“Generally Applicable Criminal Law”: ERISA’s Little-Known Exception to Preemption and Its Impact in a Post-Roe World

August 26, 2022 – Following the Supreme Court’s recent decision to overturn Roe v. Wade, state legislatures have begun passing new laws targeting those who obtain and provide abortion services, as well as those who assist them. Some state laws impose criminal liability, and others may soon follow. And, of course, all states have criminal homicide laws that could be employed by zealous prosecutors when state law supports the personality of the fetus.

Employer benefit plans and their sponsors and administrators should understand the risks of potential criminal liability to themselves and their employees if they provide benefits for abortion services and abortion-related travel. Although the Employees Retirement Income Security Act of 1974 (ERISA) generally preempts state laws that would seek to prohibit self-funded employee benefit plans from offering abortion-related coverage, ERISA does not necessarily prevent states from suing plans, sponsors, administrators and their employees in all cases.

A. ERISA preemption and its exception

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ERISA greatly supersedes “all state laws to the extent that they do not or subsequently relate to an employee benefit plan.” (29 USC § 1144(a)). However, section (b)(4) of ERISA’s pre-emptive provision states that subsection (a) “does not apply to any generally applicable criminal law of any state.” (29 USC § 1144(b)(4) (emphasis added). ERISA does not define “generally applicable criminal law”, and there is almost no legislative history and very little case law interpreting this language.

As a result, the law’s plain language could give states a way to prosecute plans, sponsors, and administrators that allegedly helped women obtain abortions, either by offering coverage and benefits or in other ways. .

Consider the following hypothesis: State X criminalizes the sale or use of mail-order abortion pills and also makes it a crime, with severe penalties, to aid or abet a person in obtaining such medication . It would be a criminal law of general application, in that it broadly applies to all people in the state.

If a plan covers medications or a telemedicine appointment where medications are prescribed, could this be aid and encouragement under the law? If so, would the law be preempted by ERISA as it applies to the plan?

Legislative history, regulatory guidance and case law regarding the “criminal law of general application” clause do not offer definitive answers. Rather, they tend to suggest that a state may be able to impose and enforce criminal penalties against ERISA benefit plans and their administrators in certain circumstances.

B. Legislative history

During the April 1974 conference committee on the bill that became ERISA, a proposal for a major preemptive exclusion for laws affecting the rights of participants or beneficiaries to recover plan benefits was replaced by a narrow exclusion limited to “generally applicable criminal law”. During the House debate, Senator Jacob Javits was the only person to mention the generally applicable law:

“Given federal preemption, state laws requiring disclosure of private welfare or pension plans, imposing fiduciary requirements on such plans, imposing criminal penalties for non-contribution to plans – unless criminal law of general application – establish state termination insurance programs, et cetera, will be superseded. It is also intended that a substantial body of federal law be developed by the courts to deal with matters involving rights and obligations under private welfare and pension schemes (120 Cong. Rec. 29942 (1974)).

Senator Javits’ comments imply that Congress intended at least to allow states to enforce criminal laws imposing penalties on employers for failing to make contributions to the plan. However, Senator Javits did not speak directly to the “generally applicable criminal law” exclusion and, therefore, did not offer a full statement of its intended scope.

C. Regulatory guidance

The US Department of Labor (DOL) has not addressed the “generally applicable criminal laws” clause in depth, but its guidance suggests that states have the ability to enforce criminal laws against schemes and administrators, both that these laws do not specifically target regimes. . For example, the DOL found that a Massachusetts law that imposed fines and penalties was preempted by ERISA because it specifically applied only to welfare and retirement plans, whereas a State law criminalizing robbery would not be preempted as applied to pension administrators.

In contrast, a Colorado criminal law prohibiting usury was found to be “generally applicable criminal law” and therefore was not preempted by ERISA as applied to a plan, as the law applied generally to anyone in the state. “Because the Consumer Credit Code prohibitions at issue are not intended to apply specifically to activity related to employee benefit plans, we believe that the exception in Section 514(b) to pre-emption should apply.”).

D. Courts

To the extent that the courts have dealt with section 1144(b)(4), they have not been particularly helpful in defining its scope. Few courts have done a thorough analysis. The prevailing view of the courts, similar to that of the DOL, is that “generally applicable criminal laws” are those that apply to all persons in the state, such as laws against theft and embezzlement, and that a law that purports to specifically impose criminal penalties on a benefits plan or its administrator is not a criminal law of “general application”. (See, for example, Sforza v. Kenco Constructional Cont., Inc., 1986; Trs. of Sheet Metal Workers’ Int’l Ass’n Prod. Workers’ Welfare Fund v. Aberdeen Blower & Sheet Metal Workers, Inc., 1983; Baker v Caravan Moving Corp 1983 and Commonwealth v Federico 1981).

A minority view endorsed by a few courts (mainly in New York) takes an even broader view of “generally applicable” to mean a criminal law that is statewide and encompasses all persons or things of a particular class, such as employers. (Goldstein v. Mangano 1978; Sasso v. Vachris 1982; National Metalcrafters v. McNeil 1985). Notably, almost all of these rulings are old, dating to the decade immediately following the enactment of ERISA in 1974.

These decisions also tend to resemble an echo chamber, where each successive decision repeats the same reasoning as previous decisions, without substantive analysis and without reference to legislative history or regulatory guidance. This effect has given rise to certain statements regarding Section 1144(b)(4) that could be construed as limiting its scope, but ultimately are not based on binding authority.

For example, a line of courts that includes the 9th U.S. Circuit Court of Appeals — the only federal appeals court to deal with section 1144(b)(4) — has suggested the provision could be limited to laws such as those prohibiting theft and embezzlement. (Aloha Airlines v. Ahue 1993 (“We find, as did the District Court, that” the best and most widely held view is that Congress intended the words “generally applicable” to refer to criminal statutes which apply to general conduct such as theft and embezzlement.”); Walker v. Cigna Ins. Grp 2000; Mitchell Energy & Dev. Corp. v. Fain 2001; Sforza; Commonwealth v. Federico 1981; and Trs. of Sheet Metal Workers’ 1983).

These decisions do not go so far as to say that only theft and embezzlement laws are exempt from preemption, but insofar as they imply that a law must criminalize something similar to theft or embezzlement for Section 1144(b)(4) to apply, nothing in the statute, its legislative history, or its regulatory guidance compels or even supports such an interpretation.

In sum, the case law does not suggest any well-supported limitation of the scope of section 1144(b)(4), except that the criminal law must generally apply to all persons to fall within this scope. scope.

E. Conclusion

In the absence of definitive guidance from Congress, the DOL, or the courts on the scope of the section 1144(b)(4) exception to preemption for “generally applicable criminal laws”, a court determining whether a state law criminalizing aiding and abetting abortion-related activities is pre-empted will be largely in uncharted territory. If the common thread of the court is the plain text of section 1144(b)(4) and the law does not specifically target employee benefit plans or their administrators, it seems entirely possible that the court would conclude that the law is not preempted by ERISA.

Going back to our hypothesis, it is entirely possible that a scheme or administrator (or their employees) that covers abortion drugs or telemedicine used to obtain them could be accused of aiding and abetting a criminal offense and cannot rely on ERISA preemption.

Given these risks, plans and their administrators should proceed with due caution, stay abreast of all relevant national laws, and consider whether or not new criminal laws focusing on abortion could be enforceable criminal laws. general rules that may apply to them or their employees. They should also explore ways to potentially mitigate the risks, including improving oversight, to ensure they are not covering abortion-related services that might be considered illegal, and assessing the extent to which they themselves or their employees may be under the jurisdiction of a state with potentially applicable criminal laws.

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust. Westlaw Today is owned by Thomson Reuters and operates independently from Reuters News.

Thomas C. Hardy

Thomas C. Hardy is a partner and member of the Reed Smith Managed Care team. He has extensive experience advising companies on managed care litigation involving ERISA, the Federal Employee Health Benefits Act, the Affordable Care Act, Medicare and Medicaid, bad faith in insurance, state statutory claims, price disputes and other matters. He can be contacted at [email protected]

Harneet Kaur

Harneet Kaur is a partner at the firm. She focuses her practice on a wide range of labor and employment issues. She can be contacted at [email protected]