Boyle v. Anderson, 94-2237

• Decision Date: 18 October 1995
• Docket Number: No. 94-2237,94-2237
• Citation: 68 F.3d 1093
• Parties: 150 L.R.R.M. (BNA) 2644, 64 USLW 2282, 19 Employee Benefits Cas. 2073, Pens. Plan Guide P 23914H Patrick BOYLE, James Daugherty, P. Dan Gilbert, Larry Jordan, Charles Maloney, Thomas Martin, Robert Schwartzbauer, and Gary Thaden, as the Board of Trustees of the Twin City Pipe Trades Welfare Trust, et al., Appellants, v. Morris ANDERSON, in his capacity as the Commissioner of the Minnesota Department of Revenue, et al., Minnesota, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1093

68 F.3d 1093

150 L.R.R.M. (BNA) 2644, 64 USLW 2282,

19 Employee Benefits Cas. 2073,

Pens. Plan Guide P 23914H

Patrick BOYLE, James Daugherty, P. Dan Gilbert, Larry

Jordan, Charles Maloney, Thomas Martin, Robert

Schwartzbauer, and Gary Thaden, as the Board of Trustees of

the Twin City Pipe Trades Welfare Trust, et al., Appellants, v. Morris ANDERSON, in his capacity as the Commissioner of the

Minnesota Department of Revenue, et al.,

Minnesota, Appellees.

No. 94-2237.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 12, 1994.

Decided Oct. 18, 1995.

William Allen Cumming, argued, Minneapolis, MN (Lee A. Henderson and Steven T. Hetland on the brief), for appellant.

Richard S. Slowesi, Assistant Solicitor General, argued, St. Paul, MN (Michael Vanselow on the brief), for appellee.

Before RICHARD S. ARNOLD, Chief Judge, FAGG, Circuit Judge, and WILSON, ¹ District Judge.

WILSON, District Judge.

Plaintiffs-appellants challenged certain provisions of the Minnesota health care reform legislation known as MinnesotaCare. This lawsuit was filed by the trustees of thirteen self-insured welfare benefit plans that provide health care benefits to their 75,000 members, who reside in Minnesota as well as in other states. The welfare benefit plans were created and operate under the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001, et seq. The plans are funded through contributions by the covered workers and their employers. Appellants contended that ERISA and the Labor Management Relations Act (LMRA) preempted the "passthrough" to their plans of any part of a 2 percent gross receipts tax imposed by the MinnesotaCare statute on hospitals and other health care providers. Appellants also challenged the data reporting provisions and spending cap provisions of the statute. Defendants-appellees are the commissioners of the Minnesota Departments of Revenue, Health, and Human Services, and the director of the program providing health care coverage to low-income uninsured people in the state. The District Court, the Honorable Paul A. Magnuson presiding, granted summary judgment for defendants, ruling that plaintiffs did not have standing to challenge the data reporting provisions and spending cap provisions of the statute. Judge Magnuson further ruled that the provider tax portions of the statute are not preempted by ERISA or the LMRA. We affirm.

SUMMARY JUDGMENT

We review a grant of summary judgment de novo. Summary judgment is appropriate where there are no genuine issues of material fact and a party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1985). Where the unresolved issues are primarily legal rather than factual, summary judgment is particularly appropriate. Crain v. Board of Police Commissioners, 920 F.2d 1402, 1405-1406 (8th Cir.1990). The Supreme Court has stated that "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole." Celotex, 477 U.S. at 327, 106 S.Ct. at 2555.

BACKGROUND

In April, 1992, the Minnesota Health Right Act, now known as MinnesotaCare, became law. The legislators' purpose in passing the law was to reduce health care costs and make health care available for all people in Minnesota. MinnesotaCare created several programs, including one to provide health coverage for low-income uninsured people. The Act also created a Health Care Commission to set limits on health care inflation and take other actions intended to reduce health care costs. To implement the legislation, the Department of Health has promulgated rules regarding collection of data from providers and purchasers of health care to help establish limits on the growth of health care spending. The MinnesotaCare programs are funded by several sources, including a 2 percent tax on gross patient revenues of hospitals, a 2 percent tax on gross revenues of Hospitals and health care providers are able to pass the cost of the MinnesotaCare 2 percent provider tax to others. The law permits a provider to transfer the expense of the provider tax to third party purchasers such as insurance companies, health maintenance organizations (HMOs), or self-insured employee health plans. The passthrough provision states:

                non-hospital health care providers, a cigarette tax increase, and other taxes.  In 1994 the Legislature directed the Health Care Commission to re-evaluate the financing structure of the health care reform program, providing that "To the extent possible, universal coverage should be achieved without a net increase in total health spending, taxes, or government spending by recapturing savings and reallocating resources within the system ... To the extent that universal coverage will require additional funding, revenues may be raised by reducing other general fund spending or through a variety of funding options, including broad-based taxes such as income or payroll."   Chapter 625, Art. 6, Section 7, 1994 Minn.Laws 1572
                

A hospital, surgical center, pharmacy, or health care provider that is subject to a tax under Section 295.52 may transfer additional expense generated by section 295.52 obligations on to all third-party contracts for the purchase of health care services on behalf of a patient or consumer. The expense must not exceed two percent of the gross revenues received under the third-party contract, including copayments and deductibles paid by the individual patient or consumer.... All third-party purchasers of health care services.... must pay the transferred expense in addition to any payments due under existing or future contracts with the hospital, surgical center, pharmacy, or health care provider, to the extent allowed under federal law. Nothing in this subdivision limits the ability of a hospital, surgical center, pharmacy or health care provider to recover all or part of the section 295.52 obligation by other methods, including increasing fees or charges. Minn.Stat.Section 295.582 (Supp.1993).

This provision makes it clear that it is not intended to limit the ability of a provider to recover all or part of its tax obligations by other methods, so that providers retain whatever legal right they may otherwise have to recover the cost of the 2 percent tax from purchasers of their services by increasing their charges. If providers use the method of increasing their charges for health care services, third-party purchasers do not receive a separate itemized charge for the provider tax, but they have to pay greater amounts for the services than they would have before the passage of MinnesotaCare.

ERISA

In cases involving preemption analysis, the Supreme Court has ruled that "the purpose of Congress is the ultimate touchstone." Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747, 105 S.Ct. 2380, 2393, 85 L.Ed.2d 728 (1985), citing Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443 (1978). In passing ERISA, Congress intended to free employee benefit plans from the threat of conflicting or inconsistent regulations by different states. Fort Halifax Packing Company v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211, 2216, 96 L.Ed.2d 1 (1987). As the Supreme Court concluded in a recent case involving the ERISA preemption provision: "The basic thrust of the preemption clause, then, was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans." New York State Conference of Blue Cross & Blue Shield Plans, et al., v. Travelers Insurance Company, et al., --- U.S. ----, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). The statute provides that it shall "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title." 29 U.S.C. 1144(a). The Supreme Court has held that the words "relate to" should be "construed expansively: 'a law relates to an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such plan.' " Shaw v. Delta Air Lines, 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983).

Despite this expansive interpretation of the statute, the Supreme Court has stressed that there are limitations to ERISA's preemption clause. Ingersoll Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990). Notwithstanding the variety of opportunities for federal preeminance, the Supreme Court has "never assumed lightly that Congress has derogated state regulation, but instead we have addressed claims of preemption with the starting presumption that Congress does not intend to supplant state law." Travelers, supra, --- U.S. at ----, 115 S.Ct. at 1676 (citing Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 2128, 68 L.Ed.2d 576 (1981). In addressing allegations that federal law bars state action in fields of traditional state regulation, the Travelers Court emphasized that "we have worked on the assumption 'that the historic police powers of the states were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.' " Id., citing Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). The Court cautioned that "If 'relate to' were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes preemption would never run its course, for 'really, universally, relations stop nowhere.' H. James, Roderick Hudson xli (New York ed., World's Classics 1980)." Travelers, at ----, 115 S.Ct. at 1677. The Court stressed that such an expansive interpretation of the preemption clause "would be to read Congress' words of limitation as mere sham, and to read the presumption against preemption out of the law...