WILLIAM S. DUFFEY, JR., District Judge.
This matter is before the Court on Plaintiff's Motion for a Preliminary Injunction [4] and Defendant's Motion to Dismiss Complaint [22].
Plaintiff America's Health Insurance Plans ("AHIP") challenges the validity of certain provisions of Georgia statutes, regulating the timeliness of the payment of claims submitted to "self-funded" employer health benefit plans, on the ground that the statutes are preempted by the federal Employee Retirement Income Security Act of 1974 ("ERISA"). Defendant Ralph T. Hudgens ("Commissioner"), the Georgia Insurance and Fire Safety Commissioner, is sued in his official capacity because he is charged with the enforcement of the challenged statutes.
ERISA is a comprehensive statute that "subjects to federal regulation plans providing employees with fringe benefits." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). See generally ERISA, Pub. L. No. 93-406, 88 Stat. 829 (1974) (codified as amended at 29 U.S.C. §§ 1001-3058). ERISA governs both "pension plans" and "welfare plans," and it is "designed to promote the interests of employees and their beneficiaries in employee benefit plans." Shaw, 463 U.S. at 90, 103 S.Ct. 2890. It achieves its purpose by "set[ting] various uniform standards, including rules concerning reporting, disclosure, and fiduciary responsibility, for both pension and welfare plans." See id. at 91.
Among the "welfare plans" governed by ERISA are health benefit plans (i.e., employer-offered health insurance). See 29 U.S.C. § 1002(1) (2006). There are two general types of employer health benefit plans: "insured" plans and "self-funded" plans. In insured plans, employers purchase a health insurance policy to cover the plan's members. In self-funded plans, employers pay the plan members' claims. See generally David Goldin, Survey, External Review Process Options for Self-Funded Health Insurance Plans, 2011 Colum. Bus. L.Rev. 429, 440-41. ERISA plans are administered by a "fiduciary," which exercises "discretionary authority" over the plan. See 29 U.S.C. § 1002(21)(A). In most cases, the employer offering the plan acts as the "fiduciary." See Baker v. Big Star Div. of the Grand Union Co., 893 F.2d 288, 290 (11th Cir. 1989). An employer who offers a self-funded plan usually contracts with a third-party administrator ("TPA"), often an insurance company, to provide administrative or non-fiduciary services to the plan. Goldin, supra, at 440.
Under the traditional health insurance model, patient-insureds pay premiums, medical providers treat patients and then
Beginning in the early 1980s, state legislatures responded to these insurer late payment tactics with various types of "prompt pay" legislation, including by requiring insurers to pay claims within prescribed time periods or face various penalties.
An "insurer" under the 1999 Prompt Pay Statute included "accident and sickness insurers," and thus applied to the health insurance companies issuing policies to ERISA-regulated insured health plans. See id. § 33-24-59.5(a)(3), (b)(1).
The evidence submitted with the pending motions shows that, from the enactment of the 1999 Prompt Pay Statute to 2011, the percentage of workers covered nationwide by self-funded plans increased from 44% to 60%. (Comm'r's Ex. B[21] at 41; Med. Ass'ns' Ex. C [18-3] at 3.) In Georgia, the percentage now may be as high as 65%. (Med. Ass'ns' Ex. B [18-2] ¶ 19, at 6.) This trend has significantly eroded the number of plans that are subject to the requirements of the 1999 Prompt Pay Statute. (See id.)
In April 2011, to address the eroded application of the 1999 Prompt Pay Statute to payors of healthcare claims, the General Assembly enacted the Insurance Delivery Enhancement Act of 2011 ("IDEA"). IDEA amends a variety of Georgia statutes governing health insurance, including the 1999 Prompt Pay Statute. See Insurance Delivery Enhancement Act of 2011, No. 196, 2011 Ga. Laws 595 [hereinafter IDEA]; see also H.B. 167, 151st Gen. Assemb., Reg. Sess. (Ga. 2011) (showing line-by-line amendments), available at http://www.legis.ga.gov/Legislation/20112012/116210.pdf. Several provisions of Sections 4, 5, and 6 of IDEA, which take effect on January 1, 2013, extend the requirements of the 1999 Prompt Pay Statute to self-funded health plans. See IDEA §§ 4-6, 7(b), 2011 Ga. Laws at 596-600.
Section 4 of IDEA amends Section 33-23-100 of the Georgia Code, a statute governing the licensure of insurance "administrators." The Act expands the definition of "administrator" to include entities that provide claims processing services "on behalf of a single or multiple employer self-insurance health plan." H.B. 167 § 4 (amending O.C.G.A. § 33-23-100(a)(1)). It deletes a provision exempting from licensure an "entity that acts solely as an administrator of one or more bona fide employee benefit plans established by an employer or an employee organization, or both, for whom the insurance laws of this
Section 5 of IDEA specifically amends the 1999 Prompt Pay Statute (O.C.G.A. § 33-24-59.5). Section 5 changes the substantive requirements of the statute by establishing a deadline, of 15 days for electronic claims and 30 days for paper claims, for processing and paying (or denying) a claim. See id. § 5 (amending O.C.G.A. § 33-24-59.5(b)(1)). It also reduces, from 18 to 12 percent, the interest rate on untimely payments. See id. § 5 (amending O.C.G.A. § 33-24-59.5(c)). It adds a provision authorizing the Commissioner to impose "administrative penalties" on insurers that fail to timely process at least 95 percent of claims in a quarter. See id. (adding O.C.G.A. § 33-24-59.5(d)).
Section 5 also amends certain statutory definitions. It amends the definition of "health benefit plan" to include a "self insured plan." Id. § 5 (amending O.C.G.A. § 33-24-59.5(a)(2)).
Section 6 of IDEA creates a new section of the Georgia Code: O.C.G.A. § 33-24-59.14 ("Section 59.14"). See H.B. 167 § 6. The new section is nearly, but not completely,
AHIP is a national trade association that represents companies that provide, and administer, health insurance to insured employer health plans and that provide administrative services, including claims processing, to self-funded employer health plans.
The Commissioner is charged with enforcing the Prompt Pay Statute,
On August 28, 2012, AHIP filed its Complaint seeking a declaratory judgment that ERISA preempts Sections 4, 5, and 6 of IDEA, as applied to ERISA-regulated self-funded health plans and their administrators, and an injunction prohibiting the Commissioner from enforcing Sections 4, 5, and 6 of IDEA against ERISA-regulated self-funded health plans and their administrators. AHIP contends that Section 514(a) of ERISA expressly preempts the challenged IDEA provisions. Alternatively, AHIP contends that both a Department
On September 14, 2012, AHIP filed its Motion for Preliminary Injunction to enjoin the Commissioner from enforcing the challenged IDEA provisions, scheduled to take effect January 1, 2013. On October 12, 2012, the Commissioner filed his opposition to the Motion for Preliminary Injunction.
On October 12, 2012, the Commissioner also filed his Motion to Dismiss seeking dismissal of the action on the grounds that the Court lacks subject matter jurisdiction and that AHIP's Complaint fails to state a claim for relief. The Commissioner argues that AHIP's claim is not justiciable because AHIP lacks standing, and because the claim is not ripe. The Commissioner further argues that AHIP has not demonstrated that the Court has diversity jurisdiction over this matter and that the Tax Injunction Act deprives the Court of jurisdiction. The Commissioner contends that AHIP fails to state a claim upon which relief can be granted because, in seeking a preemption declaration, AHIP has not asserted cognizable causes of action and AHIP's claims are barred by the Eleventh Amendment.
The Commissioner further argues that, as a matter of law, ERISA does not preempt the challenged provisions of IDEA. The Commissioner essentially advances two arguments to support his position. First, he argues that IDEA was carefully drafted not to apply to self-funded plans themselves but only to such plans' TPAs and, because TPAs are not ERISA fiduciaries and are not directly governed by ERISA, the State of Georgia may regulate claims processing by TPAs. Second, the Commissioner argues that the Prompt Pay Statute governs only a ministerial function — the required timing for paying or denying claims — to which ERISA's express preemption provision does not apply and which does not conflict with any existing requirements of ERISA or ERISA regulations.
On October 26, 2012, AHIP filed its opposition to the Motion to Dismiss.
A motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) of
On a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must "assume that the factual allegations in the complaint are true and give the plaintiff[] the benefit of reasonable factual inferences." Wooten v. Quicken Loans, Inc., 626 F.3d 1187, 1196 (11th Cir.2010), cert. denied, ___ U.S. ___, 132 S.Ct. 245, 181 L.Ed.2d 140 (2011). Although reasonable inferences are made in the plaintiff's favor, "`unwarranted deductions of fact' are not admitted as true." Aldana v. Del Monte Fresh Produce, N.A., 416 F.3d 1242, 1248 (11th Cir.2005) (quoting S. Fla. Water Mgmt. Dist. v. Montalvo, 84 F.3d 402, 408 n. 10 (1996)). Similarly, the Court is not required to accept conclusory allegations and legal conclusions as true. See Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir.2010) (construing Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). Mere "labels and conclusions" are insufficient. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). This requires more than the "mere possibility of misconduct." Am. Dental, 605 F.3d at 1290 (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. 1937). The well-pled allegations must "nudge[] their claims across the line from conceivable to plausible." Id. at 1289 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955).
The Commissioner argues that the Court lacks jurisdiction over this matter because AHIP's claims are not justiciable. Article III of the United States Constitution provides that the judicial power of the federal courts extends only to "cases" and "controversies." U.S. Const. art. III, § 2, cl. 1. It is well-settled that this limited extension of power imposes substantive constitutional constraints on the power of federal courts to resolve legal disputes. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d
The doctrine of standing is a fundamental boundary of the judicial power to decide cases and controversies. Lujan, 504 U.S. at 560, 112 S.Ct. 2130. "[T]he question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). This is a threshold issue in every federal case. Id. Under recent formulations of the standing doctrine, "[a] plaintiff who invokes the jurisdiction of a federal court bears the burden to show (1) an injury in fact, meaning an injury that is concrete and particularized, and actual or imminent, (2) a causal connection between the injury and the [challenged] conduct, and (3) a likelihood that the injury will be redressed by a favorable decision." CAMP Legal Defense Fund, Inc. v. City of Atlanta, 451 F.3d 1257, 1269 (11th Cir.2006) (internal quotation marks omitted). Standing "must be supported in the same way as any other matter on which the plaintiff bears the burden proof," that is, "with the manner and degree of evidence required at the successive stages of the litigation." CAMP, 451 F.3d at 1269 (quoting Lujan, 504 U.S. at 561, 112 S.Ct. 2130). Where, as here, "standing becomes an issue on a motion to dismiss, general factual allegations of injury resulting from the defendant's conduct may be sufficient to show standing." Bischoff v. Osceola Cnty., 222 F.3d 874, 878 (11th Cir.2000).
The second and third prongs of the standing inquiry are not at issue here. If AHIP has alleged a judicially cognizable injury under the first prong, it is caused by the threat of enforcement of the challenged provisions of IDEA, and a declaration that the provisions are preempted would redress the injury by allowing AHIP's members, on whose behalf this action is asserted, to provide plan services without fear of civil or criminal penalties. Cf. N.H. Right to Life Political Action Comm. v. Gardner, 99 F.3d 8, 13 (1st Cir.1996) (holding that, in pre-enforcement challenge to statute on First Amendment grounds, dispositive inquiry was presence of injury-in-fact, because any injury was traceable to challenged statute and declaratory relief against government officials would redress the injury). The issue, therefore, is whether AHIP has adequately alleged an actual injury-in-fact.
AHIP asserts standing in this action on behalf of its members. "[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Doe v. Stincer, 175 F.3d 879, 882 (11th Cir.1999) (quoting Hunt v. Wash. State Apple Advertising Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)). The Commissioner challenges AHIP's associational standing only on the first prong, arguing that AHIP has not shown that any of its members would have standing in its own right because AHIP has not alleged that any member has suffered a cognizable "injury."
The Commissioner also argues that this case is not justiciable because AHIP's claims are not ripe. The ripeness inquiry asks "whether there is sufficient injury to meet Article III's requirement of a case or controversy and, if so, whether the claim is sufficiently mature, and the issues sufficiently defined and concrete, to permit effective decisionmaking by the court." Socialist Workers, 145 F.3d at 1244 (quoting Digital Props., Inc. v. City of Plantation, 121 F.3d 586, 589 (11th Cir.1997)). In pre-enforcement challenges to state laws, "the lines among the justiciability doctrines tend to blur" because "the ripeness query merges into the injury inquiry performed in the standing analysis." Id. at 1244-45; see also Nat'l Treasury Emps. Union v. United States, 101 F.3d 1423, 1428 (D.C.Cir.1996) ("[I]f a threatened injury is sufficiently `imminent' to establish standing, the constitutional requirements of the ripeness doctrine will necessarily be satisfied."). The Court has concluded that AHIP faces "a realistic danger of sustaining direct injury as a result of the [Prompt Pay Statute]'s operation or enforcement," see Ga. Latino Alliance, 691 F.3d at 1257-58, and the Court also concludes that AHIP has asserted a "sufficiently mature," and thus ripe, claim. See Socialist Workers, 145 F.3d at 1244.
The Commissioner next argues that the Court lacks jurisdiction because of the Tax Injunction Act, which prohibits a
The Commissioner next argues that AHIP's Complaint fails to state a claim because there is no private right of action for preemption. Earlier this year, the Eleventh Circuit held that a plaintiff does "have an implied right of action to assert a preemption claim seeking injunctive... relief." Ga. Latino Alliance, 691 F.3d at 1262 (omission in original) (quoting Planned Parenthood of Houston & Se. Tex. v. Sanchez, 403 F.3d 324, 334 n. 47, 335 (5th Cir.2005)).
The Commissioner last argues that AHIP's Complaint fails to state a claim because, as a matter of law, ERISA does
AHIP alleges that express and conflict preemption apply here because Section 514 of ERISA expressly preempts state laws that "relate to" ERISA plans and because a Department of Labor regulation and ERISA's civil enforcement remedies conflict with IDEA. The Commissioner argues that neither express nor conflict preemption applies to IDEA. He argues specifically that ERISA does not preempt IDEA because the IDEA amendments extend the requirements of the Prompt Pay Statute to TPAs of self-funded ERISA plans, which are not generally considered to be fiduciaries of ERISA plans are not governed directly by ERISA. See Baker v. Big Star Div. of the Grand Union Co., 893 F.2d 288, 290 (11th Cir.1989). He further argues that the requirements imposed on TPAs by IDEA are ministerial in nature and therefore do not "relate to" ERISA or conflict with any provision of ERISA, or ERISA regulations.
In evaluating the parties' claims, the Court first reviews the Prompt Pay Statute, as amended by IDEA, to determine, as the Commissioner argues, whether IDEA only allows for the regulation of TPAs and does not otherwise impact self-funded employer health plans themselves.
Section 4 of IDEA amends a statute governing the licensure of insurance "administrators."
Section 5 of IDEA amends the Prompt Pay Statute itself. Id. § 5, 2011 Ga. Laws at 598-99 (amending O.C.G.A. § 33-24-59.5). The effect of its changes is to extend the Prompt Pay Statute's requirements to all health insurance and health benefit plans, including non-ERISA plans, insured ERISA plans, and, for the first time, self-funded ERISA plans. See id. IDEA achieves this expansion of the Prompt Pay Statute's reach by amending the statutory definition of "insurer" broadly to include self-funded ERISA plans and the entities that administer and determine benefits under self-funded ERISA plans. See id. (amending O.C.G.A. § 33-24-59.5(a)(3)). Section 5 of IDEA specifically deletes the express exemption of self-funded ERISA plans from the former definition of "insurer." See IDEA § 5, 2011 Ga. Laws at 598 (defining "insurer"). It then adds to the definition a list of numerous types of entities, including "any self-insured health benefit plan," any entity that "provides for the financing or delivery of health care services through a health benefit plan [which includes a `self-insured plan']," an "administrator as defined in ... Code Section 33-23-100," and a "plan administrator of any health plan."
As discussed above, Section 6 of IDEA creates new Code Section 59.14.
Section 514(a) of ERISA, an express preemption provision, states that the provisions of ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any [ERISA] employee benefit plan." 29 U.S.C. § 1144(a) (2006). The broad preemptive effect of Section 514(a) is limited, somewhat, by the so-called "Saving Clause" of Section 514(b), which provides that "nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities." Id. § 1144(b)(2)(A). The Saving Clause, in turn, is tempered by the so-called "Deemer Clause," which provides, in pertinent part, that an ERISA employee benefit plan "shall [not] be deemed to be an insurance company or other insurer ... or to be engaged in the business of insurance ... for purposes of any law of any State purporting to regulate insurance companies [or] insurance contracts." Id. § 1144(b)(2)(B).
The Supreme Court succinctly explained the relationship among these three statutory provisions:
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (alterations in original). A court analyzing whether a state law is expressly preempted under Section 514 of ERISA must first determine whether the state law "relates to" employee benefit plans. If it does, the court then must determine if the law is saved from preemption by the Saving Clause. If it is not, the law is preempted. If it is, the court must then determine whether the law is denied its Saving Clause protection by the Deemer Clause. If it is, the law is preempted. See FMC Corp. v. Holliday, 498 U.S. 52, 57-58, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990); Pilot Life, 481 U.S. at 45, 107 S.Ct. 1549; Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739-41, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985).
AHIP argues that the challenged provisions of IDEA "relate to" ERISA plans. AHIP further argues that the IDEA provisions are not saved by the Saving Clause or, alternatively, that, if the Saving Clause applies, the Deemer Clause applies to preempt the provisions. The Commissioner argues that the challenged provisions do not "relate to" ERISA plans. But if they do, he argues that the Saving Clause applies and that the Deemer Clause does not.
The parties agree that self-funded employer health plans are "employee benefit plans" subject to Section 514(a). The issue here is whether the challenged provisions of IDEA "relate to" such plans. The specific question is whether the payment timing decisions made by Prompt Pay Statute "insurers," including TPAs and other plan administrators, "relate to" ERISA self-funded plans such that regulation of them is preempted.
The Supreme Court consistently has observed that "relate to" is a "broadly worded
"To determine whether a state law has the forbidden connection," the Supreme Court has instructed courts to "look both to the objectives of the ERISA statute as a guide to the scope of the state law that would survive, as well as to the nature of the effect of the state law on ERISA plans." Egelhoff, 532 U.S. at 147, 121 S.Ct. 1322 (quoting Dillingham, 519 U.S. at 325, 117 S.Ct. 832) (internal quotation marks omitted). A state law that governs a "central matter of plan administration" or "interferes with nationally uniform plan administration" has an impermissible "connection." Id. at 147-48, 121 S.Ct. 1322; cf. Branche v. Airtran Airways, Inc., 342 F.3d 1248, 1255 (11th Cir.2003) (reviewing the Supreme Court's ERISA cases to construe the identically-worded preemption provision of the Airline Deregulation Act and recognizing that a state law has a "connection with" the Act if it has a "sufficient — i.e., significant — impact" on the services regulated by the Act). This is so because a "principal goal[] of ERISA is to enable employers `to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits.' Uniformity is impossible, however, if plans are subject to different legal obligations in different States." Egelhoff, 532 U.S. at 148, 121 S.Ct. 1322 (citations omitted) (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987)).
In Egelhoff, the Supreme Court found a "connection" with ERISA plans where a state law provided that the designation of a spouse as the beneficiary of a non-probate asset would be revoked automatically upon divorce. 532 U.S. at 143, 121 S.Ct. 1322. The Court determined that, when applied to ERISA plans, the law purported to govern the payment of plan benefits, which is a "central matter of plan administration." Id. at 147-48, 121 S.Ct. 1322. The Court further found that, to comply with the law at issue and similar laws of any other state, ERISA plan administrators would be required to "familiarize themselves with state statutes so that they can determine whether the named beneficiary's status has been `revoked' by operation of law." Id. at 148-49, 121 S.Ct. 1322. The Court held that such a requirement interfered with "nationally uniform plan
In FMC, the Court held that a state antisubrogation statute, prohibiting health insurers and plans from recouping expenditures from beneficiaries' tort recoveries, had a "connection" with ERISA plans. 498 U.S. at 59-60, 111 S.Ct. 403. The Court found that subjecting ERISA plans to varying antisubrogation schemes would require plan administrators to calculate benefit levels differently state-by-state, which would in turn frustrate nationwide uniformity of plan administration. Id. at 60, 111 S.Ct. 403.
In De Buono, the Court held that a generally-applicable tax on hospital receipts, including those of hospitals owned by ERISA plans, did not have a "connection" with the plans. See 520 U.S. at 809, 814-15, 117 S.Ct. 1747. The tax affected the cost of an available benefit scheme (i.e., the operation of a hospital), but it did not require or prohibit any particular benefit scheme, specific types of benefits, or methods of calculating benefits. Id. at 815-16, 117 S.Ct. 1747. Similarly, in Dillingham, the Court held that a state law allowing construction companies to pay below-market wages to apprentices in state-authorized apprenticeship programs, including programs qualifying as ERISA plans, did not have a "connection" with the plans. 519 U.S. at 328-34, 117 S.Ct. 832. The Court found that the state law provided an incentive for ERISA apprenticeship programs to become state-authorized (to allow the sponsoring employers to pay lower wages), but that the law did not require any programs to become state-authorized or impose any other requirements on the programs. Id. at 332-34, 117 S.Ct. 832. The Court explained that a state law lacks an impermissible "connection" with ERISA plans when it "alters the incentives, but does not dictate the choices, facing ERISA plans." Id. at 334, 117 S.Ct. 832.
These cases show that a state law has a "connection with" ERISA plans when the law affects national uniformity of benefits determinations and claims, but not when it merely impacts the costs of providing certain benefits. The Prompt Pay Statute, as amended by IDEA, requires health plans, including ERISA plans, to process and to pay provider claims, or to send notices denying the claims, within 15 or 30 days, depending on whether the claim is submitted electronically or in paper. Although not explicit, the statute necessarily requires that benefit eligibility determinations (i.e., determinations as to whether the claim is covered) also be made within 15 or 30 days, in time to satisfy the payment or notice timing requirement. These requirements, when applied to ERISA plans, have at least a "connection" with the plans. These requirements, while not "alter[ing] the incentives" for ERISA plans to pursue certain actions, do compel certain action — "prompt" benefit determinations and payments — by plans and their administrators. Cf. Dillingham, 519 U.S. at 334, 117 S.Ct. 832. The payment or denial of plan benefits, and the timing of these activities, is a, if not the, "central matter of plan administration."
Having concluded that IDEA falls within the general preemption provision of Section
The Saving Clause exempts from Section 514(a) preemption a state law that "regulates insurance." 29 U.S.C. § 1144(b)(2)(A). It applies when (1) the state law is "specifically directed toward entities engaged in insurance" and (2) the state law "substantially affect[s] the risk pooling arrangement between the insurer and the insured." Ky. Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329, 341-42, 123 S.Ct. 1471, 155 L.Ed.2d 468 (2003). To be "engaged in insurance," an entity need not be an insurance company but must simply "engage in the same sort of risk pooling arrangements" as insurers. Id. at 336 n. 1, 123 S.Ct. 1471. Self-funded employee health plans are, under this definition, "engaged in insurance." Id.
The IDEA provisions at issue, which apply to all health plans and insurance policies, are "directed toward entities engaged in insurance." See id. The Court also finds that IDEA "substantially affects the risk pooling arrangement between the insurer and the insured" because the Act, applying equally to claims for payment by providers and claims for reimbursement by beneficiaries, imposes a timeliness requirement onto the agreement between the insurer, or plan, and the insured, or beneficiary.
The application of the Deemer Clause to IDEA is straightforward. The Act imposes the Prompt Pay Statute's requirements directly on all health plans, insured and self-funded alike. The imposition of the requirements on insured plans is permitted under the Saving Clause. The imposition of the requirements on self-funded plans is prohibited under the Deemer Clause. The Court concludes that the challenged provisions of IDEA — those which extend the requirements of the Prompt Pay Statute to self-funded plans — are expressly preempted by Section 514 of ERISA. For this reason, the Commissioner's Motion to Dismiss on the ground that IDEA is not preempted is required to be denied.
In addition to "express preemption" under Section 514, AHIP alternatively contends that the challenged provisions of IDEA are preempted under principles of "conflict preemption." AHIP argues that an ERISA regulation promulgated by the Department of Labor, 29 C.F.R. § 2560.503-1(f)(2)(iii)(B), conflicts with the requirements of the amended Prompt Pay Statute. AHIP further argues that Section 502(a) of ERISA, which provides civil enforcement remedies, preempts the application of the amended Prompt Pay Statute. Because the Court concludes that the challenged IDEA provisions are "expressly" preempted, the Court does not reach AHIP's alternative arguments for preemption, under either the regulation
To be eligible for a preliminary injunction under Rule 65 of the Federal Rules of Civil Procedure, a movant must show: (1) a substantial likelihood of prevailing on the merits; (2) that the movant will suffer irreparable injury if the relief is not granted; (3) that the threatened injury outweighs the harm the relief would inflict on the opposing party; and (4) that if granted, the injunction would not be adverse to the public interest. See Schiavo ex rel. Schindler v. Schiavo, 403 F.3d 1223, 1225-26 (11th Cir.2005); Parker v. State Bd. of
AHIP argues that its claim, seeking the invalidation of the challenged provisions of IDEA, will be successful on the merits because, as a matter of law, ERISA preempts the challenged provisions. For the reasons fully explained above, the Court agrees. ERISA preempts the challenged provisions of IDEA, and AHIP is therefore likely to succeed on the merits of its claim.
To determine whether a preliminary injunction is appropriate, the Court considers the remaining equitable factors: whether AHIP's members will suffer irreparable injury without an injunction, whether the threatened injury outweighs the harm an injunction would inflict on the Commissioner, and the effect of an injunction on the public interest. See Schiavo, 403 F.3d at 1225-26.
The Court concludes that AHIP's members will suffer irreparable injury if Sections 4, 5, and 6 of IDEA are permitted to take effect. To comply with the law, AHIP's members will be required to incur the costs and burdens, including increased employee time, of modifying their claims processing systems, of monitoring compliance, and of preparing quarterly reports to Georgia regulators. (AHIP's Ex. 3[4-4] ¶¶ 8-14.) To ignore the law, AHIP's members face the imposition not only of 12 percent interest on "late" payments but also of penalties imposed by the Commissioner, who has publicly announced that he intends to enforce the law. (Id.; AHIP's Ex. A [28-1] at 3.) Absent an injunction, AHIP's members will be forced either to incur the costs of compliance with a preempted state law or to face the possibility of penalties. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (holding that a plaintiff would suffer "irreparable harm" if forced to choose to incur either the civil enforcement liability of violating a preempted state law or the costs of complying with the law during the pendency of the proceedings); Ga. Latino Alliance for Human Rights v. Governor of Ga., 691 F.3d 1250, 1268-69 (11th Cir.2012) (recognizing that a plaintiff faces "irreparable harm" for purposes of a preliminary injunction when it is "under the threat of state prosecution for crimes that conflict with federal law"). There also is no mechanism to allow AHIP's members to recover any costs or penalties paid in the event that enforcement of the challenged IDEA provisions is ultimately permanently enjoined. See Bankwest, Inc. v. Baker, 324 F.Supp.2d 1333, (N.D.Ga.2004) (citing Bank of Am., N.A. v. Sorrell, 248 F.Supp.2d 1196, 1199-1200 (N.D.Ga.2002), vacated as moot, 446 F.3d 1358 (11th Cir. 2006)) (recognizing that a "threatened loss of revenue, which will not be recoverable, constitutes irreparable harm"); see also Chamber of Commerce v. Edmondson, 594 F.3d 742, 770-71 (10th Cir.2010) (citing
The Court also concludes that neither harm to the Commissioner nor the public interest weighs against a preliminary injunction. The Court recognizes that IDEA passed by wide margins in the General Assembly — not once but twice — and that the extension of the Prompt Pay Statute enjoys broad legislative support. Nevertheless, the challenged IDEA provisions are preempted by ERISA. As a matter of law, therefore, the Commissioner cannot suffer harm from an injunction against the Act, and the public would be harmed by its enforcement. See Trans World Airlines, Inc. v. Mattox, 897 F.2d 773, 784 (5th Cir.1990) (holding that "there is no injury to the states to weigh" in the enjoining of a preempted law and that the public interest is necessarily served by enforcing a congressional intention that a state law be preempted); see also Cal. Pharmacists Ass'n v. Maxwell-Jolly, 563 F.3d 847, 852-53 (9th Cir.2009) (holding that "the interest of preserving the Supremacy Clause is paramount" in weighing the effects of a preliminary injunction on the state and the public).
Having concluded that AHIP will likely succeed on the merits of its claim, that AHIP will suffer irreparable harm if the challenged IDEA provisions take effect, and that neither harm to the Commissioner nor the public interest counsel against enjoining the provisions, the Court finds that AHIP's Motion for a Preliminary Injunction is required to be granted.
Accordingly, for the foregoing reasons,
Id. § 33-24-59.5(a)(3). A "health benefit plan" under the statute was defined as:
Id. § 33-24-59.5(a)(2).
IDEA § 5, 2011 Ga. Laws at 598 (amending O.C.G.A. § 33-24-59.5(a)(2)).
IDEA § 5, 2011 Ga. Laws at 598 (amending O.C.G.A. § 33-24-59.5(a)(3)).
(See Tr. [44] 38:7-39:1.) The second part of the Commissioner's argument is without support. In Baker, the court found that TPAs usually (but not necessarily always) are not ERISA fiduciaries and are not governed by ERISA, and on that basis, held that a non-fiduciary TPA could not be liable for a claim under ERISA. 893 F.2d at 289-90. Baker does not hold that ERISA cannot preempt a state law regulating non-fiduciary TPAs. The real question before the Court, therefore, is not whether the State of Georgia can impose the Prompt Pay Statute's requirements on TPAs but whether the State can regulate the function governed by the Prompt Pay Statute as applied to self-funded ERISA plans. To evaluate this question, the Court considers whether the IDEA amendments "relate to" ERISA, as discussed below.
Flynn, supra, at 403-04 (footnotes omitted).