:: ERISA Preemption – What We Have Here Is A Failure To Communicate

Stephen Rosenberg observed this week that ERISA’s preemption provisions were “a legitimate policy choice by the Congress that passed ERISA to maintain one consistent federal policy and body of law for purposes of employee benefits.” He makes the point that Congress, not the judiciary, is responsible for the statute’s preemptive reach.

It’s a point worth noting.

That the statute, arriving in the swaddling clothes of an employee protection measure, could have the vicious effect it often visits on employees (and that often by dint of preemption) might reasonably make one wonder if some terrible mistake has been made. Perhaps the federal judiciary has turned the statute on its head somehow and subverted Congress’ purpose. In fact, we often hear critics urge that Congress set affairs in order through corrective measures that restore ERISA to its intended purpose.

But Congress has not done so – which should give these critics pause. In an alliterative turn of phrase, Stephen makes note of this pregnant silence, stating:

It is worth noting that, some thirty years, countless judicial decisions enforcing preemption, and even more countless numbers of critics later, Congress still has never acted to change that – to, in effect, preempt preemption.

No, despite many amendments to the statute, Congress has but once significantly “preempted preemption” and that simply to make clear its original intent that ERISA preemption provides no protection for promoters of dubious benefit arrangements through MEWA’s.

For quick access to the story of ERISA’s creation, BNA’s Pension & Benefits blog entries on the topic are hard to beat. In a nutshell, most of the riddle is revealed in the account of an unholy alliance of business and labor interests during the conference committee deliberations. So, as Stephen correctly observes, and as told in first person perspective by participants on the BNA blog, ERISA preemption really was intended to be a blockbuster provision.

And yet – I think criticism is still fairly leveled at some of the judicial development of the statute.

After all, the Supreme Court itself has engaged in some self-deprecation on its ERISA preemption jurisprudence. (” . . . we have to recognize that our prior attempt to construe the phrase ‘relate to’ does not give us much help drawing the line here.” New York State Conference of Blue Cross & Blue Shield v. Travelers, 514 U.S. 645 (1995)) And a good case has been made that the Court took a wrong turn in Firestone, Langbein, “The Supreme Court Flunks Trusts” 1990 S.Ct.Rev. 207 (1990).

Probably, the most provocative development has been the judiciary’s blithesome acceptance of an array of “wrongs without remedy” in the face of Congress’ evident intent that the federal courts develop a federal common law of ERISA. These cases, often explained by what is perhaps an immoderate concern for protection of the purported “comprehensive and reticulated” remedial scheme, comprise but a part of an even larger problem with the statute’s jurisprudence.

That failing is simply that, regardless of the soundness of the statute’s underlying policy, only a relatively small cadre of lawyers, and virtually no employees, understand that the statute operates the way it does. In other words, regardless of whether it is good policy that benefits may be promised but not provided (uniform administration of benefit plans, encouraging formation of benefit plans, etc.), it is really inexcusable that the summary plan descriptions are not required to clearly state the implication these policies may have on promised benefits.

So, we cannot complain that ERISA has been turned inside out by the judiciary, though we may have reason to question whether it has been at least partially deformed. But we may justifiably object that the law’s reversal of normal expectations as to available remedies awaits discovery for many until the day they seek its protection.

Note: Apropos of this subject, WorkPlace Prof describes today an ambitious project in his post “ERISA Reform Legislation Effort