22 Attorneys General File Amicus Brief Arguing Texas District ERISA Judgment Threatens State Powers

District of Columbia Attorney General Karl A. Racine is at the helm of a brief submitted by 22 attorneys general as amici curiae in support of the United States Department of Labor and other defendants. The brief comes after a Northern District of Texas judgment in favor of Data Marketing Partnership LP, the plaintiff, upholding that a benefits arrangement “whereby users obtain health insurance in exchange for sharing data as they browse the Internet” is an employee benefits plan governed by the Employee Retirement Income Security Act (ERISA).

Racine — joined by the attorneys general of California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin — contended that the district court erred in its judgment for failure to consider such a ruling’s implications for the country’s federalist structure.

The coalition urged the Fifth Circuit to consider that treating Data Marketing Partnership’s health insurance scheme as an ERISA plan, when no evidence exists that its insureds were “meaningfully employed” by the plaintiff, “undermines the idea that ERISA is limited to plans in genuine employment contexts,” Racine said in a news release sent to Law Street announcing the amicus brief. Such an expansion of the meaning of “employee benefit plan” through jurisprudence throws the system of state regulation of general insurance plans into imbalance — a “power shift” to which the federal government itself objects, the attorneys general claimed.

“(A)ll three branches of the federal government have repeatedly reached the uncontroversial conclusion that ERISA was never intended to supplant states’ traditional role in regulating insurance and protecting consumers in settings where health coverage was not offered as an incident of an authentic employment relationship, but marketed to multiple employers or discrete individuals,” the brief said.

According to the amici, states’ historical and “paradigmatic” authority to govern insurance “is critical to protecting individuals and companies from catastrophic financial loss.”

“Fundamentally, questions about ERISA’s preemptive scope are questions about the allocation of power in a federal system,” the brief argued. “The Amici States therefore have a critical interest in protecting their historic police powers to ensure the health and well-being of their residents through insurance regulation.”

Data Marketing Partnership and other appellee L.P. Management Services LLC are represented by Taylor English Duma LLP.