OCTOBER TERM, 2001
certiorari to the united states court of appeals for the seventh circuit
No. 00-1021. Argued January 16, 2002—Decided June 20, 2002
Petitioner Rush Prudential HMO, Inc., a health maintenance organization
(HMO) that contracts to provide medical services for employee welfare benefit plans covered by the Employee Retirement Income Security Act of 1974 (ERISA), denied respondent Moran's request to have surgery by an unaffiliated specialist on the ground that the procedure was not medically necessary. Moran made a written demand for an independent medical review of her claim, as guaranteed by § 4-10 of Illinois's HMO Act, which further provides that "[i]n the event that the reviewing physician determines the covered service to be medically necessary," the HMO "shall provide" the service. Rush refused her demand, and Moran sued in state court to compel compliance with the Act. That court ordered the review, which found the treatment necessary, but Rush again denied the claim. While the suit was pending, Moran had the surgery and amended her complaint to seek reimbursement. Rush removed the case to federal court, arguing that the amended complaint stated a claim for ERISA benefits. The District Court treated Moran's claim as a suit under ERISA and denied it on the ground that ERISA preempted § 4-10. The Seventh Circuit reversed. It found Moran's reimbursement claim preempted by ERISA so as to place the case in federal court, but it concluded that the state Act was not preempted as a state law that "relate[s] to" an employee benefit plan, 29 U. S. C. § 1144(a), because it also "regulates insurance" under ERISA's saving clause, § 1144(b)(2)(A).
Held: ERISA does not preempt the Illinois HMO Act. Pp. 364-387.
(a) In deciding whether a law regulates insurance, this Court starts with a commonsense view of the matter, Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S. 724, 740, which requires a law to "be specifically directed toward" the insurance industry, Pilot Life Ins. Co. v. Dedeaux, 481 U. S. 41, 50. It then tests the results of the commonsense enquiry by employing the three factors used to point to insurance laws spared from federal preemption under the McCarran-Ferguson Act. Pp. 365-375.
(1) The Illinois HMO Act is directed toward the insurance industry, and thus is an insurance regulation under a commonsense view. Although an HMO provides health care in addition to insurance, nothing
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