WASHINGTON, August 16, 2023 – The ERISA Industry Committee (ERIC) today lauded the 10th U.S. Circuit Court of Appeals’ reversal yesterday of a previous District Court decision in PCMA v. Mulready regarding provisions of an Oklahoma law controlling pharmacy benefit manager (PBM) practices. In its ruling, the 10th Circuit held that the federal Employment Retirement Income Security Act (ERISA) preempts several key parts of the state law as applied to ERISA plans, and that Medicare Part D preempts a portion of the law as well. The Court reversed and remanded with instructions the case back to the lower court to enter judgment consistent with its opinion.
“The 10th Circuit’s well-considered opinion is a significant win for employer plan sponsors as well as the millions of employees who rely on their health care benefit programs,” said James Gelfand, President of ERIC. “Importantly, the Oklahoma law at the heart of PCMA v. Mulready is one of several state PBM laws of its kind; this decision at the Circuit Court level marks a key victory in preserving ERISA preemption from further erosion and safeguards the ability of self-insured employer plans to continue to provide access to high quality care in a nationwide market.”
ERIC in April led the filing of a coalition amicus brief in PCMA v. Mulready. The 10th Circuit’s decision yesterday largely follows the arguments laid out in ERIC’s amicus brief and recognized the impact that provisions of the Oklahoma law would have on ERISA plans – specifically that:
- ERISA preempts state laws that “relate to” covered benefit plans, including state laws that directly regulate plan design.
- The provider network is a crucial component of an employer-sponsored health plan’s benefit design.
- The challenged provisions of Oklahoma law are preempted according to these principles.
- Allowing this kind of state regulation of network design would erode the protections of ERISA preemption and threaten the nationwide benefits enjoyed by millions of Americans.