Lawmaker Proposes Eliminating ERISA Pre-emption

November 4, 2009 ( - The ERISA Industry Committee (ERIC) is reporting that U.S. Representative John Shadegg (R-Arizona), during a press conference on Wednesday, urged Congress to eliminate the Employee Retirement Income Security Act's pre-emption clause to allow state-based remedies for employer plans.

In a blog on the Arizona Republic Web site, Shadegg claims that under ERISA, health care plans are “immune from consequential damages” and should be held accountable for adverse actions.

In response to Shadegg’s proposal at the press conference, ERIC President Mark Ugoretz warned that, “if Congress were to allow state litigation of ERISA plans, employers potentially could face thousands of lawsuits, under dozens of legal frameworks, resulting in a litigation nightmare,” according to an ERIC statement opposing the proposal.

“Health care is a national not a state-by-state issue and must be dealt with in a nationally uniform system — anything less results in health care chaos.  Employer-provided health care coverage cannot survive if it is subjected to a patchwork of enforcement, remedies, and compliance rules by 50 states and a kind of product liability litigation,” Ugoretz said. “Employers, many of whom are struggling to offer health coverage to their employees, cannot provide health care coverage if they are subject to a patchwork of rules and multiple lawsuits in state courts.”

Ugoretz added that for multi-state employers, “ERISA preemption is an essential protection that allows employers to offer nationally uniform benefit packages to their employees regardless of where they are geographically located.”  He added that the proposal would result in a retreat from offering health care coverage for millions of Americans who rely on ERISA-governed plans for their health care needs, and would drive up already escalating health care costs that ultimately will be passed on to employees.