AWP Decision Seen Aiding Cause Of State Regulation

Justice Antonin Scalia asked a question about McCarran-Ferguson factors used in the two-part test that proceeded the decision. Justice Scalia seemed to be "playing the devils advocate," Johnson says. "He realized that the old test was unworkable."

"Every term, they have heard another ERISA preemption case" and there is frustration with the amount of litigation, Johnson says. The decision offers a "broader and clearer test," she adds.

"I can think of very few, if any laws, that have received as much attention as ERISA," says Andrew Baida, solicitor general in Maryland Attorney Generals office, who adds that this decision will provide clarity and reduce the need for litigation.

The decision is "very significant for insurance regulators" because the new test could be used in cases such as a pending review by the Supreme Court over a state law that guarantees health care consumers a right to an independent review of claims, Baida says. The review arises out of a suit initiated by Connecticut General Life Insurance Company to prevent the Maryland Insurance Commissioner from enforcing the law. The insurer argued preemption under ERISA.

The decision could also be used when regulators make their case in Washington for state insurance regulation, says Mike Pickens, president of the National Association of Insurance Commissioners, Kansas City, Mo.

However, there will be little immediate impact on states such as Arkansas and Florida that do not have AWP laws on the books.

Reproduced from National Underwriter Edition, April 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.