ERISA Versus State Law

ERISA lawyers in the Dallas / Fort Worth can tell you how powerful ERISA is and that the rules governing ERISA plans pre-empt State rules governing insurance. This is argued in a Northern District, Dallas Division case styled, Curtis v. Metropolitan Life Insurance Company.
This case concerns a three-party contractual relationship between Curtis (Plaintiff), his employer (EFH), and MetLife. The contractual relationship is governed by ERISA.
Three documents encapsulate the terms of this relationship: the EFH Master Plan Document, the EFH Summary Plan Description (SPD), and the MetLife Certificate of Insurance (COI).
The plan provided for long-term disability (LTD) benefits which Plaintiff had been receiving but were eventually terminated based on a determination by MetLife. As a result this lawsuit was filed.
One of the arguments in this case was whether or not ERISA preempts a Texas law that prohibits discretionary clauses in insurance contracts. This is found in the Texas Insurance Code, Section 1701.062. It is also found in the Texas Administrative Code, Section 3.1201.
The Fifth Circuit has not specifically addressed whether ERISA preemption principles bar state law prohibitions of discretionary clauses in insurance contracts.
The Fifth Circuit has, however, adopted a general standard for deciding whether ERISA preempts state laws purporting to regulate insurance like the Texas laws at issue in this case.
ERISA contains a preemption clause that expressly preempts all State laws that relate to any employee benefit plan. But ERISA also contains a savings clause that excepts “any law of any State which regulates insurance, banking, or securities” from preemption.
Here, a common sense view reveals that Plaintiff is correct, and that the Texas laws prohibiting discretionary clauses in insurance contracts clearly target entities engaged in insurance. And second, they regulate insurers “with respect to their insurance practices.”
However, as MetLife points out, Texas may have authority to regulate certain insurance policies, but it has no authority to regulate non-insurance, ERISA plan documents.
The above is a brief sketch of the issues in the case from the two points of view. The opinion itself discusses the relevant issues and looks at how other courts in the country are handling this issue.
In this case, there was not a clear answer given by the Court except that, in a victory for the Plaintiff, the Court denied MetLife’s Motion Confirming that the Abuse-of-Discretion Standard Applies.