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Supreme Court allows states to enact price controls for ERISA

| Dec 22, 2020 | ERISA Benefits

With all the news lately, one may have missed the recent ERISA Supreme Court decision. Specifically, it found a recent effort by Alabama to reduce ERISA prescription drug prices was legal and enforceable.

ERISA

As a primer, the Employee Retirement Income Security Act of 1974 is a federal law that covers employer provider retirement and health plans. It sets the minimum standards and provides protections for individuals covered by these plans.

The court case

In Rutledge v. Pharmaceutical Care Mgt. Assoc., 2020 WL 7250098 (Dec. 10, 2020), the Supreme Court held that, while ERISA has a broad preemption component, it does not preempt states’ ability to lower pricing. In that case, the Alabama court sought to lower prescription drug prices. The insurance industry argued that the state did not have that ability because ERISA controlled prescription drug pricing. The Court held that ERISA is primarily concerned with preempting laws that require providers to structure benefit plans in particular ways, such as by requiring payment of specific benefits. Though, ERISA does not pre-empt state rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substantive coverage.

Why does this matter?

For those in the Washington, D.C., metro area, with ERISA claims, this Supreme Court holding will likely not affect them. However, it does provide another example of how ERISA laws are constantly changing, including at the state level. This is important because it drives the point home that when one has an ERISA claim, they should contact an attorney immediately. The attorney can help one navigate the system to ensure one’s rights are protected, and the claimant gets all of their entitlements.

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