De Buono v. NYSA-ILA Medical and Clinical Services Fund
520 U.S. 806

Annotate this Case

OCTOBER TERM, 1996

Syllabus

DE BUONO, NEW YORK COMMISSIONER OF HEALTH, ET AL. v. NYSA-ILA MEDICAL AND CLINICAL SERVICES FUND, BY ITS TRUSTEES, BOWERS, ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

No. 95-1594. Argued February 24, 1997-Decided June 2,1997

New York's Health Facility Assessment (HFA) imposes a tax on gross receipts for patient services at, inter alia, diagnostic and treatment centers. The NYSA-ILA Medical and Clinical Services Fund (Fund), which administers a plan subject to the Employee Retirement Income Security Act of 1974 (ERISA), owns and operates New York treatment centers for longshore workers, retirees, and their dependents. Respondents, the Fund's trustees, discontinued paying the tax and filed this action to enjoin petitioner state officials from making future assessments and to obtain a refund, alleging that the HFA is a state law that "relates to" the Fund within the meaning of § 514(a) of ERISA, and is therefore pre-empted as applied to hospitals run by ERISA plans. The District Court concluded that the HFA is not pre-empted because it is a tax of general application having only an incidental impact on benefit plans. The Second Circuit reversed, reasoning that the HFA relates to the Fund by reducing the amount of Fund assets that would otherwise be available to provide plan members with benefits, and could cause the plan to limit its benefits or to charge plan members higher fees. On remand from this Court in light of New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U. S. 645-in which this Court held that ERISA did not pre-empt a New York statute requiring hospitals to collect surcharges from patients covered by a commercial insurer but not from patients insured by a Blue Cross/Blue Shield plan-the Second Circuit reinstated its judgment, distinguishing Travelers on the ground that the statute there at issue had only an indirect economic influence on the decisions of ERISA plan administrators, whereas the HFA depletes the Fund's assets directly, and thus has an immediate impact on an ERISA plan's operations.

Held: Section 514(a) does not preclude New York from imposing a gross receipts tax on ERISA funded medical centers. Pp. 812-816.

(a) When the Second Circuit initially found the HFA pre-empted, it relied substantially on an expansive and literal interpretation of the


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words "relate to" in § 514(a). It appears to have adhered to that approach on remand, failing to give proper weight to Travelers' rejection of such a strictly literal reading. In Travelers, the Court unequivocally concluded that the "relates to" language was not intended to modify "the starting presumption that Congress does not intend to supplant state law." 514 U. S., at 654. In evaluating whether the normal presumption against pre-emption has been overcome in a particular case, this Court must look to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive. Id., at 656. Pp. 812-814.

(b) Following that approach here, the HFA clearly operates in a field that has been traditionally occupied by the States: the regulation of health and safety matters. Hillsborough County v. Automated Medical Laboratories, Inc., 471 U. S. 707, 715. Nothing in the HFA's operation convinces this Court that it is the type of state law that Congress intended ERISA to supersede. It is one of myriad state laws of general applicability that impose some burdens on the administration of ERISA plans but nevertheless do not relate to them within the statute's meaning. See, e. g., Travelers, 514 U. S., at 668. The supposed difference between direct and indirect impact-upon which the Second Circuit relied in distinguishing this case from Travelers-cannot withstand scrutiny. While the Fund has arranged to provide medical benefits for its beneficiaries directly, had it chosen to purchase the services at independently run hospitals, those hospitals would have passed their HFA costs onto the Fund through their rates. Although the tax would be "indirect," its impact on the Fund's decisions would be in all relevant respects identical to the "direct" impact felt here. Pp. 814-816.

74 F.3d 28, reversed.

STEVENS, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and O'CONNOR, KENNEDY, SOUTER, GINSBURG, and BREYER, JJ., joined. SCALIA, J., filed a dissenting opinion, in which THOMAS, J., joined, post, p. 816.

M. Patricia Smith, Assistant Attorney General of New York, argued the cause for petitioners. With her on the briefs were Dennis C. Vacco, Attorney General, Barbara G. Billet, Solicitor General, Peter H. Schiff, Deputy Solicitor General, and Daniel F. De Vita, Assistant Attorney General.

Deputy Solicitor General Kneedler argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Acting Solicitor General Dellinger,


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Full Text of Opinion

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