How Does New York's Anti-Subrogation Law Effect ERISA Plan's

Question: In light of the enactment of NY's anti-subrogation law (GOL 5-335 and CPLR 4545), what effect does that have on a Self-Funded ERISA plan's attempt to assert a lien on a personal injury settlement (note: notice of the lien was asserted prior to passage of the legislation?

Answer: ERISA expressly preempts state laws insofar as they relate to employee benefit plans (29 U.S.C. 1144(a)).HOWEVER, under ERISA this preemption does not apply to those laws which regulate insurance, banking, or securities (29 USC 1144(b)(2)(A).This is known as the savings clause. Thus; for a state law to apply, it must be found to regulate insurance. We feel that the NY law regulates insurance as we discuss in the piece below.The rub is that if state law regulates insurance (and thus is not preempted) it will apply to insurance companies. Unfortunately, the Supreme Court in FMC Corp v. Holiday, 498 US 52, 61 (1990) held that the "Deemer clause" exempts self-funded plans under ERISA from state laws that "regulate insurance" within meaning of the saving clause, and thus self-funded ERISA plans are exempt from state regulation insofar as that regulation relates to the plans. Thus, a self-funded plan would most likely NOT be effected by the new legislation.Until case law begins to build based upon this new legislation I believe this is the reasonable interpretation.

I hope you find this response helpful.