Laurel Hill Mgmt. Servs. v. La-Z-Boy Inc., 25-1727 (6th Cir. Aug. 19, 2026).
Cent. States v. McClain, 25-2727 (7th Cir. Aug. 26, 2026)
ERISA preemption is one of the golden tickets in health subrogation. It is this concept that allows ERISA plans to escape the confines of state-law anti-subrogation rules like made whole and common fund. At the same time, it is important to remember that ERISA preemption is not a magic ticket to avoid all state legislation, and important to remember that while the underlying statute and major caselaw is consistent across the nation, the various circuits often have slightly different interpretations as to the extent of ERISA preemption. Two recent cases—decided a week apart by the Sixth and Seventh Circuits—demonstrate the nuances of this area of law.
A brief refresher on the federal court system may be appropriate. A basic concept of the law is that federal law preempts state law when the two conflict. This is how ERISA plan terms supersede state anti-subrogation statutes. The federal statutes and caselaw apply across the country, but on nuanced issues that have not yet been taken up by the Supreme Court, each of the thirteen federal circuit courts can issue holdings that are binding only in that circuit. This means that whether ERISA preempts a state statute in Wisconsin may be different than whether a statute worded the exact same way is preempted by ERISA in Minnesota.
The first of the two August cases came out of the Sixth Circuit (which encompasses Michigan, Ohio, Kentucky, and Tennessee). Laurel Hill Mgmt. Servs. V. La-Z-Boy Inc., 25-1727 (6th Cir. Aug. 19, 2026). In that case, medical providers sued a self-funded ERISA plan under the state law theories of promissory estoppel and negligent misrepresentation. The case arose after medical providers, prior to providing treatment to the insured, contacted the plan’s third-party administrator to ask what the plan would pay for certain medical treatment. The administrator allegedly responded that they would pay the usual, customary and reasonable (UCR) rate for the procedures. The providers provided treatment and billed over $340,000. Instead of the UCR rate, the plan paid the Medicare rate of $1,598.40. The Sixth Circuit held that the state law claims were preempted because they had a connection with the ERISA plan. Citing earlier caselaw, which held that the proper question was to ask “whether in essence such a claim is for the recovery of an ERISA plan benefit,” the Sixth Circuit dismissed the medical provider’s claims. They did attempt to limit the holding to only such situations where the “claims arise out of an ERISA-plan administrator’s oral assurances about the terms of coverage or reimbursement under an ERISA-governed plan.”
The second case involves an Arkansas rule that was aimed at ensuring that health plans reimbursed pharmacies a fair and reasonable amount. Cent. States v. McClain, 25-2727 (7th Cir. Aug. 26, 2026). The rule requires a health plan to pay a dispensing fee and requires that the health plan submit compensation information to the Commissioner. Unhappy with the restrictions and burden, the Fund filed suit, arguing that the statute was preempted by ERISA. If the Seventh Circuit had applied the Sixth Circuit’s question of “whether in essence such a claim is for the recovery of an ERISA plan benefit,” the result may have been different. However, under Seventh Circuit precedent, the Dispensing Fee was a “cost regulation” that was not preempted by ERISA. The reporting requirement also was not preempted, as it fell within an exception for “state law[s]…the enforcement of which necessitates incidental reporting by ERISA plans.” In other words, the Seventh Circuit explained, the requirements under the rule were not requirements that infringed on “a central matter of plan administration” or “nationally uniform plan administration.”
Taken together, these cases are a reminder that ERISA preemption turns on more than whether a plan is involved. The nature of the claim, the state rule at issue, and the law of the circuit all matter. That is why it is worth involving legal counsel early when a preemption question arises: a careful look at the plan, the statute, and the governing precedent can help distinguish a viable argument from one that only looks pers
