Who owns health data? Supreme Court may try answering that question

The U.S. Supreme Court is considering hearing a case that could have implications for self-funded insurers nationwide and as many as 16 states that have passed laws creating healthcare data collection programs.

The case, Gobeille v. Liberty Mutual Insurance Co., asks the question of whether self-funded insurers should have to hand over certain information to state databases upon request or whether those insurers don't have to under federal law.

The state of Vermont argues that it needs such data—on claims, member eligibility and other issues—to help it improve the cost and effectiveness of healthcare. The insurance company, however, counters that the federal Employee Retirement Income Security Act, or ERISA, exempts it and its third-party administrator from having to submit the information to state databases.

Vermont says the federal law—which regulates traditional pensions and other employer-provided benefits—does not trump the state's law, which requires payers to submit the data. The company argues ERISA does take precedence.

Supreme Court justices discussed the case in a closed-door conference Dec. 12, and decided to ask the federal government to weigh in before deciding whether to officially hear it. Vermont is asking the Supreme Court to reverse an earlier decision out of the 2nd U.S. Circuit Court of Appeals, which ruled that ERISA does pre-empt state law, meaning Liberty Mutual's third-party administrator shouldn't have to submit the data to Vermont's database.

Whether the justices decide to take the case could have far-reaching ramifications, said Peter Stris, an attorney whose firm, Stris & Maher in Los Angeles, was retained by Vermont to assist in the case.

Liberty Mutual has fewer than 200 members in Vermont. But, as of 2011, more than 58% of workers with health coverage nationwide were in self-insured plans, according to the Employee Benefit Research Institute.

The circuit court's decision is only binding in Vermont, Connecticut and New York, Stris said, but it could lead to more challenges if the Supreme Court declines to hear the case and the circuit's decision stands.

“You'd be trying to regulate and analyze data with just a major, major piece of the jigsaw puzzle missing,” Stris said of allowing self-funded insurance plans to skip submitting data.

Vermont, for example, uses the payer data it collects to track geographic differences in utilization; evaluate cost and outcomes for similar medical procedures; and to conduct research to help improve quality of care, said Bridget Asay, a Vermont assistant attorney general.

States that are creating all-payer claims databases are not trying to regulate ERISA plans, she said.

“The states merely seek the same basic information from ERISA plans that all public and private payers provide, to get an accurate, comprehensive picture of the healthcare market in that state,” Asay said in an e-mail.

The states of New York, Maryland, Massachusetts, New Hampshire, Oregon and Utah also have filed a brief in the case, supporting Vermont.

In that brief, the states argued that the circuit court's decision, if left uncorrected, “will diminish the ability of states to improve the quality and affordability of the healthcare services available to their residents.”

Seth Waxman, an attorney for Liberty Mutual, declined to discuss the case, saying he doesn't comment on pending litigation. Liberty Mutual also declined to comment.

But Liberty Mutual attorneys wrote in a November brief filed with the Supreme Court that Vermont's claims about the implications of exempting self-funded payers from the database are “overstated.” They argue that the circuit court's decision “will not prevent states from obtaining an accurate picture of the healthcare services provided within their borders.”

They also argue that ERISA purposefully pre-empts state law when it comes to collecting data.

“In addition to protecting the interests of beneficiaries, Congress intended to protect plans and employers with self-funded plans (and, ultimately, employees and beneficiaries as well) from the burdens of complying with conflicting state laws by reserving the field of employee benefit plans for federal regulation,” lawyers for Liberty Mutual wrote.

The case confronts a basic, but important issue, said Steve Wojcik, vice president of public policy for the National Business Group on Health, an association representing large employers on healthcare and health benefits. It's the issue of who has ultimate ownership and say over such data, he said.

He hopes the case makes it clear that insurers own the data and should have the right to decide who may and may not access it, he said.

“They should not have to fight to establish ownership and control over their own data,” he said of self-funded payers. “This is probably the most prominent case and only one I know of at this point where a self-funded employer has stood up to fight for their rights to their own data.”

Wojcik wondered if Vermont would still need to run its database now that the governor has decided to ditch plans to make the state the first in the country with single-payer healthcare system. Still, the case could have important implications for self-funded employers moving forward, he said.

Follow Lisa Schencker on Twitter: @lschencker