Attorney General Karl A. Racine led a coalition of 22 state attorneys general urging the U.S. Court of Appeals for the Fifth Circuit to protect states’ historic power to regulate insurance and protect their residents from fraud, abuse, or substandard health coverage.
- The coalition filed the brief in U.S. Department of Labor v. Data Marketing Partnership, a case that centers on the Department of Labor’s conclusion that a scheme—under which users obtain health insurance in exchange for sharing data as they browse the internet—failed to qualify as an “employee benefit plan” under the Employee Retirement Income Security Act of 1974 (ERISA).
- AG Racine said, “States have the authority—and responsibility—to protect consumers by regulating insurance plans. Those regulations should apply to Data Marketing Partnership’s scheme, which provides health insurance to consumers—not to its employees. The company’s attempt to circumvent these rules by disguising its plans as employee benefits, when they are transparently not, should be rejected.”
- In the amicus brief filed in the U.S. Court of Appeals for the Fifth Circuit, the coalition argues that treating this scheme as an employee benefit plan under ERISA encroaches on states’ historic authority to regulate insurance and protect consumers, upsets the guardrails the Supreme Court and Congress have placed on ERISA’s scope, and disregards the actual nature of the relationship between Data Marketing Partnership and its limited partners, which has none of the hallmarks of an employer-employee relationship.
- ERISA is a federal statute regulating employee welfare and benefit plans. Where applicable, ERISA preempts—that is, supersedes—state law, meaning that certain ERISA plans are immune from direct state regulation. Because states heavily regulate the sale of insurance to protect consumers, opportunistic entities have historically tried to disguise health plans sold to consumers to ascertain ERISA-based employee health plans to avoid state insurance rules.