Second Circuit Finds That New York’s Anti-Subrogation Statute Is Not Preempted By ERISA

Recently, the Second Circuit held in Wurtz v. The Rawlings Company, — F.3d—, 2014 WL 3746801, that New York’s anti-subrogation, Section 5-335, is “saved” by ERISA’s “saving clause” and applies to health insurers providing coverage through ERISA plans. This will provide some significant relief to New York ERISA participants and beneficiaries.

Plaintiffs filed a class action in state court alleging violations of New York law relating to efforts to secure reimbursement of medical benefits from plaintiffs’ tort settlements.  The defendants removed the case to federal court and the federal trial judge dismissed it on the basis of ERISA preemption.

On appeal, The Second Circuit reversed finding that ERISA did not provide “complete preemption” or “conflict preemption,” because the New York state claims survived under ERISA’s savings clause. This opinion is at odds with rulings from other circuits which mean the issue may eventually find its way to the Supreme Court.

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