FMC CORP. v. HOLLIDAY

Print this Page
Case Basics
Docket No. 
89-1048
Petitioner 
FMC Corp.
Respondent 
Holliday
Opinion 
Advocates
(Argued the cause for the respondent)
(Argued the cause for the petitioner)
(On behalf of the United States, as amicus curiae, in support of the petitioner)
Tags
Term:
Facts of the Case 

FMC Corporation (FMC) provided its employees with a self-funded health benefit plan (Plan). The daughter of an FMC employee, Gerald Holliday (Holliday), was seriously injured in a car accident and the Plan paid for a portion of her medical expenses. Holliday also received, in settlement of a negligence action he brought on behalf of his daughter, payment from the driver of the automobile in which his daughter was injured. FMC sought reimbursement under the terms of the Plan. Holliday obtained a declaratory judgment that Section 1720 of the Pennsylvania Motor Vehicle Financial Responsibility Law - which precludes reimbursement from a claimant's tort recovery for benefit payments by a program, group contract, or other arrangement - prohibited FMC's exercise of subrogation rights. The Third Circuit affirmed, holding that the Employee Retirement Income Security Act (ERISA), which applies to employee welfare benefit plans such as FMC's Plan, did not preempt Section 1720.

Question 

Does ERISA preempt the Pennsylvania law precluding employee welfare benefit plans from exercising subrogation rights on a claimant's tort recovery?

Conclusion 
Decision: 7 votes for FMC Corp., 1 vote(s) against
Legal provision: Employee Retirement Income Security

Yes. Three provisions of ERISA speak to the question of preemption: the preemption clause, the saving clause, and the deemer clause. The preemption clause establishes as an area of exclusive federal concern the subject of every state law that "relate[s] to" an employee benefit plan governed by ERISA. The saving clause returns to the states the power to enforce those state laws that "regulat[e] insurance." The deemer clause dictates that an employee benefit plan governed by ERISA shall not be deemed an insurance matter. The Pennsylvania law is covered by the preemption clause since it relates to an employee benefit plan. It also falls within the saving clause because it invalidates certain insurance subrogation provisions. The deemer clause, however, exempts self-funded ERISA plans from being governed by state laws regulating insurance within the meaning of the saving clause. As a result, Section 1720 is preempted insofar as it prohibits FMC's self funded Plan from exercising its subrogation rights.

Cite this Page
FMC CORP. v. HOLLIDAY. The Oyez Project at IIT Chicago-Kent College of Law. 31 August 2014. <http://www.oyez.org/cases/1990-1999/1990/1990_89_1048>.
FMC CORP. v. HOLLIDAY, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1990-1999/1990/1990_89_1048 (last visited August 31, 2014).
"FMC CORP. v. HOLLIDAY," The Oyez Project at IIT Chicago-Kent College of Law, accessed August 31, 2014, http://www.oyez.org/cases/1990-1999/1990/1990_89_1048.