Wisconsin Legislature: Insurance; Insurance, Commissioner Of; Words And Phrases;

80 Op. Att'y Gen. 290, 290 (1992)

Insurance; Insurance, Commissioner Of; Words And Phrases;

The Commissioner of Insurance lacks the authority to regulate administrators of self-funded or self-insured employe benefit plans under section 3516r of 1991 Wisconsin Act 39 (the budget bill) since such regulation is preempted by ERISA and therefore precluded by section 633.16, Stats., as created by the bill. OAG 20-92

July 28, 1992

80 Op. Att'y Gen. 290, 290 (1992)

ROBERT D. HAASE,

Commissioner

Office of the Commissioner of Insurance

80 Op. Att'y Gen. 290, 290 (1992)

You request my opinion regarding your authority to regulate administrators of self-funded or self-insured employe benefit plans. Specifically you ask whether you have the authority to regulate such administrators under chapter 633, Stats., created by section 3516r of 1991 Wisconsin Act 39 (budget bill) or whether this regulation is precluded by provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and section 633.16.

80 Op. Att'y Gen. 290, 290 (1992)

Sections 633.01 through 633.17, as created by the budget bill, provide for regulation of employe benefit plan administrators by the Commissioner of Insurance. The specified elements regulated include administrator agreements (633.04), notification of insured (633.12), record retention (633.04(4)), payment of claims (633.10), fiduciary responsibilities (633.09), bonding (633.14(1)(b)) and licensure (633.13(1)). Certain of these elements of state regulation are among the core elements regulated by ERISA; 29 U.S.C.A. 1022 (1985) (plan description), 29 U.S.C.A. 1021 (1985) (disclosure to insured), 29 U.S.C.A. 1027, 1059 (1985) (retention of records), and 29 U.S.C.A. 1104 (1985) (fiduciary duties). Thus the Legislature in section 633.16 provides that "[n]othing in this chapter gives the commissioner the authority to impose requirements on a plan that is exempt from state law under 29 USC 1144 (b) [ERISA]."

80 Op. Att'y Gen. 290, 291 (1992)

It is my opinion that you lack the authority to regulate administrators of self-funded or self-insured employe benefit plans, as set forth in chapter 633, because such authority is preempted by ERISA and therefore excluded by section 633.16. While "plan" is defined as "an insured or wholly or partially self-insured employe benefit plan" under section 633.01(4), your question and therefore my answer relate only to self-funded or self-insured plans and do not consider insured or partially insured plans. The term self-funded plan as used hereafter should be deemed to also include self-insured plans.

80 Op. Att'y Gen. 290, 291 (1992)

FMC Corp. v. Holliday

, 498 U.S. 52 (1990), the United States Supreme Court determined that the ERISA "deemer clause" preempts state statutes that regulate self-funded employe benefit plans. As that Court stated, 498 U.S. at 56-58:

80 Op. Att'y Gen. 290, 291 (1992)

In determining whether federal law pre-empts a state statute, we look to congressional intent. " 'Pre-emption may be either express or implied, and "is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose." ' " [Case cites omitted.]... We "begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose." [Case cite omitted.] Three provisions of ERISA speak expressly to the question of pre-emption:

80 Op. Att'y Gen. 290, 291 (1992)

"Except as provided in subsection (b) of this section [the saving clause], the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 514(a), as set forth in 29 U.S.C. 1144(a) (pre-emption clause).

80 Op. Att'y Gen. 290, 291-292 (1992)

"Except as provided in subparagraph (B) [the deemer clause], 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." 514(b)(2)(A), as set forth in 29 U.S.C. 1144(b)(2)(A) (saving clause).

80 Op. Att'y Gen. 290, 292 (1992)

"Neither an employee benefit plan... nor any trust established under such a plan, shall be deemed to be an insurance company or other insurer, bank, trust company, or investment company or to be engaged in the business of insurance or banking for purposes of any law of any State purporting to regulate insurance companies, insurance contracts, banks, trust companies, or investment companies." 514(b)(2)(B), 29 U.S.C. 1144(b)(2)(B) (deemer clause).

80 Op. Att'y Gen. 290, 292 (1992)

. . . The pre-emption clause is conspicuous for its breadth. It establishes as an area of exclusive federal concern the subject of every state law that "relate[s] to" an employee benefit plan governed by ERISA. The saving clause returns to the States the power to enforce those state laws that "regulat[e] insurance," except as provided in the deemer clause. Under the deemer clause, an employee benefit plan governed by ERISA shall not be "deemed" an insurance company, an insurer, or engaged in the business of insurance for purposes of state laws "purporting to regulate" insurance companies or insurance contracts.

80 Op. Att'y Gen. 290, 292 (1992)

It appears that chapter 633 is intended to cover administrators of the same employe benefit plans covered by ERISA. "Employee benefit plan" as defined under ERISA includes "an

employee welfare benefit plan

or an

employee pension benefit plan

or a plan which is both an employee welfare benefit plan and an employee pension benefit plan." 29 U.S.C.A. 1002(3) (West Supp. 1992). "Employee welfare benefit plan" means for ERISA purposes:

80 Op. Att'y Gen. 290, 292-293 (1992)

any plan, fund, or program... maintained by an employer or by an employee organization, or by both... for the purpose of providing... through the purchase of insurance or otherwise,... medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment....