Metropolitan Life Insurance v. Massachusetts

Background

Massachusetts passed a law requiring certain health-insurance policies that provide hospital and surgical coverage to include minimum mental-health benefits for Commonwealth residents. The State’s attorney general sued two insurers that sold group policies covering Massachusetts residents, arguing the insurers had not included the mandated benefits. The insurers argued that federal law governing employee benefit plans (ERISA) and federal labor law (NLRA) prevent the State from imposing this requirement on policies bought for employee plans or negotiated in collective bargaining.

Reasoning

The Court first agreed the state law “relates to” ERISA plans, so ERISA’s broad preemption would normally apply. But ERISA contains a saving clause for state laws “which regulate insurance.” The Court held that the Massachusetts mandate does regulate insurance because it controls the terms of insurance contracts, meets long-standing criteria for insurance regulation, and fits with the deemer clause and the McCarran-Ferguson framework. On the labor-law issue, the Court reasoned that the NLRA does not bar all state laws that set minimum substantive terms; the mandate is a general public-health and insurance regulation that does not upset the balance of collective bargaining that the NLRA protects.

Real world impact

The decision means insurers who sell policies covering Massachusetts residents must include the minimum mental-health benefits when those residents are covered under insured employee plans or under union-negotiated insured plans. Self-insured plans remain outside the State mandate because ERISA treats those plans differently. The ruling preserves state-by-state differences in insured coverage and leaves policy choices about uniformity to Congress.

Dissents or concurrances

A state-court dissent had urged a narrower reading of ERISA’s saving clause to preserve nationwide uniformity; the Supreme Court rejected that view and affirmed the state courts’ judgment.