Sixth Circuit Clarifies Insurer vs. Fiduciary Capacity in ERISA Dispute

In Bluecross Blueshield of Tennessee, Inc. v. Nicolopoulos, No. 24-5307, 2025 WL 1338242 (6th Cir. May 8, 2025), the Sixth Circuit Court of Appeals addressed an issue central to the intersection of state insurance mandates and federal ERISA regulations. The crux of the dispute was whether the New Hampshire Insurance Commissioner initiated an enforcement action against BlueCross BlueShield of Tennessee (BlueCross) in its capacity as an ERISA fiduciary or as an insurer. This distinction was critical, as it determined whether ERISA’s preemption provisions or its saving clause would apply.

BlueCross, serving as both an insurer and fiduciary of an ERISA-governed health plan, denied coverage for fertility treatments to a plan member in New Hampshire. The denial was in accordance with the plan’s terms under Tennessee law, which does not require coverage for such treatments. However, New Hampshire law mandates that insurers provide coverage for medically necessary fertility treatments. Consequently, the New Hampshire Insurance Commissioner issued a Show-Cause Order against BlueCross, asserting that the company was subject to New Hampshire insurance mandates due to its provision of coverage to employees within the state.

The central legal question was whether this enforcement action targeted BlueCross in its capacity as an ERISA fiduciary or as an insurer. BlueCross argued that the action interfered with its fiduciary duties under ERISA, which governs employee benefit plans. The company maintained that, as a fiduciary, its actions were protected from state interference by ERISA’s preemption provisions. Conversely, the Commissioner contended that the action was directed at BlueCross as an insurer, making it subject to state insurance regulations preserved by ERISA’s saving clause.

The Sixth Circuit’s analysis focused on the capacity in which BlueCross was being targeted. The court carefully examined the nature of the Show-Cause Order and the legal basis for the enforcement action. The court’s determination hinged on whether the action was aimed at BlueCross’s role as an insurer, which would fall under state regulatory authority, or as a fiduciary, which would be protected by ERISA’s preemption. The court concluded that the enforcement action was indeed directed at BlueCross in its capacity as an insurer. This was evidenced by the Commissioner’s reliance on state insurance laws mandating fertility treatment coverage, which apply to insurers operating within New Hampshire. The court underscored the significance of ERISA’s saving clause, which allows state laws regulating insurance to remain effective, even against insurers of ERISA plans. This clause effectively permits states to enforce insurance mandates, irrespective of the federal preemption that ERISA generally provides for employee benefit plans. The court also cited the Supreme Court’s decision in UNUM Life Insurance Co. of America v. Ward, 526 U.S. 358, 119 S.Ct. 1380, 143 L.Ed.2d 462 (1999). Ward clarified that fiduciary duties under ERISA do not exempt insurers from complying with state insurance laws, thus reinforcing the Commissioner’s position.

The Sixth Circuit affirmed the district court’s ruling, holding that the Commissioner was rightfully acting against BlueCross in its capacity as an insurer. As such, ERISA’s preemption provisions did not shield BlueCross from New Hampshire’s insurance mandates.