Cite as: 526 U. S. 40 (1999)
Opinion of the Court
insurer, of course, might become liable to the employer (or its workers) if the refusal to pay breached the contract or constituted "bad faith," but the obligation to pay would only arise after the employer had initiated a claim and reduced it to a judgment. That Pennsylvania first recognized an insurer's traditionally private prerogative to withhold payment, then restricted it, and now (in one limited respect) has restored it, cannot constitute the delegation of a traditionally exclusive public function. Like New York in Flagg Bros., Pennsylvania "has done nothing more than authorize (and indeed limit)—without participation by any public official— what [private insurers] would tend to do, even in the absence of such authorization," i. e., withhold payment for disputed medical treatment pending a determination that the treatment is, in fact, reasonable and necessary. 436 U. S., at 162, n. 12.
The Court of Appeals, in response to the various arguments advanced by respondents, seems to have figuratively thrown up its hands and fallen back on language in our decision in Burton v. Wilmington Parking Authority, 365 U. S. 715 (1961). The Pennsylvania system, that court said, "inextricably entangles the insurance companies in a partnership with the Commonwealth such that they become an integral part of the state in administering the statutory scheme." 139 F. 3d, at 170. Relying on Burton, respondents urge us to affirm the Court of Appeals' holding under a "joint participation" theory of state action.
Burton was one of our early cases dealing with "state action" under the Fourteenth Amendment, and later cases have refined the vague "joint participation" test embodied in that case. Blum and Jackson, in particular, have established that "privately owned enterprises providing services that the State would not necessarily provide, even though they are extensively regulated, do not fall within the ambit of Burton." Blum, 457 U. S., at 1011; see Jackson, supra, at 357-358. Here, workers' compensation insurers are at least
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