Rutledge v. Pharmaceutical Care Management Assn.

(Slip Opinion) OCTOBER TERM, 2020 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
RUTLEDGE, ATTORNEY GENERAL OF ARKANSAS v.
PHARMACEUTICAL CARE MANAGEMENT
ASSOCIATION
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE EIGHTH CIRCUIT
No. 18–540. Argued October 6, 2020—Decided December 10, 2020
Pharmacy benefit managers (PBMs) act as intermediaries between phar-
macies and prescription-drug plans. In that role, they reimburse phar-
macies for the cost of drugs covered by prescription-drug plans. To
determine the reimbursement rate for each drug, PBMs develop and
administer maximum allowable cost (MAC) lists. In 2015, Arkansas
passed Act 900, which effectively requires PBMs to reimburse Arkan-
sas pharmacies at a price equal to or higher than the pharmacy’s
wholesale cost. To accomplish this result, Act 900 requires PBMs to
timely update their MAC lists when drug wholesale prices increase,
Ark. Code Ann. §17–92–507(c)(2), and to provide pharmacies an ad-
ministrative appeal procedure to challenge MAC reimbursement rates,
§17–92–507(c)(4)(A)(i)(b). Act 900 also permits Arkansas pharmacies
to refuse to sell a drug if the reimbursement rate is lower than its ac-
quisition cost. §17–92–507(e). Respondent Pharmaceutical Care Man-
agement Association (PCMA), which represents the 11 largest PBMs
in the country, sued, alleging, as relevant here, that Act 900 is pre-
empted by the Employee Retirement Income Security Act of 1974
(ERISA). Following Circuit precedent in a case involving a similar
Iowa statute, the District Court held that ERISA pre-empts Act 900.
The Eighth Circuit affirmed.
Held: Arkansas’ Act 900 is not pre-empted by ERISA. Pp. 4–10.
(a) ERISA pre-empts state laws that “relate to” a covered employee
benefit plan. 29 U. S. C. §1144(a). “[A] state law relates to an ERISA
plan if it has a connection with or reference to such a plan.” Egelhoff
2 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
Syllabus
v. Egelhoff, 532 U. S. 141, 147. Act 900 has neither of those impermis-
sible relationships. Pp. 4–7.
(1) Act 900 does not have an impermissible connection with an
ERISA plan. To determine whether such a connection exists, this
Court asks whether the state law “governs a central matter of plan
administration or interferes with nationally uniform plan administra-
tion.” Gobeille v. Liberty Mut. Ins. Co., 577 U. S. 312, 320. State rate
regulations that merely increase costs or alter incentives for ERISA
plans without forcing plans to adopt any particular scheme of substan-
tive coverage are not pre-empted by ERISA. See New York State Con-
ference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514
U. S. 645, 668. Like the law at issue in Travelers, Act 900 is merely a
form of cost regulation that does not dictate plan choices. Pp. 4–6.
(2) Act 900 also does not “refer to” ERISA. It does not “ ‘ac[t] im-
mediately and exclusively upon ERISA plans,’ ” and “ ‘the existence of
ERISA plans is [not] essential to the law’s operation.’ ” Gobeille, 577
U. S., at 319–320. Act 900 affects plans only insofar as PBMs may
pass along higher pharmacy rates to plans with which they contract,
and Act 900 regulates PBMs whether or not the plans they service fall
within ERISA’s coverage. ERISA plans are therefore also not essential
to Act 900’s operation. Pp. 6–7.
(b) PCMA’s contention that Act 900 has an impermissible connection
with an ERISA plan because its enforcement mechanisms both directly
affect central matters of plan administration and interfere with na-
tionally uniform plan administration is unconvincing. First, its claim
that Act 900 affects plan design by mandating a particular pricing
methodology for pharmacy benefits is simply a long way of saying that
Act 900 regulates reimbursement rates. Second, Act 900’s appeal pro-
cedure does not govern central matters of plan administration simply
because it requires administrators to comply with a particular process
and may require a plan to reprocess how much it owes a PBM. Taken
to its logical endpoint, PCMA’s argument would pre-empt any suits
under state law that could affect the price or provision of benefits, but
this Court has held that ERISA does not pre-empt “state-law mecha-
nisms of executing judgments against” ERISA plans, Mackey v. Lanier
Collection Agency & Service, Inc., 486 U. S. 825, 831. Third, allowing
pharmacies to decline to dispense a prescription if the PBM’s reim-
bursement will be less than the pharmacy’s cost of acquisition does not
interfere with central matters of plan administration. The responsi-
bility for offering the pharmacy a below-acquisition reimbursement
lies first with the PBM. Finally, any “operational inefficiencies”
caused by Act 900 are insufficient to trigger ERISA pre-emption, even
if they cause plans to limit benefits or charge plan members higher
rates. See De Buono v. NYSA–ILA Medical and Clinical Services
Cite as: 592 U. S. ____ (2020) 3
Syllabus
Fund, 520 U. S. 806, 816. Pp. 7–10.
891 F. 3d 1109, reversed and remanded.
SOTOMAYOR, J., delivered the opinion of the Court, in which all other
Members joined, except BARRETT, J., who took no part in the considera-
tion or decision of the case. THOMAS, J., filed a concurring opinion.
Cite as: 592 U. S. ____ (2020) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order that
corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 18–540
_________________
LESLIE RUTLEDGE, ATTORNEY GENERAL OF
ARKANSAS, PETITIONER v. PHARMA-
CEUTICAL CARE MANAGEMENT
ASSOCIATION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
[December 10, 2020]
JUSTICE SOTOMAYOR delivered the opinion of the Court.
Arkansas’ Act 900 regulates the price at which pharmacy
benefit managers reimburse pharmacies for the cost of
drugs covered by prescription-drug plans. The question
presented in this case is whether the Employee Retirement
Income Security Act of 1974 (ERISA), 88 Stat. 829, as
amended, 29 U. S. C. §1001 et seq., pre-empts Act 900. The
Court holds that the Act has neither an impermissible con-
nection with nor reference to ERISA and is therefore not
pre-empted.
I
A
Pharmacy benefit managers (PBMs) are a little-known
but important part of the process by which many Americans
get their prescription drugs. Generally speaking, PBMs
serve as intermediaries between prescription-drug plans
and the pharmacies that beneficiaries use. When a benefi-
ciary of a prescription-drug plan goes to a pharmacy to fill
2 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
Opinion of the Court
a prescription, the pharmacy checks with a PBM to deter-
mine that person’s coverage and copayment information.
After the beneficiary leaves with his or her prescription, the
PBM reimburses the pharmacy for the prescription, less the
amount of the beneficiary’s copayment. The prescription-
drug plan, in turn, reimburses the PBM.
The amount a PBM “reimburses” a pharmacy for a drug
is not necessarily tied to how much the pharmacy paid to
purchase that drug from a wholesaler. Instead, PBMs’ con-
tracts with pharmacies typically set reimbursement rates
according to a list specifying the maximum allowable cost
(MAC) for each drug. PBMs normally develop and admin-
ister their own unique MAC lists. Likewise, the amount
that prescription-drug plans reimburse PBMs is a matter of
contract between a given plan and a PBM. A PBM’s reim-
bursement from a plan often differs from and exceeds a
PBM’s reimbursement to a pharmacy. That difference gen-
erates a profit for PBMs.
In 2015, Arkansas adopted Act 900 in response to con-
cerns that the reimbursement rates set by PBMs were often
too low to cover pharmacies’ costs, and that many pharma-
cies, particularly rural and independent ones, were at risk
of losing money and closing. 2015 Ark. Acts no. 900. In
effect, Act 900 requires PBMs to reimburse Arkansas phar-
macies at a price equal to or higher than that which the
pharmacy paid to buy the drug from a wholesaler.
Act 900 accomplishes this result through three key en-
forcement mechanisms. First, the Act requires PBMs to
tether reimbursement rates to pharmacies’ acquisition
costs by timely updating their MAC lists when drug whole-
sale prices increase. Ark. Code Ann. §17–92–507(c)(2)
(Supp. 2019). Second, PBMs must provide administrative
appeal procedures for pharmacies to challenge MAC reim-
bursement prices that are below the pharmacies’ acquisi-
tion costs. §17–92–507(c)(4)(A)(i)(b). If a pharmacy could
not have acquired the drug at a lower price from its typical
Cite as: 592 U. S. ____ (2020) 3
Opinion of the Court
wholesaler, a PBM must increase its reimbursement rate to
cover the pharmacy’s acquisition cost. §17–92–
507(c)(4)(C)(i)(b). PBMs must also allow pharmacies to “re-
verse and rebill” each reimbursement claim affected by the
pharmacy’s inability to procure the drug from its typical
wholesaler at a price equal to or less than the MAC reim-
bursement price. §17–92–507(c)(4)(C)(iii). Third, and fi-
nally, the Act permits a pharmacy to decline to sell a drug
to a beneficiary if the relevant PBM will reimburse the
pharmacy at less than its acquisition cost. §17–92–507(e).
B
Respondent Pharmaceutical Care Management Associa-
tion (PCMA) is a national trade association representing
the 11 largest PBMs in the country. After the enactment of
Act 900, PCMA filed suit in the Eastern District of Arkan-
sas, alleging, as relevant here, that Act 900 is pre-empted
by ERISA. See 29 U. S. C. §1144(a) (ERISA pre-empts “any
and all State laws insofar as they may now or hereafter re-
late to any employee benefit plan”).
Before the District Court issued its opinion in response to
the parties’ cross-motions for summary judgment, the
Court of Appeals for the Eighth Circuit decided, in a differ-
ent case, that ERISA pre-empts a similar Iowa statute.
Pharmaceutical Care Mgmt. Assn. v. Gerhart, 852 F. 3d 722(2017). The Eighth Circuit concluded that the Iowa statute
was pre-empted for two reasons. First, it made “implicit
reference” to ERISA by regulating PBMs that administer
benefits for ERISA plans. Id., at 729. Second, it was im-
permissibly “connected with” an ERISA plan because, by
requiring an appeal process for pharmacies to challenge
PBM reimbursement rates and restricting the sources from
which PBMs could determine pricing, the law limited a plan
administrator’s ability to control the calculation of drug
benefits. Id., at 726, 731. Concluding that Arkansas’ Act
900 contains similar features, the District Court held that
4 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
Opinion of the Court
ERISA likewise pre-empts Act 900. 240 F. Supp. 3d 951,
958 (ED Ark. 2017). The Eighth Circuit affirmed. 891 F.
3d 1109, 1113 (2018). This Court granted certiorari. 589
U. S. ___ (2020).
II
ERISA pre-empts “any and all State laws insofar as they
may now or hereafter relate to any employee benefit plan”
covered by ERISA. 29 U. S. C. §1144(a). “[A] state law re-
lates to an ERISA plan if it has a connection with or refer-
ence to such a plan.” Egelhoff v. Egelhoff, 532 U. S. 141,
147 (2001) (internal quotation marks omitted). Because Act
900 has neither of those impermissible relationships with
an ERISA plan, ERISA does not pre-empt it.
A
To determine whether a state law has an “impermissible
connection” with an ERISA plan, this Court considers
ERISA’s objectives “as a guide to the scope of the state law
that Congress understood would survive.” California Div.
of Labor Standards Enforcement v. Dillingham Constr.,
N. A., Inc., 519 U. S. 316, 325 (1997) (internal quotation
marks omitted). ERISA was enacted “to make the benefits
promised by an employer more secure by mandating certain
oversight systems and other standard procedures.” Go-
beille v. Liberty Mut. Ins. Co., 577 U. S. 312, 320–321
(2016). In pursuit of that goal, Congress sought “to ensure
that plans and plan sponsors would be subject to a uniform
body of benefits law,” thereby “minimiz[ing] the adminis-
trative and financial burden of complying with conflicting
directives” and ensuring that plans do not have to tailor
substantive benefits to the particularities of multiple juris-
dictions. Ingersoll-Rand Co. v. McClendon, 498 U. S. 133,
142 (1990).
ERISA is therefore primarily concerned with pre-
empting laws that require providers to structure benefit
Cite as: 592 U. S. ____ (2020) 5
Opinion of the Court
plans in particular ways, such as by requiring payment of
specific benefits, Shaw v. Delta Air Lines, Inc., 463 U. S. 85(1983), or by binding plan administrators to specific rules
for determining beneficiary status, Egelhoff, 532 U. S. 141.
A state law may also be subject to pre-emption if “acute,
albeit indirect, economic effects of the state law force an
ERISA plan to adopt a certain scheme of substantive cover-
age.” Gobeille, 577 U. S., at 320 (internal quotation marks
omitted). As a shorthand for these considerations, this
Court asks whether a state law “governs a central matter
of plan administration or interferes with nationally uniform
plan administration.” Ibid. (internal quotation marks and
ellipsis omitted). If it does, it is pre-empted.
Crucially, not every state law that affects an ERISA plan
or causes some disuniformity in plan administration has an
impermissible connection with an ERISA plan. That is es-
pecially so if a law merely affects costs. In New York State
Conference of Blue Cross & Blue Shield Plans v. Travelers
Ins. Co., 514 U. S. 645 (1995), this Court addressed a New
York law that imposed surcharges of up to 13% on hospital
billing rates for patients covered by insurers other than
Blue Cross/Blue Shield (Blues). Plans that bought insur-
ance from the Blues therefore paid less for New York hos-
pital services than plans that did not. This Court presumed
that the surcharges would be passed on to insurance buy-
ers, including ERISA plans, which in turn would incentiv-
ize ERISA plans to choose the Blues over other alternatives
in New York. Id., at 659. Nevertheless, the Court held that
such an “indirect economic influence” did not create an im-
permissible connection between the New York law and
ERISA plans because it did not “bind plan administrators
to any particular choice.” Ibid. The law might “affect a
plan’s shopping decisions, but it [did] not affect the fact that
any plan will shop for the best deal it can get.” Id., at 660.
If a plan wished, it could still provide a uniform interstate
benefit package. Ibid.6 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
Opinion of the Court
In short, ERISA does not pre-empt state rate regulations
that merely increase costs or alter incentives for ERISA
plans without forcing plans to adopt any particular scheme
of substantive coverage. Id., at 668; cf. De Buono v. NYSA–
ILA Medical and Clinical Services Fund, 520 U. S. 806, 816
(1997) (concluding that ERISA did not pre-empt a state tax
on gross receipts for patient services that simply increased
the cost of providing benefits); Dillingham, 519 U. S., at 332(holding that ERISA did not pre-empt a California statute
that incentivized, but did not require, plans to follow cer-
tain standards for apprenticeship programs).
The logic of Travelers decides this case. Like the New
York surcharge law in Travelers, Act 900 is merely a form
of cost regulation. It requires PBMs to reimburse pharma-
cies for prescription drugs at a rate equal to or higher than
the pharmacy’s acquisition cost. PBMs may well pass those
increased costs on to plans, meaning that ERISA plans may
pay more for prescription-drug benefits in Arkansas than
in, say, Arizona. But “cost uniformity was almost certainly
not an object of pre-emption.” Travelers, 514 U. S., at 662.
Nor is the effect of Act 900 so acute that it will effectively
dictate plan choices. See id., at 668. Indeed, Act 900 is less
intrusive than the law at issue in Travelers, which created
a compelling incentive for plans to buy insurance from the
Blues instead of other insurers. Act 900, by contrast, ap-
plies equally to all PBMs and pharmacies in Arkansas. As
a result, Act 900 does not have an impermissible connection
with an ERISA plan.
B
Act 900 also does not “refer to” ERISA. A law refers to
ERISA if it “ ‘acts immediately and exclusively upon ERISA
plans or where the existence of ERISA plans is essential to
the law’s operation.’ ” Gobeille, 577 U. S., at 319–320 (quot-
ing Dillingham, 519 U. S., at 325; ellipsis omitted).
Act 900 does not act immediately and exclusively upon
Cite as: 592 U. S. ____ (2020) 7
Opinion of the Court
ERISA plans because it applies to PBMs whether or not
they manage an ERISA plan. Indeed, the Act does not di-
rectly regulate health benefit plans at all, ERISA or other-
wise. It affects plans only insofar as PBMs may pass along
higher pharmacy rates to plans with which they contract.
ERISA plans are likewise not essential to Act 900’s oper-
ation. Act 900 defines a PBM as any “entity that adminis-
ters or manages a pharmacy benefits plan or program,” and
it defines a “pharmacy benefits plan or program,” in turn,
as any “plan or program that pays for, reimburses, covers
the cost of, or otherwise provides for pharmacist services to
individuals who reside in or are employed in [Arkansas].”
Ark. Code Ann. §§17–92–507(a)(7), (9). Under those provi-
sions, Act 900 regulates PBMs whether or not the plans
they service fall within ERISA’s coverage. 1 Act 900 is there-
fore analogous to the law in Travelers, which did not refer
to ERISA plans because it imposed surcharges “regardless
of whether the commercial coverage [was] ultimately se-
cured by an ERISA plan, private purchase, or otherwise.”
514 U. S., at 656; see also Dillingham, 519 U. S., at 328(concluding that the relevant California law did not refer to
ERISA plans because the apprenticeship programs it regu-
lated did not need to be ERISA programs).
III
PCMA disagrees that Act 900 amounts to nothing more
than cost regulation. It contends that Act 900 has an im-
permissible connection with an ERISA plan because its en-
forcement mechanisms both directly affect central matters
of plan administration and interfere with nationally uni-
form plan administration. The mechanisms that PCMA
identifies, however, do not require plan administrators to
structure their benefit plans in any particular manner, nor
——————
1 PBMs contract with a variety of healthcare plans and programs that
are not covered by ERISA, including Medicaid, Medicare, military, and
market place plans.
8 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
Opinion of the Court
do they lead to anything more than potential operational
inefficiencies. 2
PCMA first claims that Act 900 affects plan design by
mandating a particular pricing methodology for pharmacy
benefits. As PCMA reasons, while a plan might prefer that
PBMs reimburse pharmacies using a MAC list constructed
with an eye toward containing costs and ensuring predicta-
bility, Act 900 ignores that preference and instead requires
PBMs to reimburse pharmacies based on acquisition costs.
But that argument is just a long way of saying that Act 900
regulates reimbursement rates. Requiring PBMs to reim-
burse pharmacies at or above their acquisition costs does
not require plans to provide any particular benefit to any
particular beneficiary in any particular way. It simply es-
tablishes a floor for the cost of the benefits that plans choose
to provide. The plans in Travelers might likewise have pre-
ferred that their insurers reimburse hospital services with-
out paying an additional surcharge, but that did not trans-
form New York’s cost regulation into central plan
administration. 3
Act 900’s appeal procedure likewise does not govern cen-
tral matters of plan administration. True, plan administra-
tors must “comply with a particular process, subject to
state-specific deadlines, and [Act 900] dictates the substan-
tive standard governing the resolution of [an] appeal.”
Brief for Respondent 24. Moreover, if a pharmacy wins its
appeal, a plan, depending on the terms of its contract with
a PBM, may need to recalculate and reprocess how much it
——————
2 PCMA does not suggest that Act 900’s enforcement mechanisms over-
lap with “fundamental components of ERISA’s regulation of plan admin-
istration.” Gobeille v. Liberty Mut. Ins. Co., 577 U. S. 312, 323 (2016).
3 PCMA also points to Act 900’s requirement that PBMs update their
MAC lists to reflect statutorily mandated prices. But that obligation
does not affect plan design for the same reasons. Moreover, if PBMs were
not required to update their MAC lists, they would be in constant non-
compliance with Act 900’s cost regulation.
Cite as: 592 U. S. ____ (2020) 9
Opinion of the Court
(and its beneficiary) owes. But any contract dispute impli-
cating the cost of a medical benefit would involve similar
demands and could lead to similar results. Taken to its log-
ical endpoint, PCMA’s argument would pre-empt any suits
under state law that could affect the price or provision of
benefits. Yet this Court has held that ERISA does not pre-
empt “state-law mechanisms of executing judgments
against ERISA welfare benefit plans, even when those
mechanisms prevent plan participants from receiving their
benefits.” Mackey v. Lanier Collection Agency & Service,
Inc., 486 U. S. 825, 831–832 (1988).
PCMA also argues that Act 900 interferes with central
matters of plan administration by allowing pharmacies to
decline to dispense a prescription if the PBM’s reimburse-
ment will be less than the pharmacy’s cost of acquisition.
PCMA contends that such a refusal effectively denies plan
beneficiaries their benefits, but that argument misunder-
stands the statutory scheme. Act 900 requires PBMs to
compensate pharmacies at or above their acquisition costs.
When a pharmacy declines to dispense a prescription, the
responsibility lies first with the PBM for offering the phar-
macy a below-acquisition reimbursement.
Finally, PCMA argues that Act 900’s enforcement mech-
anisms interfere with nationally uniform plan administra-
tion by creating “operational inefficiencies.” Brief for Re-
spondent 34. But creating inefficiencies alone is not enough
to trigger ERISA pre-emption. See, e.g., Mackey, 486 U. S.,
at 831 (holding that ERISA did not pre-empt a state gar-
nishment procedure despite petitioners’ contention that
such actions would impose “substantial administrative bur-
dens and costs” on plans). PCMA argues that those opera-
tional inefficiencies will lead to increased costs and, poten-
tially, decreased benefits. ERISA does not pre-empt a state
law that merely increases costs, however, even if plans de-
cide to limit benefits or charge plan members higher rates
as a result. See De Buono, 520 U. S., at 816 (“Any state tax,
10 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
Opinion of the Court
or other law, that increases the cost of providing benefits to
covered employees will have some effect on the administra-
tion of ERISA plans, but that simply cannot mean that
every state law with such an effect is pre-empted by the fed-
eral statute”).
* * *
In sum, Act 900 amounts to cost regulation that does not
bear an impermissible connection with or reference to
ERISA. The judgment of the Eighth Circuit is therefore re-
versed, and the case is remanded for further proceedings
consistent with this opinion.
It is so ordered.
JUSTICE BARRETT took no part in the consideration or de-
cision of this case.
Cite as: 592 U. S. ____ (2020) 1
THOMAS, J., concurring
SUPREME COURT OF THE UNITED STATES
_________________
No. 18–540
_________________
LESLIE RUTLEDGE, ATTORNEY GENERAL OF
ARKANSAS, PETITIONER v. PHARMA-
CEUTICAL CARE MANAGEMENT
ASSOCIATION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
[December 10, 2020]
JUSTICE THOMAS, concurring.
I join the Court’s opinion in full because it properly ap-
plies our precedents interpreting the pre-emptive effect of
the Employee Retirement Income Security Act of 1974
(ERISA), 29 U. S. C. §1144.
I write separately because I continue to doubt our ERISA
pre-emption jurisprudence. Gobeille v. Liberty Mut. Ins.
Co., 577 U. S. 312, 327 (2016) (THOMAS, J., concurring).
The plain text of ERISA suggests a two-part pre-emption
test: (1) do any ERISA provisions govern the same matter
as the state law at issue, and (2) does that state law have a
meaningful relationship to ERISA plans? Only if the an-
swers to both are in the affirmative does ERISA displace
state law. But our precedents have veered from the text,
transforming §1144 into a “vague and ‘potentially bound-
less’. . . ‘purposes and objectives’ pre-emption” clause that
relies on “generalized notions of congressional purposes.”
Wyeth v. Levine, 555 U. S. 555, 587 (2009) (THOMAS, J., con-
curring in judgment). Although that approach may allow
courts to arrive at the correct result in individual cases, it
offers little guidance or predictability. We should instead
apply the law as written.
2 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
THOMAS, J., concurring
I
When construing a statutory provision, we begin with the
text. United States v. Alvarez-Sanchez, 511 U. S. 350, 356
(1994). Section 1144(a) provides that certain of ERISA’s
provisions “shall supersede any and all State laws insofar
as they may now or hereafter relate to any employee benefit
plan” with certain exceptions not relevant in this case.
The term “supersede” precludes reading the statute as
categorically pre-empting any state law related to employee
benefit plans. Rather, it suggests a replacement or substi-
tution instead of a blanket pre-emption. See Webster’s
Third New International Dictionary 2295 (1976) (defining
“supersede” to mean, among other things, “to take the place
of and outmode by superiority”); District of Columbia v.
Greater Washington Bd. of Trade, 506 U. S. 125, 135–136
(1992) (Stevens, J., dissenting) (noting the word “super-
sede” is “often overlooked”).
Where Congress seeks to pre-empt state laws without re-
placing them, it typically uses different words. See, e.g., 84
Stat. 88, codified in 15 U. S. C. §1334(b) (stating in a
“preemption” section that “[n]o requirement or prohibition
based on smoking and health shall be imposed under State
law with respect to the advertising or promotion of any cig-
arettes the packages of which are labeled in conformity
with the provisions of this Act”); 49 U. S. C. §41713(b)(1)
(“[A] State . . . may not enact or enforce a law, regulation,
or other provision having the force and effect of law related
to a price, route, or service of an air carrier”). Congress
knows how to write sweeping pre-emption statutes. But it
did not do so here. Applying the statutory text, the first
step is to ask whether a provision in ERISA governs the
same matter as the disputed state law, and thus could re-
place it.
The next step is to determine whether the state law “re-
late[s] to” employee benefit plans. 29 U. S. C. §1144(a).
The Court has expressed concern that a literal reading of
Cite as: 592 U. S. ____ (2020) 3
THOMAS, J., concurring
this phrase is so broad that it is meaningless. See New York
State Conference of Blue Cross & Blue Shield Plans v. Trav-
elers Ins. Co., 514 U. S. 645, 655 (1995). But many times it
is the ordinary, not literalist, meaning that is the better
one. See, e.g., McBoyle v. United States, 283 U. S. 25, 26
(1931) (“vehicle” in the 1930s did not include aircraft be-
cause “in everyday speech ‘vehicle’ calls up the picture of a
thing moving on land”). “[A] reasonable person conversant
with applicable social conventions” would not understand
“relate to” as covering any state law with a connection to
employee benefit plans, no matter how remote the connec-
tion. Manning, What Divides Textualists From Purposiv-
ists? 106 Colum. L. Rev. 70, 77 (2006); see also California
Div. of Labor Standards Enforcement v. Dillingham
Constr., N. A., Inc., 519 U. S. 316, 336 (1997) (Scalia J., con-
curring) (interpreting “relate to” literally would lead to re-
sults “no sensible person could have intended”). If someone,
for instance, asserted that he is “related to Joe,” it would be
reasonable to presume a close familial relationship. No one
would assume that the speaker was referencing a mutual
tie to Adam and Eve. So too here. A state law needs more
than a “tenuous, remote, or peripheral” connection with
ERISA plans to trigger the statute. Shaw v. Delta Air
Lines, Inc., 463 U. S. 85, 100, n. 21 (1983); cf. Wisconsin
Dept. of Revenue v. William Wrigley, Jr., Co., 505 U. S. 214,
231 (1992) (“ ‘the law cares not for trifles’ ”).
II
Here, the parties have not pointed to any ERISA provi-
sion that governs the same matter as Act 900. That alone
should resolve the case. But the parties certainly cannot be
faulted for not raising this argument. Our amorphous prec-
edents have largely ignored this step. E.g., District of
Columbia, 506 U. S., at 129.
Instead, we have asked only if the state law “ ‘relate[d]
to’ ” ERISA plans. Ibid. But this has proved problematic
4 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
THOMAS, J., concurring
because of “how much state law §1144 would pre-empt if
read literally.” Gobeille, 577 U. S., at 328 (THOMAS, J., con-
curring). Instead of reverting to the text, however, we de-
cided that “relate to” is so “indetermina[te]” that it cannot
“give us much help drawing the line.” Travelers, 514 U. S.,
at 655.
Having paid little attention to the actual statutory test,
we crafted our own, asking whether the challenged state
law frustrates the “ ‘objectives’ ” of ERISA. Gobeille, 577
U. S., at 320. Under this approach, the Court will declare
as pre-empted “state laws based on perceived conflicts with
broad federal policy objectives, legislative history, or gener-
alized notions of congressional purposes that are not em-
bodied within the text of federal law.” Wyeth, 555 U. S., at
583 (opinion of THOMAS, J.). Our case law states that under
an objectives and purposes pre-emption approach, a state
law is pre-empted if it has a “reference to” or an “impermis-
sible connection with” ERISA plans. Gobeille, 577 U. S., at
319–320. But this vague test offered “no more help than”
the “ ‘relate to’ ” one. Travelers, 514 U. S., at 656.
Our more recent efforts to further narrow the test have
just yielded more confusion. A state law references ERISA
only if it “ ‘acts immediately and exclusively upon ERISA
plans. . . or where the existence of ERISA plans is essential
to the law’s operation.’ ” Gobeille, 577 U. S., at 319–320 (el-
lipsis in original). A connection with ERISA plans is imper-
missible only if it “ ‘governs. . . a central matter of plan ad-
ministration’ ” or “ ‘interferes with nationally uniform plan
administration.’ ” Id., at 320. (ellipsis in original). 1 Alt-
——————
1 We have also held that a state law might have an impermissible con-
nection with ERISA plans if the indirect economic effects of the state law
“force an ERISA plan to adopt a certain scheme of substantive coverage
or effectively restrict its choice of insurers.” New York State Conference
of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U. S. 645,
668 (1995).
Cite as: 592 U. S. ____ (2020) 5
THOMAS, J., concurring
hough, at first blush, that may seem more precise than ask-
ing if a law “relates to” ERISA, it has proven just as difficult
to apply consistently, leading many members of the Court
to suggest still other methods. See, e.g., Egelhoff v.
Egelhoff, 532 U. S. 141, 152 (2001) (Scalia, J., concurring);
Aetna Health Inc. v. Davila, 542 U. S. 200, 222–224 (2004)
(Ginsburg, J., concurring). Instead of relying on this “ac-
cordion-like” test that seems to expand or contract depend-
ing on the year, Reece, The Accordion Type Jurisprudence
of ERISA Preemption Creates Unnecessary Uncertainty, 88
UMKC L. Rev. 115, 124, n. 71 (2019), perhaps we should
just interpret the text as written.
III
Stare decisis concerns need not caution against a return
to the text because the outcomes of our recent cases—if not
the reasoning— are generally consistent with a text-based
approach. Indeed, since Travelers every state law this
Court has held pre-empted involved a matter explicitly ad-
dressed by ERISA provisions. See, e.g., Boggs v. Boggs, 520
U. S. 833, 843–854 (1997) (pre-empting state law and dis-
cussing ERISA provisions with which it conflicts); Aetna
Health, 542 U. S., at 204 (holding that states cannot create
new causes of action that conflict with ERISA’s “ ‘interlock-
ing, interrelated, and interdependent remedial scheme,’ ”
located in §502(a) of ERISA). 2
——————
2 The Court has found something to be “a central matter of plan admin-
istration” only when the matter is addressed by ERISA’s text. E.g.,
Egelhoff v. Egelhoff, 532 U. S. 141, 148 (2001); Gobeille v. Liberty Mut.
Ins. Co., 577 U. S., at 321–322. And if the state law interferes with na-
tional uniformity but ERISA does not address the matter, we have held
that the matter in question does not require uniformity. Travelers, 514
U. S., at 662; ante, at 5, (“not every state law that. . . causes some disuni-
formity in plan administration” is pre-empted). We have also held that
ERISA does not pre-empt state laws regulating ERISA plans engaging
in activity not regulated by ERISA, like running a hospital. See De
Buono v. NYSA–ILA Medical and Clinical Services Fund, 520 U. S. 8066 RUTLEDGE v. PHARMACEUTICAL CARE
MANAGEMENT ASSN.
THOMAS, J., concurring
But it is not enough for this Court to reach the right con-
clusions. We should do so in the way Congress instructed.
Indeed, although we have generally arrived at the conclu-
sions we would arrive at under a text-based approach, our
capacious, nontextual test encourages departure from the
text. The decision below is testament to that problem. We
unanimously reverse that decision today, but we can hardly
fault judges when they apply the amorphous test that we
gave them. We can and should do better.
——————
(1997). That makes sense because ERISA has nothing to say about those
activities.