State welfare trust law and ERISA preemption

P/OPINION 75-143


                                                                 514


                        October 30, 1975


Dear           :

This letter is in belated reply to your inquiry of last
December regarding possible preemption of a law of the
State of           governing employee welfare trust funds.
The questions raised are both difficult and important
which is why we have been slow in responding. We have
now concluded, however, that except for section 48.502.040,
the substantive provisions of Chapter 48.52 of the (State)
Revised Code have been preempted by the Employee Retirement
Income Security Act of 1974 (ERISA). The reasons for our
view are set forth below.

Section 514(a) of ERISA provides that Titles I and IV
supersede any and all State laws insofar as they may
now or hereafter relate to any employee benefit plan
established or maintained by an employer or employee
organization engaged in commerce or in any industry or
activity affecting commerce, with specified exceptions.
The exceptions preserve State laws which regulate governmental
plans, church plans, plans maintained solely for the purpose
of complying with applicable workmen's or unemployment
compensation or disability insurance laws, plans maintained
outside the United States primarily for nonresidents, and
excess benefit plans. Paragraph 514(b) specifies that
Title I of the Act shall not be deemed to relieve or
exempt any person from any State law governing insurance,
banking or securities.

The (State) law is a law governing employee benefit plans
insofar as its coverage extends to any fund established
by one or more employers to provide employees, their
families or dependents with medical, hospital, disability,
death, retirement or annuity benefits. A fund for these
purposes is an employee benefit plan; it follows therefore
that State regulation of such a fund would be preempted.
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P/OPINION 75-143


In general we reach a different conclusion about section
48.52.040 because it regulates insurers and health care
contractors, and these are not normally employee benefit
plans. A health care contractor is defined by
48.44.010 as a suitably sponsored corporation, cooperative
group or association (e.g. by a group of licensed doctors
or hospitals) which provides prepaid health care. An
insurer is defined by          48.01.50 as a person engaged in
the business of making contracts of insurance. Insofar as
these organizations are not employee benefit plans, State
laws regulating them would not be preempted. Moreover,
State laws regulating insurance companies are specifically
saved from preemption by section 514 (b)(2) of ERISA.

Sincerely,