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Massachusetts' mandated-benefit law, Mass. Gen. Laws Ann. ch. 175, § 47B, is a "law which regulates insurance" and so is not pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA) as it applies to insurance contracts purchased for plans subject to ERISA. Massachusetts' mandated-benefit law, Mass. Gen. Laws Ann. ch. 175, § 47B, as applied to a plan negotiated pursuant to a collective-bargaining agreement subject to the National Labor Relations Act, 29 U.S.C.S. § 151 et seq., is not pre-empted by federal labor law.
The Attorney General of Massachusetts brought suit in Massachusetts Superior Court for declaratory and injunctive relief against out-of-state insurers to force them to comply with Mass. Gen. Laws Ann. ch. 175, § 47B, which required that specified minimum mental health-care benefits be provided to a Massachusetts resident who was insured under a general insurance policy, an accident of sickness insurance policy, or an employee health-care plan that covers hospital and surgical expenses. The insurers contended that the state statute, as applied to insurance policies purchased by employee health-care plans regulated by the federal Employee Retirement Income Security Act of 1974 (ERISA) (29 USCS 1001 et seq.), was pre-empted by that Act, and that the statute, as applied to insurance policies purchased pursuant to negotiated collective-bargaining agreements regulated by the National Labor Relations Act (NLRA) (29 USCS 151 et seq.), was pre-empted by that labor Act. The Superior Court issued a permanent injunction requiring the insurers to provide the coverage mandated by the state statute. The Supreme Judicial Court of Massachusetts affirmed, finding no pre-emption under either § 514(a) of ERISA or the NLRA. The insurers appealed.
Was the state statute preempted by either ERISA or NLRA?
On further appeal, the Supreme Court affirmed the decisions of lower courts, holding that the statute avoided preemption because it regulated insurance within the meaning of ERISA's savings clause, § 514(b)(2)(A), 29 U.S.C.S. § 1144(b)(2)(A), and because benefit plans were not deemed insurance companies under § 514(b)(2)(B) of ERISA, 29 U.S.C.S. § 1144(b)(2)(B). Further, the mandated benefit law was a state regulation of the insurance business protected by the McCarran-Ferguson Act, 15 U.S.C.S. § 1011 et seq. The court also found no preemption under the NLRA because state laws that imposed minimum requirements for contract terms did not limit protected rights of self-organization or collective bargaining.