Section 4-10 of Illinois's Health Maintenance Organization Act, 215 Ill. Comp. Stat., ch. 125, § 4-10 (2000), provides recipients of health coverage by such organizations with a right to independent medical review of certain denials of benefits. The issue in this case is whether the statute, as applied to health benefits provided by a health maintenance organization under contract with an employee welfare benefit plan, is preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 832, as amended, 29 U. S. C. § 1001 et seq. We hold it is not.
Petitioner, Rush Prudential HMO, Inc., is a health maintenance organization (HMO) that contracts to provide medical services for employee welfare benefit plans covered by ERISA. Respondent Debra Moran is a beneficiary under one such plan, sponsored by her husband's employer. Rush's "Certificate of Group Coverage," issued to employees who participate in employer-sponsored plans, promises that Rush will provide them with "medically necessary" services. The terms of the certificate give Rush the "broadest possible discretion" to determine whether a medical service claimed by a
As the certificate explains, Rush contracts with physicians "to arrange for or provide services and supplies for medical care and treatment" of covered persons. Each covered person selects a primary care physician from those under contract to Rush, while Rush will pay for medical services by an unaffiliated physician only if the services have been "authorized" both by the primary care physician and Rush's medical director. See id., at 11, 16.
In 1996, when Moran began to have pain and numbness in her right shoulder, Dr. Arthur LaMarre, her primary care physician, unsuccessfully administered "conservative" treatments such as physiotherapy. In October 1997, Dr. LaMarre recommended that Rush approve surgery by an unaffiliated specialist, Dr. Julia Terzis, who had developed an unconventional treatment for Moran's condition. Although Dr. LaMarre said that Moran would be "best served" by that procedure, Rush denied the request and, after Moran's internal appeals, affirmed the denial on the ground that the procedure was not "medically necessary." 230 F.3d 959, 963 (CA7
In January 1998, Moran made a written demand for an independent medical review of her claim, as guaranteed by § 4-10 of Illinois's HMO Act, 215 Ill. Comp. Stat., ch. 125, § 4-10 et seq. (2000), which provides:
The Act defines a "Health Maintenance Organization" as
While the suit was pending, Moran had surgery by Dr. Terzis at her own expense and submitted a $94,841.27 reimbursement claim to Rush. Rush treated the claim as a renewed request for benefits and began a new inquiry to determine coverage. The three doctors consulted by Rush said the surgery had been medically unnecessary.
Meanwhile, the federal court remanded the case back to state court on Moran's motion, concluding that because Moran's request for independent review under § 4-10 would not require interpretation of the terms of an ERISA plan, the claim was not "completely preempted" so as to permit removal under 28 U. S. C. § 1441.
Moran amended her complaint in state court to seek reimbursement for the surgery as "medically necessary" under Illinois's HMO Act, and Rush again removed to federal court, arguing that Moran's amended complaint stated a claim for ERISA benefits and was thus completely preempted by ERISA's civil enforcement provisions, 29 U. S. C. § 1132(a), as construed by this Court in Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987). The District Court treated Moran's claim as a suit under ERISA, and denied the claim on the ground that ERISA preempted Illinois's independent review statute.
The Court of Appeals for the Seventh Circuit reversed. 230 F.3d 959 (2000). Although it found Moran's state-law reimbursement claim completely preempted by ERISA so as to place the case in federal court, the Seventh Circuit did not agree that the substantive provisions of Illinois's HMO Act were so preempted. The court noted that although ERISA broadly preempts any state laws that "relate to" employee benefit plans, 29 U. S. C. § 1144(a), state laws that "regulat[e]
Because the decision of the Court of Appeals conflicted with the Fifth Circuit's treatment of a similar provision of Texas law in Corporate Health Ins., Inc. v. Texas Dept. of Ins., 215 F.3d 526 (2000), we granted certiorari, 533 U.S. 948 (2001). We now affirm.
To "safeguar[d] . . . the establishment, operation, and administration" of employee benefit plans, ERISA sets "minimum standards . . . assuring the equitable character of such plans and their financial soundness," 29 U. S. C. § 1001(a), and contains an express preemption provision that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . ." § 1144(a). A saving clause then reclaims a substantial amount of ground with its provision that "nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities." § 1144(b)(2)(A). The "unhelpful" drafting of these antiphonal clauses, New York State Confer-
It is beyond serious dispute that under existing precedent § 4-10 of the Illinois HMO Act "relates to" employee benefit plans within the meaning of § 1144(a). The state law bears "indirectly but substantially on all insured benefit plans," Metropolitan Life, 471 U. S., at 739, by requiring them to submit to an extra layer of review for certain benefit denials if they purchase medical coverage from any of the common types of health care organizations covered by the state law's definition of HMO. As a law that "relates to" ERISA plans under § 1144(a), § 4-10 is saved from preemption only if it also "regulates insurance" under § 1144(b)(2)(A). Rush insists that the Act is not such a law.
In Metropolitan Life, we said that in deciding whether a law "regulates insurance" under ERISA's saving clause, we start with a "common-sense view of the matter," 471 U. S.,
The commonsense enquiry focuses on "primary elements of an insurance contract[, which] are the spreading and underwriting of a policyholder's risk." Ibid. The Illinois statute addresses these elements by defining "health maintenance organization" by reference to the risk that it bears. See 215 Ill. Comp. Stat., ch. 125, § 1-2(9) (2000) (an HMO "provide[s] or arrange[s] for . . . health care plans under a system which causes any part of the risk of health care delivery to be borne by the organization or its providers").
Rush contends that seeing an HMO as an insurer distorts the nature of an HMO, which is, after all, a health care provider, too. This, Rush argues, should determine its characterization, with the consequence that regulation of an HMO is not insurance regulation within the meaning of ERISA.
"The defining feature of an HMO is receipt of a fixed fee for each patient enrolled under the terms of a contract to provide specified health care if needed." Pegram v. Herdrich, 530 U.S. 211, 218 (2000). "The HMO thus assumes the financial risk of providing the benefits promised: if a participant never gets sick, the HMO keeps the money regardless, and if a participant becomes expensively ill, the HMO is responsible for the treatment . . . ." Id., at 218-219. The HMO design goes beyond the simple truism that all contracts are, in some sense, insurance against future fluctuations in price, R. Posner, Economic Analysis of Law 104 (4th ed. 1992), because HMOs actually underwrite and spread risk among their participants, see, e. g., R. Shouldice, Introduction to Managed Care 450-462 (1991), a feature distinctive to insurance, see, e. g., SEC v. Variable Annuity Life Ins. Co. of America, 359 U.S. 65, 73 (1959) (underwriting of risk is an "earmark of insurance as it has commonly been conceived of in popular understanding and usage"); Royal Drug, supra, at 214-215, n. 12 ("[U]nless there is some element of spreading risk more widely, there is no underwriting of risk").
So Congress has understood from the start, when the phrase "Health Maintenance Organization" was established and defined in the HMO Act of 1973. The Act was intended to encourage the development of HMOs as a new form of health care delivery system, see S. Rep. No. 93-129, pp. 7-9
This conception has not changed in the intervening years. Since passage of the federal Act, States have been adopting their own HMO enabling Acts, and today, at least 40 of them, including Illinois, regulate HMOs primarily through the States' insurance departments, see Aspen Health Law and Compliance Center, Managed Care Law Manual 31-32 (Supp. 6, Nov. 1997), although they may be treated differently from traditional insurers, owing to their additional role as health care providers,
On a second tack, Rush and its amici dispute that § 4-10 is aimed specifically at the insurance industry. They say the law sweeps too broadly with definitions capturing organizations that provide no insurance, and by regulating noninsurance activities of HMOs that do. Rush points out that Illinois law defines HMOs to include organizations that cause the risk of health care delivery to be borne by the organization itself,or by "its providers." 215 Ill.Comp. Stat., ch. 125, § 1-2(9) (2000). In Rush's view, the reference to "its
These arguments, however, are built on unsound assumptions. Rush's first contention assumes that an HMO is no longer an insurer when it arranges to limit its exposure, as when an HMO arranges for capitated contracts to compensate its affiliated physicians with a set fee for each HMO patient regardless of the treatment provided. Under such an arrangement, Rush claims, the risk is not borne by the HMO at all. In a similar vein, Rush points out that HMOs may contract with third-party insurers to protect themselves against large claims.
The problem with Rush's argument is simply that a reinsurance contract does not take the primary insurer out of the insurance business, cf. Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993) (applying McCarran-Ferguson to a dispute involving primary insurers and reinsurers); id., at 772-773 ("[P]rimary insurers . . . usually purchase insurance to cover a portion of the risk they assume from the consumer"), and capitation contracts do not relieve the HMO of its obligations to the beneficiary. The HMO is still bound to provide medical care to its members, and this is so regardless of the ability of physicians or third-party insurers to honor their contracts with the HMO.
Nor do we see anything standing in the way of applying the saving clause if we assume that the general state definition of HMO would include a contractor that provides only administrative services for a self-funded plan.
It is far from clear, though, that the terms of § 4-10 would even theoretically apply to the matchmaker, for the requirement that the HMO "provide" the covered service if the independent reviewer finds it medically necessary seems to assume that the HMO in question is a provider, not the mere arranger mentioned in the general definition of an HMO. Even on the most generous reading of Rush's argument, however, it boils down to the bare possibility (not the likelihood) of some overbreadth in the application of § 4-10 beyond orthodox HMOs, and there is no reason to think Congress would have meant such minimal application to noninsurers to remove a state law entirely from the category of insurance regulation saved from preemption.
In sum, prior to ERISA's passage, Congress demonstrated an awareness of HMOs as risk-bearing organizations subject to state insurance regulation, the state Act defines HMOs by reference to risk bearing, HMOs have taken over much business formerly performed by traditional indemnity insurers, and they are almost universally regulated as insurers under state law. That HMOs are not traditional "indemnity"
The McCarran-Ferguson factors confirm our conclusion. A law regulating insurance for McCarran-Ferguson purposes targets practices or provisions that "ha[ve] the effect of transferring or spreading a policyholder's risk; . . . [that are] an integral part of the policy relationship between the insurer and the insured; and [are] limited to entities within the insurance industry." Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982). Because the factors are guideposts, a state law is not required to satisfy all three McCarran-Ferguson criteria to survive preemption, see UNUM Life Ins. Co. v. Ward, 526 U. S., at 373, and so we follow our precedent and leave open whether the review mandated here may be described as going to a practice that "spread[s] a policyholder's risk." For in any event, the second and third factors are clearly satisfied by § 4-10.
It is obvious enough that the independent review requirement regulates "an integral part of the policy relationship between the insurer and the insured." Illinois adds an extra layer of review when there is internal disagreement about an HMO's denial of coverage. The reviewer applies both a standard of medical care (medical necessity) and characteristically, as in this case, construes policy terms. Cf. Pegram v. Herdrich, 530 U. S., at 228-229. The review affects the "policy relationship" between HMO and covered persons by translating the relationship under the HMO agreement into concrete terms of specific obligation or freedom from duty. Hence our repeated statements that the interpretation of insurance contracts is at the "core" of the business of
Rush says otherwise, citing Union Labor Life Ins. Co. v. Pireno, supra, and insisting that that case holds external review of coverage decisions to be outside the "policy relationship." But Rush misreads Pireno. We held there that an insurer's use of a "peer review" committee to gauge the necessity of particular treatments was not a practice integral to the policy relationship for the purposes of McCarranFerguson. 458 U. S., at 131-132. We emphasized, however, that the insurer's resort to peer review was simply the insurer's unilateral choice to seek advice if and when it cared to do so. The policy said nothing on the matter. The insurer's contract for advice from a third party was no concern of the insured, who was not bound by the peer review committee's recommendation any more, for that matter, than the insurer was. Thus it was not too much of an exaggeration to conclude that the practice was "a matter of indifference to the policyholder," id., at 132. Section 4-10, by contrast, is different on all counts, providing as it does a legal right to the insured, enforceable against the HMO, to obtain an authoritative determination of the HMO's medical obligations.
The final factor, that the law be aimed at a "practice . . . limited to entities within the insurance industry," id., at 129, is satisfied for many of the same reasons that the law passes the commonsense test. The law regulates application of HMO contracts and provides for review of claim denials; once it is established that HMO contracts are, in fact, contracts for insurance (and not merely contracts for medical care), it is clear that § 4-10 does not apply to entities outside the insurance industry (although it does not, of course, apply to all entities within it).
Even if we accepted Rush's contention, rejected already, that the law regulates HMOs even when they act as pure administrators, we would still find the third factor satisfied.
Given that § 4-10 regulates insurance, ERISA's mandate that "nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance," 29 U. S. C. § 1144(b)(2)(A), ostensibly forecloses preemption. See Metropolitan Life, 471 U. S., at 746 ("If a state law `regulates insurance,' . . . it is not preempted"). Rush, however, does not give up. It argues for preemption anyway, emphasizing that the question is ultimately one of congressional intent, which sometimes is so clear that it overrides a statutory provision designed to save state law from being preempted. See American Telephone & Telegraph Co. v. Central Office Telephone, Inc., 524 U.S. 214, 227 (1998) (AT&T) (clause in Communications Act of 1934 purporting to save "the remedies now existing at common law or by statute," 47 U. S. C. § 414 (1994 ed.), defeated by overriding policy of the filed-rate doctrine); Adams Express Co. v. Croninger, 226 U.S. 491, 507 (1913) (saving clause will not sanction state laws that would nullify policy expressed in federal statute; "the act cannot be said to destroy itself" (internal quotation marks omitted)).
In ERISA law, we have recognized one example of this sort of overpowering federal policy in the civil enforcement provisions, 29 U. S. C. § 1132(a), authorizing civil actions for
Although we have yet to encounter a forced choice between the congressional policies of exclusively federal remedies and the "reservation of the business of insurance to the States," Metropolitan Life, 471 U. S., at 744, n. 21, we have anticipated such a conflict, with the state insurance regulation losing out if it allows plan participants "to obtain remedies . . . that Congress rejected in ERISA," Pilot Life, supra, at 54.
In Pilot Lif e, an ERISA plan participant who had been denied benefits sued in a state court on state tort and contract claims. He sought not merely damages for breach of contract, but also damages for emotional distress and punitive damages, both of which we had held unavailable under relevant ERISA provisions. Russell, supra, at 148. We not only rejected the notion that these common law contract claims "regulat[ed] insurance," Pilot Life, 481 U. S., at 50-51, but went on to say that, regardless, Congress intended a "federal common law of rights and obligations" to develop under ERISA, id., at 56, without embellishment by independent state remedies. As in AT&T, we said the saving clause had to stop short of subverting congressional intent, clearly expressed "through the structure and legislative history[,] that the federal remedy . . . displace state causes of action." 481 U. S., at 57.
Rush says that the day has come to turn dictum into holding by declaring that the state insurance regulation, § 4-10, is preempted for creating just the kind of "alternative remedy" we disparaged in Pilot Life. As Rush sees it, the independent
We think, however, that Rush overstates the rule expressed in Pilot Life. The enquiry into state processes alleged to "supplemen[t] or supplan[t]" the federal scheme by allowing beneficiaries "to obtain remedies under state law that Congress rejected in ERISA," id., at 54, has, up to now, been far more straightforward than it is here. The first case touching on the point did not involve preemption at all; it arose from an ERISA beneficiary's reliance on ERISA's own enforcement scheme to claim a private right of action for types of damages beyond those expressly provided. Russell, 473 U. S., at 145. We concluded that Congress had not intended causes of action under ERISA itself beyond those specified in § 1132(a). Id., at 148. Two years later we determined in Metropolitan Life Ins. Co. v. Taylor, supra, that Congress had so completely preempted the field of benefits law that an ostensibly state cause of action for benefits was necessarily a "creature of federal law" removable to federal court. Id., at 64 (internal quotation marks omitted). Russell and Taylor naturally led to the holding in Pilot Life that ERISA would not tolerate a diversity action seeking monetary damages for breach generally and for consequential emotional distress, neither of which Congress had authorized in § 1132(a). These monetary awards were claimed as remedies to be provided at the ultimate step of plan enforcement, and even if they could have been characterized as products of "insurance regulation," they would have significantly
Since Pilot Life, we have found only one other state law to "conflict" with § 1132(a) in providing a prohibited alternative remedy. In Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990), we had no trouble finding that Texas's tort of wrongful discharge, turning on an employer's motivation to avoid paying pension benefits, conflicted with ERISA enforcement; while state law duplicated the elements of a claim available under ERISA, it converted the remedy from an equitable one under § 1132(a)(3) (available exclusively in federal district courts) into a legal one for money damages (available in a state tribunal). Thus, Ingersoll-Rand fit within the category of state laws Pilot Life had held to be incompatible with ERISA's enforcement scheme; the law provided a form of ultimate relief in a judicial forum that added to the judicial remedies provided by ERISA. Any such provision patently violates ERISA's policy of inducing employers to offer benefits by assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation has occurred. See Pilot Life, supra, at 56 ("`The uniformity of decision . . . will help administrators . . . predict the legality of proposed actions without the necessity of reference to varying state laws' " (quoting H. R. Rep. No. 93-533, p. 12 (1973))); 481 U. S., at 56 ("The expectations that a federal common law of rights and obligations under ERISAregulated plans would develop . . . would make little sense if the remedies available to ERISA participants and beneficiaries under [§ 1132(a)] could be supplemented or supplanted by varying state laws").
But this case addresses a state regulatory scheme that provides no new cause of action under state law and authorizes no new form of ultimate relief. While independent review under § 4-10 may well settle the fate of a benefit claim under a particular contract, the state statute does not enlarge
Rush still argues for going beyond Pilot Life, making the preemption issue here one of degree, whether the state procedural imposition interferes unreasonably with Congress's intention to provide a uniform federal regime of "rights and obligations" under ERISA. However, "[s]uch disuniformities . . . are the inevitable result of the congressional decision to `save' local insurance regulation." Metropolitan Life, 471 U. S., at 747.
To be sure, a State might provide for a type of "review" that would so resemble an adjudication as to fall within Pilot Life `s categorical bar. Rush, and the dissent, post, at 394 (opinion of Thomas, J.), contend that § 4-10 fills that bill by imposing an alternative scheme of arbitral adjudication at
In the classic sense, arbitration occurs when "parties in dispute choose a judge to render a final and binding decision on the merits of the controversy and on the basis of proofs presented by the parties." 1 I. MacNeil, R. Speidel, & T. Stipanowich, Federal Arbitration Law § 2.1.1 (1995) (internal quotation marks omitted); see also Uniform Arbitration Act § 5, 7 U. L. A. 173 (1997) (discussing submission evidence and empowering arbitrator to "hear and determine the controversy upon the evidence produced"); Commercial Dispute Resolution Procedures of the American Arbitration Association ¶¶ R33—R35 (Sept. 2000) (discussing the taking of evidence). Arbitrators typically hold hearings at which parties may submit evidence and conduct cross-examinations, e. g., Uniform Arbitration Act § 5, and are often invested with many powers over the dispute and the parties, including the power to subpoena witnesses and administer oaths, e. g., Federal Arbitration Act, 9 U. S. C. § 7; 28 U. S. C. § 653; Uniform Arbitration Act § 7, 7 U. L. A., at 199; Cal. Civ. Proc. Code Ann. §§ 1282.6, 1282.8 (West 1982).
Section 4-10 does resemble an arbitration provision, then, to the extent that the independent reviewer considers disputes about the meaning of the HMO contract
Once this process is set in motion, it does not resemble either contract interpretation or evidentiary litigation before a neutral arbiter, as much as it looks like a practice (having nothing to do with arbitration) of obtaining another medical opinion. The reference to an independent reviewer is similar to the submission to a second physician, which many health insurers are required by law to provide before denying coverage.
The practice of obtaining a second opinion, however, is far removed from any notion of an enforcement scheme, and
Next, Rush argues that § 4-10 clashes with a substantive rule intended to be preserved by the system of uniform enforcement, stressing a feature of judicial review highly prized by benefit plans: a deferential standard for reviewing benefit denials. Whereas Firestone Tire & Rubber Co. v. Bruch, 489 U. S., at 115, recognized that an ERISA plan could be designed to grant "discretion" to a plan fiduciary, deserving deference from a court reviewing a discretionary judgment, § 4-10 provides that when a plan purchases medical services and insurance from an HMO, benefit denials are subject to apparently de novo review. If a plan should continue to balk at providing a service the reviewer has found medically necessary, the reviewer's determination could carry great weight in a subsequent suit for benefits under § 1132(a),
Again, however, the significance of § 4-10 is not wholly captured by Rush's argument, which requires some perspective
Not only is there no ERISA provision directly providing a lenient standard for judicial review of benefit denials, but there is no requirement necessarily entailing such an effect even indirectly. When this Court dealt with the review standards on which the statute was silent, we held that a general or default rule of de novo review could be replaced
* * *
In sum, § 4-10 imposes no new obligation or remedy like the causes of action considered in Russell, Pilot Life, and Ingersoll-Rand. Even in its formal guise, the State Act bears a closer resemblance to second-opinion requirements than to arbitration schemes. Deferential review in the HMO context is not a settled given; § 4-10 operates before the stage of judicial review; the independent reviewer's de novo examination of the benefit claim mirrors the general or
In deciding what to make of these facts and conclusions, it helps to go back to where we started and recall the ways States regulate insurance in looking out for the welfare of their citizens. Illinois has chosen to regulate insurance as one way to regulate the practice of medicine, which we have previously held to be permissible under ERISA, see Metropolitan Life, 471 U. S., at 741. While the statute designed to do this undeniably eliminates whatever may have remained of a plan sponsor's option to minimize scrutiny of benefit denials, this effect of eliminating an insurer's autonomy to guarantee terms congenial to its own interests is the stuff of garden variety insurance regulation through the imposition of standard policy terms. See id., at 742 ("[S]tate laws regulating the substantive terms of insurance contracts were commonplace well before the mid-70's"). It is therefore hard to imagine a reservation of state power to regulate insurance that would not be meant to cover restrictions of the insurer's advantage in this kind of way. And any lingering doubt about the reasonableness of § 4-10 in affecting the application of § 1132(a) may be put to rest by recalling that regulating insurance tied to what is medically necessary is probably inseparable from enforcing the quintessentially state-law standards of reasonable medical care. See Pegram v. Herdrich, 530 U. S., at 236. "[I]n the field of health care, a subject of traditional state regulation, there is no ERISA preemption without clear manifestation of congressional purpose." Id., at 237. To the extent that benefit litigation in some federal courts may have to account for the effects of § 4-10, it would be an exaggeration to hold that the objectives of § 1132(a) are undermined. The saving clause is entitled to prevail here, and we affirm the judgment.
It is so ordered.
This Court has repeatedly recognized that ERISA's civil enforcement provision, § 502 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U. S. C. § 1132, provides the exclusive vehicle for actions asserting a claim for benefits under health plans governed by ERISA, and therefore that state laws that create additional remedies are preempted. See, e. g., Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52 (1987); Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146-147 (1985). Such exclusivity of remedies is necessary to further Congress' interest in establishing a uniform federal law of employee benefits so that employers are encouraged to provide benefits to their employees: "To require plan providers to design their programs in an environment of differing state regulations would complicate the administration of nationwide plans, producing inefficiencies that employers might offset with decreased benefits." FMC Corp. v. Holliday, 498 U.S. 52, 60 (1990).
Of course, the "expectations that a federal common law of rights and obligations under ERISA-regulated plans would develop . . . would make little sense if the remedies available to ERISA participants and beneficiaries under § 502(a) could be supplemented or supplanted by varying state laws." Pilot Life, supra, at 56. Therefore, as the Court concedes, see ante, at 377, even a state law that "regulates insurance" may be pre-empted if it supplements the remedies provided by ERISA, despite ERISA's saving clause, § 514(b)(2)(A), 29 U. S. C. § 1144(b)(2)(A). See Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248 (1984) (noting that state laws that stand as an obstacle to the accomplishment of the full purposes and objectives of Congress are pre-empted).
From the facts of this case one can readily understand why Moran sought recourse under § 4-10. Moran is covered by a medical benefits plan sponsored by her husband's employer and governed by ERISA. Petitioner Rush Prudential HMO, Inc., is the employer's health maintenance organization (HMO) provider for the plan. Petitioner's Member Certificate of Coverage (Certificate) details the scope of coverage under the plan and provides petitioner with "the broadest possible discretion" to interpret the terms of the plan and to determine participants' entitlement to benefits. 1 Record, Exh. A, p. 8. The Certificate specifically excludes from coverage services that are not "medically necessary." Id., at 21. As the Court describes, ante, at 360-362, Moran underwent a nonstandard surgical procedure.
In the course of its review, petitioner informed Moran that "there is no prevailing opinion within the appropriate specialty of the United States medical profession that the procedure proposed [by Moran] is safe and effective for its intended use and that the omission of the procedure would adversely affect [her] medical condition." 1 Record, Exh. E, at 2. Petitioner did agree to cover the standard treatment for Moran's ailment, see n. 2, supra; n. 4, infra, concluding that peer-reviewed literature "demonstrates that [the standard surgery] is effective therapy in the treatment of [Moran's condition]." 1 Record, Exh. E, at 3.
Moran, however, was not satisfied with this option. After exhausting the plan's internal review mechanism, Moran
Dr. A. Lee Dellon, an unaffiliated physician who served as the independent medical reviewer, concluded that the surgery for which petitioner denied coverage "was appropriate," that it was "the same type of surgery" he would have done, and that Moran "had all of the indications and therefore the medical necessity to carry out" the nonstandard surgery. Appellant's Separate App. (CA7), pp. A42—A43.
Nevertheless, petitioner again denied benefits, steadfastly maintaining that the unconventional surgery was not medically necessary. While the Court of Appeals recharacterized Moran's claim for reimbursement under § 4-10 as a claim for benefits under ERISA § 502(a)(1)(B), it reversed the judgment
Section 514(a)'s broad language provides that ERISA "shall supersede any and all State laws insofar as they . . . relate to any employee benefit plan," except as provided in § 514(b). 29 U. S. C. § 1144(a). This language demonstrates "Congress's intent to establish the regulation of employee welfare benefit plans `as exclusively a federal concern.' " New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995) (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)). It was intended to "ensure that plans and plan sponsors would be subject to a uniform body of benefits law" so as to "minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government" and to prevent "the potential for conflict in substantive law . . . requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990). See also Egelhoff v. Egelhoff, 532 U.S. 141, 148 (2001).
To be sure, this broad goal of uniformity is in some tension with the so-called "saving clause," which provides that ERISA does not "exempt or relieve any person from any law of any State which regulates insurance, banking, or securities." § 514(b)(2)(A) of ERISA, 29 U. S. C. § 1144(b)(2)(A). As the Court has suggested on more than one occasion, the pre-emption and saving clauses are almost antithetically broad and "`are not a model of legislative drafting.' " John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86, 99 (1993) (quoting Pilot Life, 481 U. S., at 46). But because there is "no solid basis for believing that Congress, when it designed ERISA, intended fundamentally to alter traditional pre-emption analysis," the Court has concluded
Consequently, the Court until today had consistently held that state laws that seek to supplant or add to the exclusive remedies in § 502(a) of ERISA, 29 U. S. C. § 1132(a), are preempted because they conflict with Congress' objective that rights under ERISA plans are to be enforced under a uniform national system. See, e. g., Ingersoll-Rand Co., supra, at 142-145; Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-66 (1987); Pilot Life, supra, at 52-57. The Court has explained that § 502(a) creates an "interlocking, interrelated, and interdependent remedial scheme," and that a beneficiary who claims that he was wrongfully denied benefits has "a panoply of remedial devices" at his disposal. Russell, 473 U. S., at 146. It is exactly this enforcement scheme that Pilot Life described as "represent[ing] a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans," 481 U. S., at 54. Central to that balance is the development of "a federal common law of rights and obligations under ERISA-regulated plans." Id., at 56.
In addressing the relationship between ERISA's remedies under § 502(a) and a state law regulating insurance, the Court has observed that "[t]he policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA." Id., at 54. Thus, while the preeminent federal interest in the uniform administration of employee benefit plans yields in some instances to varying state regulation of the business of insurance, the exclusivity and uniformity of
The question for the Court, therefore, is whether § 4-10 provides such a vehicle. Without question, Moran had a "panoply of remedial devices," Russell, supra, at 146, available under § 502 of ERISA when petitioner denied her claim for benefits.
Section 4-10 cannot be characterized as anything other than an alternative state-law remedy or vehicle for seeking benefits. In the first place, § 4-10 comes into play only if the HMO and the claimant dispute the claimant's entitlement to benefits; the purpose of the review is to determine whether a claimant is entitled to benefits. Contrary to the majority's characterization of § 4-10 as nothing more than a state law
There is no question that arbitration constitutes an alternative remedy to litigation. See, e. g., Air Line Pilots v. Miller, 523 U.S. 866, 876, 880 (1998) (referring to "arbitral remedy" and "arbitration remedy"); DelCostello v. Teamsters, 462 U.S. 151, 163 (1983) (referring to "arbitration remedies"); Great American Fed. Sav. & Loan Assn. v. Novotny, 442 U.S. 366, 377-378 (1979) (noting that arbitration and litigation are "alternative remedies"); 3 D. Dobbs, Law of Remedies § 12.23 (2d ed. 1993) (explaining that arbitration "is itself a remedy"). Consequently, although a contractual agreement to arbitrate—which does not constitute a "State law" relating to "any employee benefit plan"—is outside § 514(a) of ERISA's pre-emptive scope, States may not circumvent ERISA pre-emption by mandating an alternative arbitral-like remedy as a plan term enforceable through an ERISA action.
To be sure, the majority is correct that § 4-10 does not mirror all procedural and evidentiary aspects of "common arbitration." Ante, at 381-383. But as a binding decision on the merits of the controversy the § 4-10 review resembles nothing so closely as arbitration. See generally 1 I. MacNeil, R. Spediel, & T. Stipanowich, Federal Arbitration Law § 2.1.1 (1995). That the decision of the § 4-10 medical reviewer is ultimately enforceable through a suit under § 502(a) of ERISA further supports the proposition that it tracks the arbitral remedy. Like the decision of any arbitrator, it is enforceable through a subsequent judicial action, but judicial
The Court of Appeals attempted to evade the pre-emptive force of ERISA's exclusive remedial scheme primarily by characterizing the alternative enforcement mechanism created by § 4-10 as a "contract term" under state law.
The Court of Appeals' approach assumes that a State may impose an alternative enforcement mechanism through mandated contract terms even though it could not otherwise impose such an enforcement mechanism on a health plan governed by ERISA. No party cites any authority for that novel proposition, and I am aware of none. Cf. Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 16-17 (1987) (noting that a State cannot avoid ERISA pre-emption on the ground that its regulation only mandates a benefit plan; such an approach would "permit States to circumvent ERISA's pre-emption provision, by allowing them to require directly what they are forbidden to regulate"). To hold otherwise would be to eviscerate ERISA's comprehensive and exclusive remedial scheme because a claim to benefits under an employee benefits plan could be determined under each State's particular remedial devices so long as they were made contract terms. Such formalist tricks cannot be sufficient to bypass ERISA's exclusive remedies; we should not interpret ERISA in such a way as to destroy it.
With respect to the Court's position, Congress' intention that § 502(a) be the exclusive remedy for rights guaranteed under ERISA has informed this Court's weighing of the pre-emption and saving clauses. While the Court has previously focused on ERISA's overall enforcement mechanism and remedial scheme, see infra, at 393-394, the Court today ignores the "interlocking, interrelated, and interdependent" nature of that remedial scheme and announces that the relevant inquiry is whether a state regulatory scheme "provides [a] new cause of action" or authorizes a "new form of ultimate relief." Ante, at 379. These newly created principles have no roots in the precedents of this Court. That § 4-10 also
The Court's attempt to diminish § 4-10's effect by characterizing it as one where "the reviewer's determination would presumably replace that of the HMO," ante, at 380 (emphasis added), is puzzling given that the statute makes such a determination conclusive and the Court of Appeals treated it as a binding adjudication. For these same reasons, it is troubling that the Court views the review under § 4-10 as nothing more than a practice "of obtaining a second [medical] opinion." Ante, at 383. The independent reviewer may, like most arbitrators, possess special expertise or knowledge in the area subject to arbitration. But while a second medical opinion is nothing more than that—an opinion—a determination under § 4-10 is a conclusive determination with respect to the award of benefits. And the Court's reference to Pegram v. Herdrich, 530 U.S. 211 (2000), as support for its Alice in Wonderland-like claim that the § 4-10 proceeding is "far removed from any notion of an enforcement scheme," ante, at 383, is equally perplexing, given that the treatment is long over and the issue presented is purely an eligibility decision with respect to reimbursement.
By contrast, a state law regulating insurance that merely affects whether a plan participant or beneficiary may pursue the remedies available under ERISA's remedial scheme, such as California's notice-prejudice rule, is not pre-empted because it has nothing to do with § 502(a)'s exclusive enforcement scheme. In UNUM Life Ins. Co. of America v. Ward, 526 U.S. 358 (1999), the Court evaluated California's socalled notice-prejudice rule, which provides that an insurer cannot avoid liability in cases where a claim is not filed in a timely fashion absent proof that the insurer was actually prejudiced because of the delay. In holding that it was not pre-empted, the Court did not suggest that this rule provided a substantive plan term. The Court expressly declined to address the Solicitor General's argument that the saving clause saves even state law "conferring causes of action or affecting remedies that regulate insurance." See id., at 376-377, n. 7 (internal quotation marks omitted). While
* * *
Section 4-10 constitutes an arbitral-like state remedy through which plan members may seek to resolve conclusively a disputed right to benefits. Some 40 other States have similar laws, though these vary as to applicability, procedures, standards, deadlines, and consequences of independent review. See Brief for Respondent State of Illinois 12, n. 4 (citing state independent review statutes); see also Kaiser Family Foundation, K. Politz, J. Crowley, K. Lucia, & E. Bangit, Assessing State External Review Programs and the Effects of Pending Federal Patients' Rights Legislation (May 2002) (comparing state program features). Allowing disparate state laws that provide inconsistent external review requirements to govern a participant's or beneficiary's claim to benefits under an employee benefit plan is wholly destructive of Congress' expressly stated goal of uniformity in this area. Moreover, it is inimical to a scheme for furthering and protecting the "careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans," given that the development of a federal common law under ERISA-regulated plans has consistently been deemed central to that balance.
As a consequence, independent review provisions could create a disincentive to the formation of employee health benefit plans, a problem that Congress addressed by making ERISA's remedial scheme exclusive and uniform. While it may well be the case that the advantages of allowing States to implement independent review requirements as a supplement to the remedies currently provided under ERISA outweigh this drawback, this is a judgment that, pursuant to ERISA, must be made by Congress. I respectfully dissent.
Briefs of amici curiae urging affirmance were filed for the State of Texas et al. by John Cornyn, Attorney General of Texas, Howard G. Baldwin, Jr., First Assistant Attorney General, Jeffrey S. Boyd, Deputy Attorney General, Julie Parsley, Solicitor General, Christopher Livingston, Assistant Attorney General, and David C. Mattax, and by the Attorneys General for their respective jurisdictions as follows: Janet Napolitano of Arizona, Bill Lockyer of California, Gregory D'Auria of Connecticut, M. Jane Brady of Delaware, Robert A. Butterworth of Florida, Earl I. Anzai of Hawaii, Steve Carter of Indiana, G. Steven Rowe of Maine, Thomas F. Reilly of Massachusetts, J. Joseph Curran, Jr., of Maryland, Jennifer M. Granholm of Michigan, Mike Hatch of Minnesota, Mike Moore of Mississippi, Jeremiah W. (Jay) Nixon of Missouri, Mike McGrath of Montana, Frankie Sue Del Papa of Nevada, John J. Farmer, Jr., of New Jersey, Patricia A. Madrid of New Mexico, Eliot Spitzer of New York, Roy Cooper of North Carolina, Betty D. Montgomery of Ohio, W. A. Drew Edmondson of Oklahoma, D. Michael Fisher of Pennsylvania, Charles M. Condon of South Carolina, Paul G. Summers of Tennessee, Mark L. Shurtleff of Utah, William H. Sorrell of Vermont, Randolph A. Beales of Virginia, Christine O. Gregoire of Washington, Darrell V. McGraw, Jr., of West Virginia, Hoke MacMillan of Wyoming, and Anabelle Rodriguez of Puerto Rico; for AARP et al. by Mary Ellen Signorille, Michael R. Schuster, Paula Brantner, Ronald Dean, and Judith L. Lichtman; for the American Medical Association et al. by Jack R. Bierig, Richard G. Taranto, Jon N. Ekdahl, Leonard A. Nelson, and Saul J. Morse; for the National Association of Insurance Commissioners by Jennifer R. Cook, Mary Elizabeth Senkewicz, and Marc I. Machiz; and for Texas Watch et al. by George Parker Young.
Briefs of amici curiae were filed for the California Consumer Health Care Council et al. by Sharon J. Arkin; and for United Policyholders by Arnold R. Levinson.
"A civil action may be brought—
"(1) by a participant or beneficiary—
"(A) for the relief provided for in subsection (c) of this section [concerning requests to the administrator for information], or
"(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;
"(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title [breach of fiduciary duty];
"(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;
"(4) by the Secretary, or by a participant, or beneficiary for appropriate relief in the case of a violation of 1025(c) of this title [information to be furnished to participants];
"(5) except as otherwise provided in subsection (b) of this section, by the Secretary (A) to enjoin any act or practice which violates any provision of this subchapter, or (B) to obtain other appropriate equitable relief (i) to redress such violation or (ii) to enforce any provision of this subchapter;
"(6) by the Secretary to collect any civil penalty under paragraph (2), (4), (5), or (6) of subsection (c) of this section or under subsection (i) or (l ) of this section."