Kentucky Ass’n. of Health Plans Inc. v. Miller

Kentucky Ass’n. of Health Plans Inc. v. Miller,
No. 00-1471 (U.S. Apr. 2, 2003)

The U.S. Supreme Court upheld Kentucky’s "any willing provider" (AWP)
law, which prohibits health insurers from discriminating against any provider
located within the geographic area of the plan, holding that it was not subject
to preemption by ERISA. The Court established a new test to determine if a state
law "regulates insurance" and is thus exempt from ERISA pre-emption.
First, the law must be specifically directed towards entities engaged in insurance.
Second, it must substantially affect the risk-pooling arrangement between the
insurer and the insured.

The Court reasoned that even though the AWP law prohibited providers from entering
into exclusive agreements with insurers, it was still directed towards insurers.
The Court said that the fact that the law focused on the relationship between
an insurer and a provider rather than on terms of an insurance policy does not
mean that the law failed to regulate insurance because, by expanding the pool
of providers, the AWP law altered the scope of permissible bargains between
insurers and insureds. According to the Court, this would substantially affect
the type of risk-pooling arrangements that insurers may offer.