oklahoma Law does just that: it restricts core benefit designs, effectively preventing plans from using preferred pharmacy networks, which generate discounted prices for plans and beneficiaries. The Oklahoma Law also forbids payors from offering discounts for employees and their families to encourage use of cost-effective and qualified mail-order and specialty pharmacies. As a concrete example, plans sometimes offer 90-days’ worth of drugs at a 60-days’ price if beneficiaries choose a mail-order pharmacy. This benefit, which is extremely popular with workers, would be eliminated under The Oklahoma Law. Finally, the Oklahoma Law prevents plans from protecting beneficiaries from unethical or noncompliant pharmacists, including those on probation with the State Board of Pharmacy, by requiring network inclusion of their pharmacies.
Therefore, the Oklahoma Law’s challenged provisions operate independently and collectively to restrict core plan structures (i.e., provider networks), thereby inflating costs and administrative burdens for ERISA sponsors, including unions, especially those with multi-state plans. These added administrative costs further threaten ERISA plan beneficiaries, who could face increased premiums and cost-sharing obligations as well as reduced benefits.
The Oklahoma Law’s restrictions on plan benefits are precisely the types of laws that ERISA was intended to preempt. Indeed, the broad language of ERISA’s preemption provision states: “[ERISA] shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. §1144(a) (emphasis added).[1] Therefore, a Court finding in this Mulready case, that the Oklahoma Law is preempted, would not only be in accord with existing law but it would comport with the Supreme Court’s decision in Rutledge v. PCMA,141 S. Ct. 474 (2020), which permitted state cost regulations that do not interfere with core plan structures, such as union health plan – contracted provider networks. Nor would it imperil existing state laws of general application, including those that apply to PBMs, TPAs, service providers, and fully-insured commercial plans that do not regulate fundamental ERISA plan designs.
On the other hand, if DOL was to oppose ERISA preemption in this Mulready case, and the Courts adopt this position, it would have significant impacts not only for union workers and their families in Oklahoma, but nationwide. Indeed, an influx of illegal state regulations affecting ERISA plan provider networks, and other core components of benefit design, could make it highly impracticable or even impossible for employers and unions to sponsor robust plan benefits for their workers. This is exactly what ERISA’s preemption provision was designed to prevent.
Therefore, we respectfully requests that you contact the DOL to encourage them to act to protect union interests by advocating in favor of ERISA preemption in any amicus filed with the 10th Circuit in the Mulready case. Such outreach to the DOL can be made to the Secretary of Labor at the email address below:
The Honorable Martin Walsh
Secretary United States Department of Labor
Executive Secretariat
200 Constitution Avenue, N.W., Room C-2313
Washington, DC 20210
Via E-mail: executivesecretariat@dol.gov
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[1]See also associated US Supreme Court case precedent. For example, Shaw v. Delta Air Lines, 463 U.S. 85, 97 (1983) states ERISA preempts laws which “prohibit [] employers from structuring their employee benefit plans in a [particular] manner.” Indeed, every court to decide the issue has found that Any Willing Provider provisions have an impermissible connection with ERISA. See, e.g., Ky. Ass’n of Health Plans v. Miller, 538 U.S. 329 (2003) (affirming Sixth Circuit judgment finding Kentucky any willing provider (“AWP”) law had an impermissible connection with ERISA plans); CIGNA Healthplan v. La. ex rel. Ieyoub, 82 F.3d 642, 648 (5th Cir. 1996), cert. denied, 519 U.S. 964 (1996). Further, ERISA preempts state laws which regulate central matters of plan administration to ensure national plan uniformity. See Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312, 323 (2016).