April 15, 2021
LANSING - Michigan Attorney General Dana Nessel joined a coalition of 22 attorneys general in urging the U.S. Court of Appeals for the Fifth Circuit to protect states' historic power to regulate insurance and protect their residents from fraud, abuse, or substandard health coverage.
The coalition filed the brief in Data Marketing Partnership v. U.S. Department of Labor, a case that challenged the Department of Labor's conclusion that a scheme-under which users obtain health insurance in exchange for sharing data as they browse the internet-failed to qualify as an "employee benefit plan" under the Employee Retirement Income Security Act.
"The Department of Labor got it right. This type of scheme is not an employee benefit plan, and characterizing it as one allows bad actors to skirt state-level regulations that are vital to protecting residents from fraud and abuse in the healthcare industry," Nessel said. "I join my colleagues in defending states' rights to regulate health insurance and protect consumers."
ERISA is a federal statute regulating employee welfare and benefit plans. Where applicable, ERISA preempts-that is, supersedes-state law, meaning that certain ERISA plans are immune from direct state regulation. Because states heavily regulate the sale of insurance to protect consumers, opportunistic entities have historically tried to disguise health plans sold to consumers as certain ERISA-based employee health plans to avoid state insurance rules.
In this case, Plaintiff Data Marketing Partnership runs a "partnership" that provides health insurance to thousands of "limited partners" in exchange for allowing an entity to collect and sell any electronic data generated by the limited partners as they use their personal devices and surf the Internet. DOL concluded that based on the partnership's own description, the plan failed to qualify under any of ERISA's provisions, but a federal judge in Texas invalidated that decision and ordered DOL to treat the plan as a valid ERISA scheme.
In the amicus brief filed in the U.S. Court of Appeals for the Fifth Circuit, the coalition argues that treating this scheme as an employee benefit plan under ERISA encroaches on states' historic authority to regulate insurance and protect consumers, upsets the guardrails the Supreme Court and Congress have placed on ERISA's scope, and disregards the actual nature of the relationship between Data Marketing Partnership and its limited partners, which has none of the hallmarks of an employer-employee relationship.
In the amicus brief, the coalition argues that:
Joining Attorney General Nessel in filing this brief are the attorneys general of California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.