Master Supreme Court upheld Kentucky's any‑willing‑provider laws as regulations of insurance saved from ERISA preemption and announced a new two‑part test for ERISA's saving clause. with this comprehensive case brief.
Kentucky Association of Health Plans v. Miller is a cornerstone ERISA preemption decision that reshaped how courts assess whether a state law regulating health insurance survives ERISA's sweeping preemption clause. For years, courts relied on a confusing blend of a "common‑sense" inquiry and the McCarran‑Ferguson factors to decide whether a state enactment "regulated insurance" and thus was preserved by ERISA's saving clause. In Miller, the Supreme Court replaced that patchwork with a clear, two‑prong test that remains the governing standard.
The case has enduring significance for health law, insurance regulation, and employee benefits. It validated state "any‑willing‑provider" (AWP) statutes as legitimate insurance regulation for insured plans, while reaffirming that self‑funded ERISA plans remain insulated by the deemer clause. For practitioners and students, Miller provides both a doctrinal compass for ERISA's saving clause and a practical roadmap for evaluating the validity of state insurance regulations affecting provider networks, utilization review, external appeals, and similar features of managed care.
Kentucky Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329 (U.S. 2003)
Kentucky enacted a set of any‑willing‑provider (AWP) statutes that required health insurers and managed care organizations operating in the state to accept any health care provider willing to meet the insurers' terms and conditions for participation. The statutes were aimed at curbing selective contracting and restricted provider networks by obligating insurers to open their networks to all qualifying providers. The Kentucky Association of Health Plans (representing various health insurers and HMOs) sued the state's insurance commissioner, arguing that ERISA § 514(a) preempted these laws because they related to employee benefit plans and interfered with managed care arrangements. Kentucky responded that the laws fell within ERISA's saving clause, § 514(b)(2)(A), which preserves from preemption state laws that "regulate insurance." The lower courts upheld the AWP provisions as saved from preemption, and the Supreme Court granted certiorari both to review the validity of Kentucky's statutes and to resolve doctrinal confusion concerning the test for whether a state law "regulates insurance" under ERISA's saving clause. Kentucky acknowledged that, consistent with ERISA's deemer clause, § 514(b)(2)(B), its AWP laws could not be enforced against self‑funded ERISA plans.
Do Kentucky's any‑willing‑provider statutes "regulate insurance" within the meaning of ERISA's saving clause, and thus avoid ERISA preemption for insured plans?
A state law "regulates insurance" within ERISA's saving clause if (1) it is specifically directed toward entities engaged in insurance, and (2) it substantially affects the risk pooling arrangement between the insurer and the insured. Even if saved from preemption under this test, the ERISA deemer clause prevents states from applying such laws to self‑funded ERISA plans by deeming them insurers.
Yes. Kentucky's any‑willing‑provider laws are specifically directed at insurers and HMOs and substantially affect the risk‑pooling arrangement between insurers and insureds. They therefore "regulate insurance" and are saved from ERISA preemption as applied to insured plans. The deemer clause continues to shield self‑funded ERISA plans from state regulation.
The Court first clarified the proper framework for ERISA's saving clause. It discarded the prior reliance on McCarran‑Ferguson "business of insurance" factors as an independent, multi‑factor test under ERISA, explaining that those factors had bred inconsistency and were not a good fit for the text of ERISA's saving clause. In their place, the Court adopted a clear two‑prong standard: a law regulates insurance if it (1) is specifically directed at entities engaged in insurance and (2) substantially affects the risk‑pooling arrangement between insurer and insured. Applying prong one, the Court held that Kentucky's AWP laws were plainly directed at insurers and HMOs. They impose obligations on insurance entities regarding the composition of provider networks and the terms under which providers may participate. The statutes do not broadly govern all businesses or providers in the state; rather, they target the conduct of insurance carriers as such. For prong two, the Court concluded that AWP laws substantially affect risk pooling because they alter the permissible bargains between insurers and insureds—the structure of provider networks is a central feature of managed care products and directly influences the price and scope of coverage available to enrollees. By limiting insurers' ability to restrict networks and to leverage selective contracting to lower costs, the AWP laws change the terms on which risk is spread and priced (e.g., premiums, benefits, access). This is not a mere indirect economic effect on insurers; it restructures the insurer‑insured relationship and the nature of the pooled risk. Having satisfied both prongs, the laws qualify as regulations of insurance and are saved from ERISA preemption. The Court also emphasized that the deemer clause separately insulates self‑funded ERISA plans from state insurance regulation; accordingly, the saving clause's protection here operates only with respect to insured plans and insurance carriers.
Miller provides the modern, controlling test for ERISA's saving clause and clarifies the boundary between federal preemption and state insurance regulation. It empowers states to regulate key features of insured health coverage—such as network access, utilization review, and external appeals—while preserving ERISA's core protection for self‑funded plans via the deemer clause. For law students, Miller is essential for exam and practice analysis: it replaces the older McCarran‑Ferguson‑influenced approach with a concise two‑part inquiry, shaping arguments and outcomes in cases testing state regulation of insurers that impacts plan design and risk allocation.
An AWP law requires health insurers or HMOs to allow any qualified provider who agrees to the plan's standard terms and conditions to join the insurer's network. The purpose is to expand patient choice and provider participation by limiting insurers' use of exclusive or highly selective networks.
The Court held that a state law "regulates insurance" for ERISA's saving clause if (1) the law is specifically directed at entities engaged in insurance, and (2) it substantially affects the risk‑pooling arrangement between the insurer and the insured. This two‑prong test replaced reliance on the McCarran‑Ferguson factors in ERISA saving‑clause analysis.
No. The Court reaffirmed ERISA's deemer clause, which prevents states from treating self‑funded ERISA plans as insurers subject to state insurance laws. Miller saves state insurance regulation only as applied to insurers and insured ERISA plans; self‑funded plans remain outside the reach of such state laws.
By constraining selective contracting and requiring broader provider participation, AWP laws change the structure and terms of the insurance product—affecting premiums, access, and the benefits for which risk is pooled. These changes go to the heart of how risk is priced and spread across enrollees, not just to side relationships with providers.
Miller abandoned the confusing blend of a "common‑sense" test plus McCarran‑Ferguson factors and substituted a clear two‑part standard keyed to ERISA's text. It streamlined analysis and reduced uncertainty about whether state insurance regulations—especially those reshaping managed care arrangements—are saved from ERISA preemption.
Ask: (1) Is the law specifically targeted at insurers or entities engaged in insurance (as opposed to general businesses)? and (2) Does it substantially alter the permissible insurer‑insured bargain or the terms of coverage and pricing (risk pooling)? If yes to both, the law likely falls within the saving clause for insured products, subject to the deemer clause's carve‑out for self‑funded plans.
Miller anchors ERISA's saving‑clause jurisprudence in a clear and administrable two‑prong test. By holding that Kentucky's AWP laws are saved from preemption, the Court affirmed states' authority to regulate core features of insured health products—even when those regulations reshape managed care network design—so long as they target insurance entities and meaningfully affect risk pooling.
At the same time, the decision preserves ERISA's foundational structure by recognizing the deemer clause's continued protection for self‑funded plans. For students and practitioners, Miller offers a durable framework that readily translates to modern disputes over state regulation of insurers and managed care, ensuring a principled balance between uniform federal oversight of employee benefits and the traditional state role in insurance regulation.
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