RUSH PRUDENTIAL HMO, INC. v. MORAN et al.

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355 OCTOBER TERM, 2001
Syllabus
RUSH PRUDENTIAL HMO, INC. v. MORAN et al.
certiorari to the united states court of appeals for
the seventh circuit
No. 00–1021. Argued January 16, 2002—Decided June 20, 2002
Petitioner Rush Prudential HMO, Inc., a health maintenance organization
(HMO) that contracts to provide medical services for employee welfare
benefit plans covered by the Employee Retirement Income Security Act
of 1974 (ERISA), denied respondent Moran’s request to have surgery
by an unaffiliated specialist on the ground that the procedure was not
medically necessary. Moran made a written demand for an independent
medical review of her claim, as guaranteed by § 4–10 of Illinois’s HMO
Act, which further provides that “[i]n the event that the reviewing phy-
sician determines the covered service to be medically necessary,” the
HMO “shall provide” the service. Rush refused her demand, and
Moran sued in state court to compel compliance with the Act. That
court ordered the review, which found the treatment necessary, but
Rush again denied the claim. While the suit was pending, Moran had
the surgery and amended her complaint to seek reimbursement. Rush
removed the case to federal court, arguing that the amended complaint
stated a claim for ERISA benefits. The District Court treated Moran’s
claim as a suit under ERISA and denied it on the ground that ERISA
preempted § 4–10. The Seventh Circuit reversed. It found Moran’s
reimbursement claim preempted by ERISA so as to place the case in
federal court, but it concluded that the state Act was not preempted as
a state law that “relate[s] to” an employee benefit plan, 29 U. S. C.
§ 1144(a), because it also “regulates insurance” under ERISA’s saving
clause, § 1144(b)(2)(A).
Held: ERISA does not preempt the Illinois HMO Act. Pp. 364–387.
(a) In deciding whether a law regulates insurance, this Court starts
with a commonsense view of the matter, Metropolitan Life Ins. Co. v.
Massachusetts, 471 U. S. 724, 740, which requires a law to “be specifi-
cally directed toward” the insurance industry, Pilot Life Ins. Co. v. De-
deaux, 481 U. S. 41, 50. It then tests the results of the commonsense
enquiry by employing the three factors used to point to insurance laws
spared from federal preemption under the McCarran-Ferguson Act.
Pp. 365–375.
(1) The Illinois HMO Act is directed toward the insurance industry,
and thus is an insurance regulation under a commonsense view. Al-
though an HMO provides health care in addition to insurance, nothing

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356 RUSH PRUDENTIAL HMO, INC. v. MORAN
Syllabus
in the saving clause requires an either-or choice between health care
and insurance. Congress recognized, the year before passing ERISA,
that HMOs are risk-bearing organizations subject to state insurance
regulation. That conception has not changed in the intervening years.
States have been adopting their own HMO enabling Acts, and at least
40, including Illinois, regulate HMOs primarily through state insurance
departments. Rush cannot submerge HMOs’ insurance features be-
neath an exclusive characterization of HMOs as health care providers.
And the argument of Rush and its amici that § 4–10 sweeps beyond the
insurance industry, capturing organizations that provide no insurance
and regulating noninsurance activities of HMOs that do, is based on
unsound assumptions. Pp. 366–373.
(2) The McCarran-Ferguson factors confirm this conclusion. A
state law does not have to satisfy all three factors to survive preemp-
tion, and § 4–10 clearly satisfies two. The independent review require-
ment satisfies the factor that a provision regulate “an integral part of
the policy relationship between the insurer and the insured.” Union
Labor Life Ins. Co. v. Pireno, 458 U. S. 119, 129. Illinois adds an extra
review layer when there is an internal disagreement about an HMO’s
denial of coverage, and the reviewer both applies a medical care stand-
ard and construes policy terms. Thus, the review affects a policy rela-
tionship by translating the relationship under the HMO agreement into
concrete terms of specific obligation or freedom from duty. The factor
that the law be aimed at a practice “limited to entities within the insur-
ance industry,” ibid., is satisfied for many of the same reasons that the
law passes the commonsense test: It regulates application of HMO con-
tracts and provides for review of claim denials; once it is established
that HMO contracts are contracts for insurance, it is clear that § 4–10
does not apply to entities outside the insurance industry. Pp. 373–375.
(b) This Court rejects Rush’s contention that, even though ERISA’s
saving clause ostensibly forecloses preemption, congressional intent
to the contrary is so clear that it overrides the statutory provision.
Pp. 375–386.
(1) The Court has recognized an overpowering federal policy of ex-
clusivity in ERISA’s civil enforcement provisions located at 29 U. S. C.
§ 1132(a); and it has anticipated that in a conflict between congressional
polices of exclusively federal remedies and the States’ regulation of in-
surance, the state regulation would lose out if it allows remedies that
Congress rejected in ERISA, Pilot Life, 481 U. S., at 54. Rush argues
that § 4–10 is preempted for creating the kind of alternative remedy
that this Court disparaged in Pilot Life, one that subverts congressional
intent, clearly expressed through ERISA’s structure and legislative his-
tory, that the federal remedy displace state causes of action. Rush

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Syllabus
overstates Pilot Life’s rule. The enquiry into state processes alleged
to “supplemen[t] or supplan[t]” ERISA remedies, id., at 56, has, up to
now, been more straightforward than it is here. Pilot Life, Massachu-
setts Mut. Life Ins. Co. v. Russell, 473 U. S. 134, and Ingersoll-Rand Co.
v. McClendon, 498 U. S. 133, all involved an additional claim or remedy
that ERISA did not authorize. In contrast, the review here may settle
a benefit claim’s fate, but the state statute does not enlarge the claim
beyond the benefits available in any § 1132(a) action. And although the
reviewer’s determination would presumably replace the HMO’s as to
what is medically necessary, the ultimate relief available would still be
what ERISA authorizes in a § 1132(a) suit for benefits. This case there-
fore resembles the claims-procedure rule that the Court sustained in
UNUM Life Ins. Co. of America v. Ward, 526 U. S. 358. Section 4–10’s
procedure does not fall within Pilot Life’s categorical preemption.
Pp. 377–380.
(2) Nor does § 4–10’s procedural imposition interfere unreasonably
with Congress’s intention to provide a uniform federal regime of “rights
and obligations” under ERISA. Although this Court has recognized a
limited exception from the saving clause for alternative causes of action
and alternative remedies, further limits on insurance regulation pre-
served by ERISA are unlikely to deserve recognition. A State might
provide for a type of review that would so resemble an adjudication as
to fall within Pilot Life’s categorical bar, but that is not the case here.
Section 4–10 is significantly different from common arbitration. The
independent reviewer has no free-ranging power to construe contract
terms, but instead confines review to the single phrase “medically neces-
sary.” That reviewer must be a physician with credentials similar to
those of the primary care physician and is expected to exercise inde-
pendent medical judgment, based on medical records submitted by the
parties, in deciding what medical necessity requires. This process does
not resemble either contract interpretation or evidentiary litigation be-
fore a neutral arbiter as much as it looks like the practice of obtaining
a second opinion. In addition, § 4–10 does not clash with any deferential
standard for reviewing benefit denials in judicial proceedings. ERISA
itself says nothing about a standard. It simply requires plans to afford
a beneficiary some mechanism for internal review of a benefit denial and
provides a right to a subsequent judicial forum for a claim to recover
benefits. Although certain “discretionary” plan interpretations may
receive deference from a reviewing court, see Firestone Tire & Rubber
Co. v. Bruch, 489 U. S. 101, 115, nothing in ERISA requires that medical
necessity decisions be “discretionary” in the first place. Pp. 381–386.
230 F. 3d 959, affirmed.

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358 RUSH PRUDENTIAL HMO, INC. v. MORAN
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Souter, J., delivered the opinion of the Court, in which Stevens,
O’Connor, Ginsburg, and Breyer, JJ., joined. Thomas, J., filed a dis-
senting opinion, in which Rehnquist, C. J., and Scalia and Kennedy,
JJ., joined, post, p. 388.
John G. Roberts, Jr., argued the cause for petitioner.
With him on the briefs were Clifford D. Stromberg, Craig A.
Hoover, Jonathan S. Franklin, Catherine E. Stetson, James
T. Ferrini, Michael R. Grimm, Sr., and Melinda S. Kollross.
Daniel P. Albers argued the cause for respondents. With
him on the brief for respondent Moran were Mark E. Rust
and Stanley C. Fickle. James E. Ryan, Attorney Gen-
eral, Joel D. Bertocchi, Solicitor General, and John Philip
Schmidt and Mary Ellen Margaret Welsh, Assistant Attor-
neys General, filed a brief for respondent State of Illinois.
Deputy Solicitor General Kneedler argued the cause for
the United States as amicus curiae urging affirmance.
With him on the brief were Acting Solicitor General Clem-
ent, James A. Feldman, Howard M. Radzely, Allen H. Feld-
man, Nathaniel I. Spiller, and Elizabeth Hopkins.*
*Miguel A. Estrada and Andrew S. Tulumello filed a brief for the
American Association of Health Plans, Inc., et al. as amici curiae urging
reversal.
Briefs of amici curiae urging affirmance were filed for the State of
Texas et al. by John Cornyn, Attorney General of Texas, Howard G. Bal-
dwin, Jr., First Assistant Attorney General, Jeffrey S. Boyd, Deputy At-
torney General, Julie Parsley, Solicitor General, Christopher Livingston,
Assistant Attorney General, and David C. Mattax, and by the Attorneys
General for their respective jurisdictions as follows: Janet Napolitano of
Arizona, Bill Lockyer of California, Gregory D’Auria of Connecticut, M.
Jane Brady of Delaware, Robert A. Butterworth of Florida, Earl I. Anzai
of Hawaii, Steve Carter of Indiana, G. Steven Rowe of Maine, Thomas F.
Reilly of Massachusetts, J. Joseph Curran, Jr., of Maryland, Jennifer M.
Granholm of Michigan, Mike Hatch of Minnesota, Mike Moore of Missis-
sippi, Jeremiah W. (Jay) Nixon of Missouri, Mike McGrath of Montana,
Frankie Sue Del Papa of Nevada, John J. Farmer, Jr., of New Jersey,
Patricia A. Madrid of New Mexico, Eliot Spitzer of New York, Roy
Cooper of North Carolina, Betty D. Montgomery of Ohio, W. A. Drew
Edmondson of Oklahoma, D. Michael Fisher of Pennsylvania, Charles M.

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359 Cite as: 536 U. S. 355 (2002)
Opinion of the Court
Justice Souter delivered the opinion of the Court.
Section 4–10 of Illinois’s Health Maintenance Organization
Act, 215 Ill. Comp. Stat., ch. 125, § 4–10 (2000), provides re-
cipients of health coverage by such organizations with a right
to independent medical review of certain denials of benefits.
The issue in this case is whether the statute, as applied to
health benefits provided by a health maintenance organiza-
tion under contract with an employee welfare benefit plan, is
preempted by the Employee Retirement Income Security
Act of 1974 (ERISA), 88 Stat. 832, as amended, 29 U. S. C.
§ 1001 et seq. We hold it is not.
I
Petitioner, Rush Prudential HMO, Inc., is a health mainte-
nance organization (HMO) that contracts to provide medical
services for employee welfare benefit plans covered by
ERISA. Respondent Debra Moran is a beneficiary under
one such plan, sponsored by her husband’s employer. Rush’s
“Certificate of Group Coverage,” issued to employees who
participate in employer-sponsored plans, promises that Rush
will provide them with “medically necessary” services. The
terms of the certificate give Rush the “broadest possible dis-
cretion” to determine whether a medical service claimed by a
Condon of South Carolina, Paul G. Summers of Tennessee, Mark L. Shurt-
leff of Utah, William H. Sorrell of Vermont, Randolph A. Beales of Vir-
ginia, Christine O. Gregoire of Washington, Darrell V. McGraw, Jr., of
West Virginia, Hoke MacMillan of Wyoming, and Anabelle Rodriguez
of Puerto Rico; for AARP et al. by Mary Ellen Signorille, Michael R.
Schuster, Paula Brantner, Ronald Dean, and Judith L. Lichtman; for
the American Medical Association et al. by Jack R. Bierig, Richard G.
Taranto, Jon N. Ekdahl, Leonard A. Nelson, and Saul J. Morse; for the
National Association of Insurance Commissioners by Jennifer R. Cook,
Mary Elizabeth Senkewicz, and Marc I. Machiz; and for Texas Watch
et al. by George Parker Young.
Briefs of amici curiae were filed for the California Consumer Health
Care Council et al. by Sharon J. Arkin; and for United Policyholders by
Arnold R. Levinson.

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360 RUSH PRUDENTIAL HMO, INC. v. MORAN
Opinion of the Court
beneficiary is covered under the certificate. The certificate
specifies that a service is covered as “medically necessary”
if Rush finds:
“(a) [The service] is furnished or authorized by a Par-
ticipating Doctor for the diagnosis or the treatment of a
Sickness or Injury or for the maintenance of a person’s
good health.
“(b) The prevailing opinion within the appropriate
specialty of the United States medical profession is that
[the service] is safe and effective for its intended use,
and that its omission would adversely affect the person’s
medical condition.
“(c) It is furnished by a provider with appropriate
training, experience, staff and facilities to furnish that
particular service or supply.” Record, Pl. Exh. A, p. 21.
As the certificate explains, Rush contracts with physicians
“to arrange for or provide services and supplies for medical
care and treatment” of covered persons. Each covered per-
son selects a primary care physician from those under con-
tract to Rush, while Rush will pay for medical services by
an unaffiliated physician only if the services have been “au-
thorized” both by the primary care physician and Rush’s
medical director. See id., at 11, 16.
In 1996, when Moran began to have pain and numbness in
her right shoulder, Dr. Arthur LaMarre, her primary care
physician, unsuccessfully administered “conservative” treat-
ments such as physiotherapy. In October 1997, Dr. LaMarre
recommended that Rush approve surgery by an unaffiliated
specialist, Dr. Julia Terzis, who had developed an unconven-
tional treatment for Moran’s condition. Although Dr. La-
Marre said that Moran would be “best served” by that proce-
dure, Rush denied the request and, after Moran’s internal
appeals, affirmed the denial on the ground that the procedure
was not “medically necessary.” 230 F. 3d 959, 963 (CA7

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Opinion of the Court
2000). Rush instead proposed that Moran undergo standard
surgery, performed by a physician affiliated with Rush.
In January 1998, Moran made a written demand for an
independent medical review of her claim, as guaranteed by
§ 4–10 of Illinois’s HMO Act, 215 Ill. Comp. Stat., ch. 125,
§ 4–10 et seq. (2000), which provides:
“Each Health Maintenance Organization shall provide a
mechanism for the timely review by a physician holding
the same class of license as the primary care physician,
who is unaffiliated with the Health Maintenance Organi-
zation, jointly selected by the patient . . . , primary care
physician and the Health Maintenance Organization in
the event of a dispute between the primary care physi-
cian and the Health Maintenance Organization regarding
the medical necessity of a covered service proposed by
a primary care physician. In the event that the review-
ing physician determines the covered service to be medi-
cally necessary, the Health Maintenance Organization
shall provide the covered service.”
The Act defines a “Health Maintenance Organization” as
“any organization formed under the laws of this or an-
other state to provide or arrange for one or more health
care plans under a system which causes any part of the
risk of health care delivery to be borne by the organiza-
tion or its providers.” Ch. 125, § 1–2.1
1 In the health care industry, the term “Health Maintenance Organiza-
tion” has been defined as “[a] prepaid organized delivery system where
the organization and the primary care physicians assume some financial
risk for the care provided to its enrolled members. . . . In a pure HMO,
members must obtain care from within the system if it is to be reim-
bursed.” Weiner & de Lissovoy, Razing a Tower of Babel: A Taxonomy
for Managed Care and Health Insurance Plans, 18 J. of Health Politics,
Policy and Law 75, 96 (Spring 1993) (emphasis in original). The term
“Managed Care Organization” is used more broadly to refer to any number
of systems combining health care delivery with financing. Id., at 97.
The Illinois definition of HMO does not appear to be limited to the tradi-

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362 RUSH PRUDENTIAL HMO, INC. v. MORAN
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When Rush failed to provide the independent review, Moran
sued in an Illinois state court to compel compliance with the
state Act. Rush removed the suit to Federal District Court,
arguing that the cause of action was “completely preempted”
under ERISA. 230 F. 3d, at 964.
While the suit was pending, Moran had surgery by
Dr. Terzis at her own expense and submitted a $94,841.27
reimbursement claim to Rush. Rush treated the claim as
a renewed request for benefits and began a new inquiry to
determine coverage. The three doctors consulted by Rush
said the surgery had been medically unnecessary.
Meanwhile, the federal court remanded the case back to
state court on Moran’s motion, concluding that because Mor-
an’s request for independent review under § 4–10 would not
require interpretation of the terms of an ERISA plan, the
claim was not “completely preempted” so as to permit re-
moval under 28 U. S. C. § 1441.2 230 F. 3d, at 964. The
state court enforced the state statute and ordered Rush to
submit to review by an independent physician. The doctor
selected was a reconstructive surgeon at Johns Hopkins
Medical Center, Dr. A. Lee Dellon. Dr. Dellon decided that
Dr. Terzis’s treatment had been medically necessary, based
on the definition of medical necessity in Rush’s Certificate of
tional usage of that term, but instead is likely to encompass a variety of
different structures (although Illinois does distinguish HMOs from pure
insurers by regulating “traditional” health insurance in a different portion
of its insurance laws, 215 Ill. Comp. Stat., ch. 5 (2000)). Except where
otherwise indicated, we use the term “HMO” because that is the term
used by the State and the parties; what we intend is simply to describe
the structures covered by the Illinois Act.
2 In light of our holding today that § 4–10 is not preempted by ERISA,
the propriety of this ruling is questionable; a suit to compel compliance
with § 4–10 in the context of an ERISA plan would seem to be akin to a
suit to compel compliance with the terms of a plan under 29 U. S. C.
§ 1132(a)(3). Alternatively, the proper course may have been to bring a
suit to recover benefits due, alleging that the denial was improper in the
absence of compliance with § 4–10. We need not resolve today which of
these options is more consonant with ERISA.

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Group Coverage, as well as his own medical judgment.
Rush’s medical director, however, refused to concede that the
surgery had been medically necessary, and denied Moran’s
claim in January 1999.
Moran amended her complaint in state court to seek reim-
bursement for the surgery as “medically necessary” under
Illinois’s HMO Act, and Rush again removed to federal court,
arguing that Moran’s amended complaint stated a claim for
ERISA benefits and was thus completely preempted by
ERISA’s civil enforcement provisions, 29 U. S. C. § 1132(a),
as construed by this Court in Metropolitan Life Ins. Co. v.
Taylor, 481 U. S. 58 (1987). The District Court treated Mor-
an’s claim as a suit under ERISA, and denied the claim on
the ground that ERISA preempted Illinois’s independent re-
view statute.3
The Court of Appeals for the Seventh Circuit reversed.
230 F. 3d 959 (2000). Although it found Moran’s state-law
reimbursement claim completely preempted by ERISA so as
to place the case in federal court, the Seventh Circuit did not
agree that the substantive provisions of Illinois’s HMO Act
were so preempted. The court noted that although ERISA
broadly preempts any state laws that “relate to” employee
benefit plans, 29 U. S. C. § 1144(a), state laws that “regulat[e]
3 No party has challenged Rush’s status as defendant in this case, despite
the fact that many lower courts have interpreted ERISA to permit suits
under § 1132(a) only against ERISA plans, administrators, or fiduciaries.
See, e. g., Everhart v. Allmerica Financial Life Ins. Co., 275 F. 3d 751,
754–756 (CA9 2001); Garren v. John Hancock Mut. Life Ins. Co., 114 F. 3d
186, 187 (CA11 1997); Jass v. Prudential Health Care Plan, Inc., 88 F. 3d
1482, 1490 (CA7 1996). Without commenting on the correctness of such
holdings, we assume (although the information does not appear in the rec-
ord) that Rush has failed to challenge its status as defendant because it
is, in fact, the plan administrator. This conclusion is buttressed by the
fact that the plan’s sponsor has granted Rush discretion to interpret the
terms of its coverage, and by the fact that one of Rush’s challenges to the
Illinois statute is based on what Rush perceives as the limits that statute
places on fiduciary discretion. Whatever Rush’s true status may be, how-
ever, it is immaterial to our holding.

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364 RUSH PRUDENTIAL HMO, INC. v. MORAN
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insurance” are saved from preemption, § 1144(b)(2)(A). The
court held that the Illinois HMO Act was such a law, the
independent review requirement being little different from
a state-mandated contractual term of the sort this Court had
held to survive ERISA preemption. See 230 F. 3d, at 972
(citing UNUM Life Ins. Co. of America v. Ward, 526 U. S.
358, 375–376 (1999)). The Seventh Circuit rejected the con-
tention that Illinois’s independent review requirement con-
stituted a forbidden “alternative remedy” under this Court’s
holding in Pilot Life Ins. Co. v. Dedeaux, 481 U. S. 41 (1987),
and emphasized that § 4–10 does not authorize any particular
form of relief in state courts; rather, with respect to any
ERISA health plan, the judgment of the independent re-
viewer is only enforceable in an action brought under
ERISA’s civil enforcement scheme, 29 U. S. C. § 1132(a). 230
F. 3d, at 971.
Because the decision of the Court of Appeals conflicted
with the Fifth Circuit’s treatment of a similar provision of
Texas law in Corporate Health Ins., Inc. v. Texas Dept. of
Ins., 215 F. 3d 526 (2000), we granted certiorari, 533 U. S.
948 (2001). We now affirm.
II
To “safeguar[d] . . . the establishment, operation, and ad-
ministration” of employee benefit plans, ERISA sets “mini-
mum standards . . . assuring the equitable character of such
plans and their financial soundness,” 29 U. S. C. § 1001(a), and
contains an express preemption provision that ERISA “shall
supersede any and all State laws insofar as they may now
or hereafter relate to any employee benefit plan . . . .”
§ 1144(a). A saving clause then reclaims a substantial
amount of ground with its provision that “nothing in this
subchapter shall be construed to exempt or relieve any per-
son from any law of any State which regulates insurance,
banking, or securities.” § 1144(b)(2)(A). The “unhelpful”
drafting of these antiphonal clauses, New York State Confer-

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ence of Blue Cross & Blue Shield Plans v. Travelers Ins.
Co., 514 U. S. 645, 656 (1995), occupies a substantial share of
this Court’s time, see, e. g., Egelhoff v. Egelhoff, 532 U. S.
141 (2001); UNUM Life Ins. Co. of America v. Ward, supra;
California Div. of Labor Standards Enforcement v. Dilling-
ham Constr., N. A., Inc., 519 U. S. 316 (1997); Metropolitan
Life Ins. Co. v. Massachusetts, 471 U. S. 724 (1985). In try-
ing to extrapolate congressional intent in a case like this,
when congressional language seems simultaneously to pre-
empt everything and hardly anything, we “have no choice”
but to temper the assumption that “ ‘the ordinary mean-
ing . . . accurately expresses the legislative purpose,’ ” id.,
at 740 (quoting Park ’N Fly v. Dollar Park & Fly, Inc.,
469 U. S. 189, 194 (1985)), with the qualification “ ‘that the
historic police powers of the States were not [meant] to be
superseded by the Federal Act unless that was the clear and
manifest purpose of Congress.’ ” Travelers, supra, at 655
(quoting Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230
(1947)).
It is beyond serious dispute that under existing precedent
§ 4–10 of the Illinois HMO Act “relates to” employee benefit
plans within the meaning of § 1144(a). The state law bears
“indirectly but substantially on all insured benefit plans,”
Metropolitan Life, 471 U. S., at 739, by requiring them to
submit to an extra layer of review for certain benefit denials
if they purchase medical coverage from any of the common
types of health care organizations covered by the state law’s
definition of HMO. As a law that “relates to” ERISA plans
under § 1144(a), § 4–10 is saved from preemption only if it
also “regulates insurance” under § 1144(b)(2)(A). Rush in-
sists that the Act is not such a law.
A
In Metropolitan Life, we said that in deciding whether a
law “regulates insurance” under ERISA’s saving clause, we
start with a “common-sense view of the matter,” 471 U. S.,

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at 740, under which “a law must not just have an impact
on the insurance industry, but must be specifically directed
toward that industry.” Pilot Life Ins. Co. v. Dedeaux,
supra, at 50. We then test the results of the commonsense
enquiry by employing the three factors used to point to in-
surance laws spared from federal preemption under the
McCarran-Ferguson Act, 15 U. S. C. § 1011 et seq.4 Although
this is not the place to plot the exact perimeter of the saving
clause, it is generally fair to think of the combined “common-
sense” and McCarran-Ferguson factors as parsing the “who”
and the “what”: when insurers are regulated with respect to
their insurance practices, the state law survives ERISA.
Cf. Group Life & Health Ins. Co. v. Royal Drug Co., 440 U. S.
205, 211 (1979) (explaining that the “business of insurance”
is not coextensive with the “business of insurers”).
1
The commonsense enquiry focuses on “primary elements
of an insurance contract[, which] are the spreading and un-
derwriting of a policyholder’s risk.” Ibid. The Illinois
statute addresses these elements by defining “health mainte-
nance organization” by reference to the risk that it bears.
See 215 Ill. Comp. Stat., ch. 125, § 1–2(9) (2000) (an HMO
“provide[s] or arrange[s] for . . . health care plans under a
system which causes any part of the risk of health care deliv-
ery to be borne by the organization or its providers”).
Rush contends that seeing an HMO as an insurer distorts
the nature of an HMO, which is, after all, a health care pro-
vider, too. This, Rush argues, should determine its charac-
terization, with the consequence that regulation of an HMO
is not insurance regulation within the meaning of ERISA.
4 The McCarran-Ferguson Act requires that the business of insurance
be subject to state regulation, and, subject to certain exceptions, mandates
that “[n]o Act of Congress shall be construed to invalidate . . . any law
enacted by any State for the purpose of regulating the business of
insurance . . . .” 15 U. S. C. § 1012(b).

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The answer to Rush is, of course, that an HMO is both: it
provides health care, and it does so as an insurer. Nothing
in the saving clause requires an either-or choice between
health care and insurance in deciding a preemption question,
and as long as providing insurance fairly accounts for the
application of state law, the saving clause may apply. There
is no serious question about that here, for it would ignore
the whole purpose of the HMO-style of organization to con-
ceive of HMOs (even in the traditional sense, see n. 1, supra)
without their insurance element.
“The defining feature of an HMO is receipt of a fixed fee
for each patient enrolled under the terms of a contract to
provide specified health care if needed.” Pegram v. Her-
drich, 530 U. S. 211, 218 (2000). “The HMO thus assumes
the financial risk of providing the benefits promised: if a par-
ticipant never gets sick, the HMO keeps the money regard-
less, and if a participant becomes expensively ill, the HMO
is responsible for the treatment . . . .” Id., at 218–219. The
HMO design goes beyond the simple truism that all contracts
are, in some sense, insurance against future fluctuations in
price, R. Posner, Economic Analysis of Law 104 (4th ed.
1992), because HMOs actually underwrite and spread risk
among their participants, see, e. g., R. Shouldice, Intro-
duction to Managed Care 450–462 (1991), a feature distinc-
tive to insurance, see, e. g., SEC v. Variable Annuity Life
Ins. Co. of America, 359 U. S. 65, 73 (1959) (underwriting of
risk is an “earmark of insurance as it has commonly been
conceived of in popular understanding and usage”); Royal
Drug, supra, at 214–215, n. 12 (“[U]nless there is some ele-
ment of spreading risk more widely, there is no underwriting
of risk”).
So Congress has understood from the start, when the
phrase “Health Maintenance Organization” was established
and defined in the HMO Act of 1973. The Act was intended
to encourage the development of HMOs as a new form of
health care delivery system, see S. Rep. No. 93–129, pp. 7–9

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368 RUSH PRUDENTIAL HMO, INC. v. MORAN
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(1973), and when Congress set the standards that the new
health delivery organizations would have to meet to get cer-
tain federal benefits, the terms included requirements that
the organizations bear and manage risk. See, e. g., Health
Maintenance Organization Act of 1973, § 1301(c), 87 Stat. 916,
as amended, 42 U. S. C. § 300e(c); S. Rep. No. 93–129, at 14
(explaining that HMOs necessarily bear some of the risk of
providing service, and requiring that a qualifying HMO “as-
sum[e] direct financial responsibility, without benefit of rein-
surance, for care . . . in excess of the first five thousand dol-
lars per enrollee per year”). The Senate Committee Report
explained that federally qualified HMOs would be required
to provide “a basic package of benefits, consistent with exist-
ing health insurance patterns,” id., at 10, and the very text
of the Act assumed that state insurance laws would apply to
HMOs; it provided that to the extent state insurance capital-
ization and reserve requirements were too stringent to per-
mit the formation of HMOs, “qualified” HMOs would be ex-
empt from such limiting regulation. See § 1311, 42 U. S. C.
§ 300e–10. This congressional understanding that it was
promoting a novel form of insurance was made explicit in the
Senate Report’s reference to the practices of “health insur-
ers to charge premium rates based upon the actual claims
experience of a particular group of subscribers,” thus “rais-
ing costs and diminishing the availability of health insurance
for those suffering from costly illnesses,” S. Rep. No. 93–129,
at 29–30. The federal Act responded to this insurance prac-
tice by requiring qualifying HMOs to adopt uniform capi-
tation rates, see § 1301(b), 42 U. S. C. § 300e(b), and it was
because of that mandate “pos[ing] substantial competitive
problems to newly emerging HMOs,” S. Rep. No. 93–129, at
30, that Congress authorized funding subsidies, see § 1304,
42 U. S. C. § 300e–4. The Senate explanation left no doubt
that it viewed an HMO as an insurer; the subsidy was justi-
fied because “the same stringent requirements do not apply
to other indemnity or service benefits insurance plans.”

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S. Rep. No. 93–129, at 30. In other words, one year before
it passed ERISA, Congress itself defined HMOs in part by
reference to risk, set minimum standards for managing the
risk, showed awareness that States regulated HMOs as in-
surers, and compared HMOs to “indemnity or service bene-
fits insurance plans.”
This conception has not changed in the intervening years.
Since passage of the federal Act, States have been adopting
their own HMO enabling Acts, and today, at least 40 of them,
including Illinois, regulate HMOs primarily through the
States’ insurance departments, see Aspen Health Law and
Compliance Center, Managed Care Law Manual 31–32 (Supp.
6, Nov. 1997), although they may be treated differently from
traditional insurers, owing to their additional role as health
care providers,5 see, e. g., Alaska Ins. Code § 21.86.010 (2000)
(health department reviews HMO before insurance commis-
sioner grants a certificate of authority); Ohio Rev. Code Ann.
§ 1742.21 (West 1994) (health department may inspect HMO).
Finally, this view shared by Congress and the States has
passed into common understanding. HMOs (broadly de-
fined) have “grown explosively in the past decade and [are]
now the dominant form of health plan coverage for privately
insured individuals.” Gold & Hurley, The Role of Managed
Care “Products” in Managed Care “Plans,” in Contemporary
Managed Care 47 (M. Gold ed. 1998). While the original
form of the HMO was a single corporation employing its own
physicians, the 1980’s saw a variety of other types of struc-
tures develop even as traditional insurers altered their own
5 We have, in a limited number of cases, found certain contracts not to
be part of the “business of insurance” under McCarran-Ferguson, notwith-
standing their classification as such for the purpose of state regulation.
See, e. g., SEC v. Variable Annuity Life Ins. Co. of America, 359 U. S. 65
(1959). Even then, however, we recognized that such classifications are
relevant to the enquiry, because Congress, in leaving the “business of in-
surance” to the States, “was legislating concerning a concept which had
taken on its coloration and meaning largely from state law, from state
practice, from state usage.” Id., at 69.

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plans by adopting HMO-like cost-control measures. See
Weiner & de Lissovoy, Razing a Tower of Babel: A Taxon-
omy for Managed Care and Health Insurance Plans, 18 J. of
Health Politics, Policy and Law 75, 83 (Spring 1993). The
dominant feature is the combination of insurer and provider,
see Gold & Hurley, supra, at 47, and “an observer may be
hard pressed to uncover the differences among products that
bill themselves as HMOs, [preferred provider organizations],
or managed care overlays to health insurance,” Managed
Care Law Manual, supra, at 1. Thus, virtually all commen-
tators on the American health care system describe HMOs
as a combination of insurer and provider, and observe that
in recent years, traditional “indemnity” insurance has fallen
out of favor. See, e. g., Weiner & de Lissovoy, supra, at 77
(“A common characteristic of the new managed care plans
was the degree to which the roles of insurer and provider
became integrated”); Gold, Understanding the Roots: Health
Maintenance Organizations in Historical Context, in Contem-
porary Managed Care, supra, at 7, 8, 13; Managed Care Law
Manual, supra, at 1; R. Rosenblatt, S. Law, & S. Rosenbaum,
Law and the American Health Care System 552 (1997);
Shouldice, Introduction to Managed Care, at 13, 20. Rush
cannot checkmate common sense by trying to submerge
HMOs’ insurance features beneath an exclusive characteriza-
tion of HMOs as providers of health care.
2
On a second tack, Rush and its amici dispute that § 4–10
is aimed specifically at the insurance industry. They say the
law sweeps too broadly with definitions capturing organiza-
tions that provide no insurance, and by regulating noninsur-
ance activities of HMOs that do. Rush points out that Illi-
nois law defines HMOs to include organizations that cause
the risk of health care delivery to be borne by the organi-
zation itself, or by “its providers.” 215 Ill. Comp. Stat.,
ch. 125, § 1–2(9) (2000). In Rush’s view, the reference to “its

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providers” suggests that an organization may be an HMO
under state law (and subject to § 4–10) even if it does not
bear risk itself, either because it has “devolve[d]” the risk of
health care delivery onto others, or because it has contracted
only to provide “administrative” or other services for self-
funded plans. Brief for Petitioner 38.
These arguments, however, are built on unsound assump-
tions. Rush’s first contention assumes that an HMO is no
longer an insurer when it arranges to limit its exposure, as
when an HMO arranges for capitated contracts to compen-
sate its affiliated physicians with a set fee for each HMO
patient regardless of the treatment provided. Under such
an arrangement, Rush claims, the risk is not borne by the
HMO at all. In a similar vein, Rush points out that HMOs
may contract with third-party insurers to protect themselves
against large claims.
The problem with Rush’s argument is simply that a rein-
surance contract does not take the primary insurer out of
the insurance business, cf. Hartford Fire Ins. Co. v. Califor-
nia, 509 U. S. 764 (1993) (applying McCarran-Ferguson to a
dispute involving primary insurers and reinsurers); id., at
772–773 (“[P]rimary insurers . . . usually purchase insurance
to cover a portion of the risk they assume from the con-
sumer”), and capitation contracts do not relieve the HMO of
its obligations to the beneficiary. The HMO is still bound to
provide medical care to its members, and this is so regardless
of the ability of physicians or third-party insurers to honor
their contracts with the HMO.
Nor do we see anything standing in the way of applying
the saving clause if we assume that the general state defini-
tion of HMO would include a contractor that provides only
administrative services for a self-funded plan.6 Rush points
6 ERISA’s “deemer” clause provides an exception to its saving clause
that prohibits States from regulating self-funded plans as insurers. See
29 U. S. C. § 1144(b)(2)(B); FMC Corp. v. Holliday, 498 U. S. 52, 61 (1990).
Therefore, Illinois’s Act would not be “saved” as an insurance law to the

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out that the general definition of HMO under Illinois law
includes not only organizations that “provide” health care
plans, but those that “arrange for” them to be provided, so
long as “any part of the risk of health care delivery” rests
upon “the organization or its providers.” 215 Ill. Comp.
Stat., ch. 125, § 1–2(9) (2000). See Brief for Petitioner 38.
Rush hypothesizes a sort of medical matchmaker, bring-
ing together ERISA plans and medical care providers;
even if the latter bear all the risks, the matchmaker would
be an HMO under the Illinois definition. Rush would
conclude from this that § 4–10 covers noninsurers, and so is
not directed specifically to the insurance industry. Ergo,
ERISA’s saving clause would not apply.
It is far from clear, though, that the terms of § 4–10 would
even theoretically apply to the matchmaker, for the require-
ment that the HMO “provide” the covered service if the in-
dependent reviewer finds it medically necessary seems to as-
sume that the HMO in question is a provider, not the mere
arranger mentioned in the general definition of an HMO.
Even on the most generous reading of Rush’s argument,
however, it boils down to the bare possibility (not the likeli-
hood) of some overbreadth in the application of § 4–10 beyond
orthodox HMOs, and there is no reason to think Congress
would have meant such minimal application to noninsurers
to remove a state law entirely from the category of insurance
regulation saved from preemption.
In sum, prior to ERISA’s passage, Congress demonstrated
an awareness of HMOs as risk-bearing organizations subject
to state insurance regulation, the state Act defines HMOs
by reference to risk bearing, HMOs have taken over much
business formerly performed by traditional indemnity insur-
ers, and they are almost universally regulated as insurers
under state law. That HMOs are not traditional “indem-
extent it applied to self-funded plans. This fact, however, does not bear
on Rush’s challenge to the law as one that is targeted toward non-risk-
bearing organizations.

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nity” insurers is no matter; “we would not undertake to
freeze the concepts of ‘insurance’ . . . into the mold they fitted
when these Federal Acts were passed.” SEC v. Variable
Annuity Life Ins. Co. of America, 359 U. S., at 71. Thus,
the Illinois HMO Act is a law “directed toward” the insur-
ance industry, and an “insurance regulation” under a “com-
monsense” view.
B
The McCarran-Ferguson factors confirm our conclusion.
A law regulating insurance for McCarran-Ferguson purposes
targets practices or provisions that “ha[ve] the effect of
transferring or spreading a policyholder’s risk; . . . [that are]
an integral part of the policy relationship between the in-
surer and the insured; and [are] limited to entities within the
insurance industry.” Union Labor Life Ins. Co. v. Pireno,
458 U. S. 119, 129 (1982). Because the factors are guide-
posts, a state law is not required to satisfy all three
McCarran-Ferguson criteria to survive preemption, see
UNUM Life Ins. Co. v. Ward, 526 U. S., at 373, and so we
follow our precedent and leave open whether the review
mandated here may be described as going to a practice that
“spread[s] a policyholder’s risk.” For in any event, the sec-
ond and third factors are clearly satisfied by § 4–10.
It is obvious enough that the independent review require-
ment regulates “an integral part of the policy relationship
between the insurer and the insured.” Illinois adds an
extra layer of review when there is internal disagreement
about an HMO’s denial of coverage. The reviewer applies
both a standard of medical care (medical necessity) and char-
acteristically, as in this case, construes policy terms. Cf. Pe-
gram v. Herdrich, 530 U. S., at 228–229. The review affects
the “policy relationship” between HMO and covered persons
by translating the relationship under the HMO agreement
into concrete terms of specific obligation or freedom from
duty. Hence our repeated statements that the interpreta-
tion of insurance contracts is at the “core” of the business of

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insurance. E. g., SEC v. National Securities, Inc., 393 U. S.
453, 460 (1969).
Rush says otherwise, citing Union Labor Life Ins. Co. v.
Pireno, supra, and insisting that that case holds external
review of coverage decisions to be outside the “policy rela-
tionship.” But Rush misreads Pireno. We held there that
an insurer’s use of a “peer review” committee to gauge the
necessity of particular treatments was not a practice integral
to the policy relationship for the purposes of McCarran-
Ferguson. 458 U. S., at 131–132. We emphasized, however,
that the insurer’s resort to peer review was simply the insur-
er’s unilateral choice to seek advice if and when it cared to
do so. The policy said nothing on the matter. The insurer’s
contract for advice from a third party was no concern of the
insured, who was not bound by the peer review committee’s
recommendation any more, for that matter, than the insurer
was. Thus it was not too much of an exaggeration to con-
clude that the practice was “a matter of indifference to the
policyholder,” id., at 132. Section 4–10, by contrast, is dif-
ferent on all counts, providing as it does a legal right to the
insured, enforceable against the HMO, to obtain an authori-
tative determination of the HMO’s medical obligations.
The final factor, that the law be aimed at a “practice . . .
limited to entities within the insurance industry,” id., at 129,
is satisfied for many of the same reasons that the law passes
the commonsense test. The law regulates application of
HMO contracts and provides for review of claim denials; once
it is established that HMO contracts are, in fact, contracts
for insurance (and not merely contracts for medical care), it
is clear that § 4–10 does not apply to entities outside the in-
surance industry (although it does not, of course, apply to all
entities within it).
Even if we accepted Rush’s contention, rejected already,
that the law regulates HMOs even when they act as pure
administrators, we would still find the third factor satisfied.

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That factor requires the targets of the law to be limited to
entities within the insurance industry, and even a matchmak-
ing HMO would fall within the insurance industry. But the
implausibility of Rush’s hypothesis that the pure administra-
tor would be bound by § 4–10 obviates any need to say more
under this third factor. Cf. Barnett Bank of Marion Cty.,
N. A. v. Nelson, 517 U. S. 25, 39 (1996) (holding that a federal
statute permitting banks to act as agents of insurance com-
panies, although not insurers themselves, was a statute regu-
lating the “business of insurance” for McCarran-Ferguson
purposes).
III
Given that § 4–10 regulates insurance, ERISA’s mandate
that “nothing in this subchapter shall be construed to ex-
empt or relieve any person from any law of any State which
regulates insurance,” 29 U. S. C. § 1144(b)(2)(A), ostensibly
forecloses preemption. See Metropolitan Life, 471 U. S., at
746 (“If a state law ‘regulates insurance,’ . . . it is not pre-
empted”). Rush, however, does not give up. It argues for
preemption anyway, emphasizing that the question is ulti-
mately one of congressional intent, which sometimes is so
clear that it overrides a statutory provision designed to save
state law from being preempted. See American Tele-
phone & Telegraph Co. v. Central Office Telephone, Inc., 524
U. S. 214, 227 (1998) (AT&T) (clause in Communications Act
of 1934 purporting to save “the remedies now existing at
common law or by statute,” 47 U. S. C. § 414 (1994 ed.), de-
feated by overriding policy of the filed-rate doctrine); Adams
Express Co. v. Croninger, 226 U. S. 491, 507 (1913) (saving
clause will not sanction state laws that would nullify policy
expressed in federal statute; “the act cannot be said to de-
stroy itself ” (internal quotation marks omitted)).
In ERISA law, we have recognized one example of this
sort of overpowering federal policy in the civil enforcement
provisions, 29 U. S. C. § 1132(a), authorizing civil actions for

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six specific types of relief.7 In Massachusetts Mut. Life
Ins. Co. v. Russell, 473 U. S. 134 (1985), we said those provi-
sions amounted to an “interlocking, interrelated, and inter-
dependent remedial scheme,” id., at 146, which Pilot Life
described as “represent[ing] a careful balancing of the need
for prompt and fair claims settlement procedures against the
public interest in encouraging the formation of employee
benefit plans,” 481 U. S., at 54. So, we have held, the civil
enforcement provisions are of such extraordinarily preemp-
tive power that they override even the “well-pleaded com-
plaint” rule for establishing the conditions under which a
cause of action may be removed to a federal forum. Metro-
politan Life Ins. Co. v. Taylor, 481 U. S., at 63–64.
7 Title 29 U. S. C. § 1132(a) provides in relevant part:
“A civil action may be brought—
“(1) by a participant or beneficiary—
“(A) for the relief provided for in subsection (c) of this section [concern-
ing requests to the administrator for information], or
“(B) to recover benefits due to him under the terms of his plan, to en-
force his rights under the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan;
“(2) by the Secretary, or by a participant, beneficiary or fiduciary for
appropriate relief under section 1109 of this title [breach of fiduciary duty];
“(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter or the terms of
the plan, or (B) to obtain other appropriate equitable relief (i) to redress
such violations or (ii) to enforce any provisions of this subchapter or the
terms of the plan;
“(4) by the Secretary, or by a participant, or beneficiary for appropriate
relief in the case of a violation of 1025(c) of this title [information to be
furnished to participants];
“(5) except as otherwise provided in subsection (b) of this section, by
the Secretary (A) to enjoin any act or practice which violates any provi-
sion of this subchapter, or (B) to obtain other appropriate equitable relief
(i) to redress such violation or (ii) to enforce any provision of this
subchapter;
“(6) by the Secretary to collect any civil penalty under paragraph (2),
(4), (5), or (6) of subsection (c) of this section or under subsection (i) or (l )
of this section.”

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A
Although we have yet to encounter a forced choice be-
tween the congressional policies of exclusively federal reme-
dies and the “reservation of the business of insurance to the
States,” Metropolitan Life, 471 U. S., at 744, n. 21, we have
anticipated such a conflict, with the state insurance regula-
tion losing out if it allows plan participants “to obtain
remedies . . . that Congress rejected in ERISA,” Pilot Life,
supra, at 54.
In Pilot Life, an ERISA plan participant who had been
denied benefits sued in a state court on state tort and con-
tract claims. He sought not merely damages for breach of
contract, but also damages for emotional distress and puni-
tive damages, both of which we had held unavailable under
relevant ERISA provisions. Russell, supra, at 148. We
not only rejected the notion that these common law contract
claims “regulat[ed] insurance,” Pilot Life, 481 U. S., at 50–51,
but went on to say that, regardless, Congress intended a
“federal common law of rights and obligations” to develop
under ERISA, id., at 56, without embellishment by inde-
pendent state remedies. As in AT&T, we said the saving
clause had to stop short of subverting congressional intent,
clearly expressed “through the structure and legislative his-
tory[,] that the federal remedy . . . displace state causes of
action.” 481 U. S., at 57. 8
Rush says that the day has come to turn dictum into hold-
ing by declaring that the state insurance regulation, § 4–10,
is preempted for creating just the kind of “alternative rem-
edy” we disparaged in Pilot Life. As Rush sees it, the inde-
8 Rush and its amici interpret Pilot Life to have gone a step further to
hold that any law that presents such a conflict with federal goals is simply
not a law that “regulates insurance,” however else the “insurance” test
comes out. We believe the point is largely academic. As will be dis-
cussed further, even under Rush’s approach, a court must still determine
whether the state law at issue does, in fact, create such a conflict. Thus,
we believe that it is more logical to proceed as we have done here.

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pendent review procedure is a form of binding arbitration
that allows an ERISA beneficiary to submit claims to a new
decisionmaker to examine Rush’s determination de novo,
supplanting judicial review under the “arbitrary and capri-
cious” standard ordinarily applied when discretionary plan
interpretations are challenged. Firestone Tire & Rubber
Co. v. Bruch, 489 U. S. 101, 110–112 (1989). Rush says that
the beneficiary’s option falls within Pilot Life’s notion of a
remedy that “supplement[s] or supplant[s]” the remedies
available under ERISA. 481 U. S., at 56.
We think, however, that Rush overstates the rule ex-
pressed in Pilot Life. The enquiry into state processes al-
leged to “supplemen[t] or supplan[t]” the federal scheme by
allowing beneficiaries “to obtain remedies under state law
that Congress rejected in ERISA,” id., at 54, has, up to now,
been far more straightforward than it is here. The first case
touching on the point did not involve preemption at all; it
arose from an ERISA beneficiary’s reliance on ERISA’s own
enforcement scheme to claim a private right of action for
types of damages beyond those expressly provided. Rus-
sell, 473 U. S., at 145. We concluded that Congress had not
intended causes of action under ERISA itself beyond those
specified in § 1132(a). Id., at 148. Two years later we de-
termined in Metropolitan Life Ins. Co. v. Taylor, supra, that
Congress had so completely preempted the field of benefits
law that an ostensibly state cause of action for benefits was
necessarily a “creature of federal law” removable to federal
court. Id., at 64 (internal quotation marks omitted). Rus-
sell and Taylor naturally led to the holding in Pilot Life
that ERISA would not tolerate a diversity action seeking
monetary damages for breach generally and for consequen-
tial emotional distress, neither of which Congress had au-
thorized in § 1132(a). These monetary awards were claimed
as remedies to be provided at the ultimate step of plan en-
forcement, and even if they could have been characterized as
products of “insurance regulation,” they would have signifi-

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cantly expanded the potential scope of ultimate liability im-
posed upon employers by the ERISA scheme.
Since Pilot Life, we have found only one other state law to
“conflict” with § 1132(a) in providing a prohibited alternative
remedy. In Ingersoll-Rand Co. v. McClendon, 498 U. S. 133
(1990), we had no trouble finding that Texas’s tort of wrong-
ful discharge, turning on an employer’s motivation to avoid
paying pension benefits, conflicted with ERISA enforcement;
while state law duplicated the elements of a claim available
under ERISA, it converted the remedy from an equitable
one under § 1132(a)(3) (available exclusively in federal dis-
trict courts) into a legal one for money damages (available in
a state tribunal). Thus, Ingersoll-Rand fit within the cate-
gory of state laws Pilot Life had held to be incompatible
with ERISA’s enforcement scheme; the law provided a form
of ultimate relief in a judicial forum that added to the judicial
remedies provided by ERISA. Any such provision patently
violates ERISA’s policy of inducing employers to offer bene-
fits by assuring a predictable set of liabilities, under uniform
standards of primary conduct and a uniform regime of ulti-
mate remedial orders and awards when a violation has oc-
curred. See Pilot Life, supra, at 56 (“ ‘The uniformity of
decision . . . will help administrators . . . predict the legality
of proposed actions without the necessity of reference to
varying state laws’ ” (quoting H. R. Rep. No. 93–533, p. 12
(1973))); 481 U. S., at 56 (“The expectations that a fed-
eral common law of rights and obligations under ERISA-
regulated plans would develop . . . would make little sense if
the remedies available to ERISA participants and benefici-
aries under [§ 1132(a)] could be supplemented or supplanted
by varying state laws”).
But this case addresses a state regulatory scheme that
provides no new cause of action under state law and author-
izes no new form of ultimate relief. While independent re-
view under § 4–10 may well settle the fate of a benefit claim
under a particular contract, the state statute does not en-

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large the claim beyond the benefits available in any action
brought under § 1132(a). And although the reviewer’s de-
termination would presumably replace that of the HMO as
to what is “medically necessary” under this contract,9 the
relief ultimately available would still be what ERISA au-
thorizes in a suit for benefits under § 1132(a).10 This case
therefore does not involve the sort of additional claim or
remedy exemplified in Pilot Life, Russell, and Ingersoll-
Rand, but instead bears a resemblance to the claims-
procedure rule that we sustained in UNUM Life Ins. Co. of
America v. Ward, 526 U. S. 358 (1999), holding that a state
law barring enforcement of a policy’s time limitation on sub-
mitting claims did not conflict with § 1132(a), even though the
state “rule of decision,” id., at 377, could mean the difference
between success and failure for a beneficiary. The proce-
dure provided by § 4–10 does not fall within Pilot Life’s cate-
gorical preemption.
9 The parties do not dispute that § 4–10, as a matter of state law, pur-
ports to make the independent reviewer’s judgment dispositive as to what
is “medically necessary.” We accept this interpretation of the meaning of
the statute for the purposes of our opinion.
10 This is not to say that the court would have no role beyond ordering
compliance with the reviewer’s determination. The court would have the
responsibility, for example, to fashion appropriate relief, or to determine
whether other aspects of the plan (beyond the “medical necessity” of a
particular treatment) affect the relative rights of the parties. Rush, for
example, has chosen to guarantee medically necessary services to plan
participants. For that reason, to the extent § 4–10 may render the inde-
pendent reviewer the final word on what is necessary, see n. 9, supra,
Rush is obligated to provide the service. But insurance contracts do not
have to contain such guarantees, and not all do. Some, for instance, guar-
antee medically necessary care, but then modify that obligation by exclud-
ing experimental procedures from coverage. See, e. g., Tillery v. Hoff-
man Enclosures, Inc., 280 F. 3d 1192 (CA8 2002). Obviously, § 4–10 does
not have anything to say about whether a proposed procedure is experi-
mental. There is also the possibility, though we do not decide the issue
today, that a reviewer’s judgment could be challenged as inaccurate or
biased, just as the decision of a plan fiduciary might be so challenged.

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B
Rush still argues for going beyond Pilot Life, making the
preemption issue here one of degree, whether the state pro-
cedural imposition interferes unreasonably with Congress’s
intention to provide a uniform federal regime of “rights and
obligations” under ERISA. However, “[s]uch disuniformi-
ties . . . are the inevitable result of the congressional decision
to ‘save’ local insurance regulation.” Metropolitan Life, 471
U. S., at 747.11 Although we have recognized a limited ex-
ception from the saving clause for alternative causes of ac-
tion and alternative remedies in the sense described above,
we have never indicated that there might be additional jus-
tifications for qualifying the clause’s application. Rush’s
arguments today convince us that further limits on insurance
regulation preserved by ERISA are unlikely to deserve
recognition.
To be sure, a State might provide for a type of “review”
that would so resemble an adjudication as to fall within Pilot
Life’s categorical bar. Rush, and the dissent, post, at 394
(opinion of Thomas, J.), contend that § 4–10 fills that bill by
imposing an alternative scheme of arbitral adjudication at
11 Thus, we do not believe that the mere fact that state independent
review laws are likely to entail different procedures will impose burdens
on plan administration that would threaten the object of 29 U. S. C.
§ 1132(a); it is the HMO contracting with a plan, and not the plan itself,
that will be subject to these regulations, and every HMO will have to
establish procedures for conforming with the local laws, regardless of what
this Court may think ERISA forbids. This means that there will be no
special burden of compliance upon an ERISA plan beyond what the HMO
has already provided for. And although the added compliance cost to the
HMO may ultimately be passed on to the ERISA plan, we have said that
such “indirect economic effect[s],” New York State Conference of Blue
Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U. S. 645, 659 (1995),
are not enough to preempt state regulation even outside of the insurance
context. We recognize, of course, that a State might enact an inde-
pendent review requirement with procedures so elaborate, and burdens
so onerous, that they might undermine § 1132(a). No such system is
before us.

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382 RUSH PRUDENTIAL HMO, INC. v. MORAN
Opinion of the Court
odds with the manifest congressional purpose to confine ad-
judication of disputes to the courts. It does not turn out to
be this simple, however, and a closer look at the state law
reveals a scheme significantly different from common arbi-
tration as a way of construing and applying contract terms.
In the classic sense, arbitration occurs when “parties in
dispute choose a judge to render a final and binding decision
on the merits of the controversy and on the basis of proofs
presented by the parties.” 1 I. MacNeil, R. Speidel, & T.
Stipanowich, Federal Arbitration Law § 2.1.1 (1995) (internal
quotation marks omitted); see also Uniform Arbitration Act
§ 5, 7 U. L. A. 173 (1997) (discussing submission evidence and
empowering arbitrator to “hear and determine the contro-
versy upon the evidence produced”); Commercial Dispute
Resolution Procedures of the American Arbitration Associa-
tion ¶¶ R33–R35 (Sept. 2000) (discussing the taking of evi-
dence). Arbitrators typically hold hearings at which parties
may submit evidence and conduct cross-examinations, e. g.,
Uniform Arbitration Act § 5, and are often invested with
many powers over the dispute and the parties, including the
power to subpoena witnesses and administer oaths, e. g., Fed-
eral Arbitration Act, 9 U. S. C. § 7; 28 U. S. C. § 653; Uniform
Arbitration Act § 7, 7 U. L. A., at 199; Cal. Civ. Proc. Code
Ann. §§ 1282.6, 1282.8 (West 1982).
Section 4–10 does resemble an arbitration provision, then,
to the extent that the independent reviewer considers dis-
putes about the meaning of the HMO contract 12 and receives
“evidence” in the form of medical records, statements from
12 Nothing in the Act states that the reviewer should refer to the defini-
tions of medical necessity contained in the contract, but the reviewer did,
in this case, refer to that definition. Thus, we will assume that some
degree of contract interpretation is required under the Act. Were no in-
terpretation required, there would be a real question as to whether § 4–10
is properly characterized as a species of mandated-benefit law of the type
we approved in Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S.
724 (1985).

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Opinion of the Court
physicians, and the like. But this is as far as the resem-
blance to arbitration goes, for the other features of review
under § 4–10 give the proceeding a different character, one
not at all at odds with the policy behind § 1132(a). The Act
does not give the independent reviewer a free-ranging power
to construe contract terms, but instead, confines review to a
single term: the phrase “medical necessity,” used to define
the services covered under the contract. This limitation, in
turn, implicates a feature of HMO benefit determinations
that we described in Pegram v. Herdrich, 530 U. S. 211
(2000). We explained that when an HMO guarantees medi-
cally necessary care, determinations of coverage “cannot be
untangled from physicians’ judgments about reasonable med-
ical treatment.” Id., at 229. This is just how the Illinois
Act operates; the independent examiner must be a physician
with credentials similar to those of the primary care physi-
cian, 215 Ill. Comp. Stat., ch. 125, § 4–10 (2000), and is ex-
pected to exercise independent medical judgment in deciding
what medical necessity requires. Accordingly, the reviewer
in this case did not hold the kind of conventional evidentiary
hearing common in arbitration, but simply received medical
records submitted by the parties, and ultimately came to
a professional judgment of his own. Tr. of Oral Arg. 30–32.
Once this process is set in motion, it does not resemble
either contract interpretation or evidentiary litigation before
a neutral arbiter, as much as it looks like a practice (having
nothing to do with arbitration) of obtaining another medical
opinion. The reference to an independent reviewer is simi-
lar to the submission to a second physician, which many
health insurers are required by law to provide before deny-
ing coverage.13
The practice of obtaining a second opinion, however, is far
removed from any notion of an enforcement scheme, and
13 See, e. g., Cal. Ins. Code Ann. § 10123.68 (West Supp. 2002); Ind. Code
§ 27–13–37–5 (1999); N. J. Stat. Ann. § 17B:26–2.3 (1996); Okla. Admin. Code
§ 365:10–5–4 (1996); R. I. Gen. Laws § 27–39–2 (1998).

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384 RUSH PRUDENTIAL HMO, INC. v. MORAN
Opinion of the Court
once § 4–10 is seen as something akin to a mandate for
second-opinion practice in order to ensure sound medical
judgments, the preemption argument that arbitration under
§ 4–10 supplants judicial enforcement runs out of steam.
Next, Rush argues that § 4–10 clashes with a substantive
rule intended to be preserved by the system of uniform en-
forcement, stressing a feature of judicial review highly
prized by benefit plans: a deferential standard for reviewing
benefit denials. Whereas Firestone Tire & Rubber Co. v.
Bruch, 489 U. S., at 115, recognized that an ERISA plan
could be designed to grant “discretion” to a plan fiduciary,
deserving deference from a court reviewing a discretionary
judgment, § 4–10 provides that when a plan purchases medi-
cal services and insurance from an HMO, benefit denials are
subject to apparently de novo review. If a plan should con-
tinue to balk at providing a service the reviewer has found
medically necessary, the reviewer’s determination could
carry great weight in a subsequent suit for benefits under
§ 1132(a),14 depriving the plan of the judicial deference a fi-
duciary’s medical judgment might have obtained if judicial
review of the plan’s decision had been immediate.15
Again, however, the significance of § 4–10 is not wholly
captured by Rush’s argument, which requires some perspec-
14 See n. 10, supra.
15 An issue implicated by this case but requiring no resolution is the
degree to which a plan provision for unfettered discretion in benefit deter-
minations guarantees truly deferential review. In Firestone Tire itself,
we noted that review for abuse of discretion would home in on any conflict
of interest on the plan fiduciary’s part, if a conflict was plausibly raised.
That last observation was underscored only two Terms ago in Pegram v.
Herdrich, 530 U. S. 211 (2000), when we again noted the potential for con-
flict when an HMO makes decisions about appropriate treatment, see id.,
at 219–220. It is a fair question just how deferential the review can be
when the judicial eye is peeled for conflict of interest. Moreover, as we
explained in Pegram, “it is at least questionable whether Congress would
have had mixed eligibility decisions in mind when it provided that deci-
sions administering a plan were fiduciary in nature.” Id., at 232. Our
decision today does not require us to resolve these questions.

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Opinion of the Court
tive for evaluation. First, in determining whether state
procedural requirements deprive plan administrators of any
right to a uniform standard of review, it is worth recalling
that ERISA itself provides nothing about the standard. It
simply requires plans to afford a beneficiary some mechanism
for internal review of a benefit denial, 29 U. S. C. § 1133(2),
and provides a right to a subsequent judicial forum for a
claim to recover benefits, § 1132(a)(1)(B). Whatever the
standards for reviewing benefit denials may be, they cannot
conflict with anything in the text of the statute, which we
have read to require a uniform judicial regime of categories
of relief and standards of primary conduct, not a uniformly
lenient regime of reviewing benefit determinations. See
Pilot Life, 481 U. S., at 56.16
Not only is there no ERISA provision directly providing
a lenient standard for judicial review of benefit denials, but
there is no requirement necessarily entailing such an effect
even indirectly. When this Court dealt with the review
standards on which the statute was silent, we held that a
general or default rule of de novo review could be replaced
16 Rush presents the alternative argument that § 4–10 is preempted as
conflicting with ERISA’s requirement that a benefit denial be reviewed by
a named fiduciary, 29 U. S. C. § 1133(2). Rush contends that § 4–10 inter-
feres with fiduciary discretion by forcing the provision of benefits over a
fiduciary’s objection. Happily, we need not decide today whether § 1133(2)
carries the same preemptive force of § 1132(a) such that it overrides even
the express saving clause for insurance regulation, because we see no con-
flict. Section 1133 merely requires that plans provide internal appeals of
benefit denials; § 4–10 plays no role in this process, instead providing for
extra review once the internal process is complete. Nor is there any con-
flict in the removal of fiduciary “discretion”; as described below, ERISA
does not require that such decisions be discretionary, and insurance regu-
lation is not preempted merely because it conflicts with substantive plan
terms. See UNUM Life Ins. Co. of America v. Ward, 526 U. S. 358, 376
(1999) (“Under [Petitioner’s] interpretation . . . insurers could displace any
state regulation simply by inserting a contrary term in plan documents.
This interpretation would virtually rea[d] the saving clause out of ERISA”
(internal quotation marks and citations omitted)).

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386 RUSH PRUDENTIAL HMO, INC. v. MORAN
Opinion of the Court
by deferential review if the ERISA plan itself provided that
the plan’s benefit determinations were matters of high or
unfettered discretion, see Firestone Tire, supra, at 115.
Nothing in ERISA, however, requires that these kinds of
decisions be so “discretionary” in the first place; whether
they are is simply a matter of plan design or the drafting
of an HMO contract. In this respect, then, § 4–10 prohibits
designing an insurance contract so as to accord unfettered
discretion to the insurer to interpret the contract’s terms.
As such, it does not implicate ERISA’s enforcement scheme
at all, and is no different from the types of substantive state
regulation of insurance contracts we have in the past permit-
ted to survive preemption, such as mandated-benefit statutes
and statutes prohibiting the denial of claims solely on the
ground of untimeliness.17 See Metropolitan Life Ins. Co. v.
Massachusetts, 471 U. S. 724 (1985); UNUM Life Ins. Co. of
America v. Ward, 526 U. S. 358 (1999).
* * *
In sum, § 4–10 imposes no new obligation or remedy like
the causes of action considered in Russell, Pilot Life, and
Ingersoll-Rand. Even in its formal guise, the State Act
bears a closer resemblance to second-opinion requirements
than to arbitration schemes. Deferential review in the
HMO context is not a settled given; § 4–10 operates before
the stage of judicial review; the independent reviewer’s de
novo examination of the benefit claim mirrors the general or
17 We do not mean to imply that States are free to create other forms of
binding arbitration to provide de novo review of any terms of insurance
contracts; as discussed above, our decision rests in part on our recognition
that the disuniformity Congress hoped to avoid is not implicated by deci-
sions that are so heavily imbued with expert medical judgments. Rather,
we hold that the feature of § 4–10 that provides a different standard of
review with respect to mixed eligibility decisions from what would be
available in court is not enough to create a conflict that undermines con-
gressional policy in favor of uniformity of remedies.

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387 Cite as: 536 U. S. 355 (2002)
Opinion of the Court
default rule we have ourselves recognized; and its effect is
no greater than that of mandated-benefit regulation.
In deciding what to make of these facts and conclusions, it
helps to go back to where we started and recall the ways
States regulate insurance in looking out for the welfare of
their citizens. Illinois has chosen to regulate insurance as
one way to regulate the practice of medicine, which we have
previously held to be permissible under ERISA, see Metro-
politan Life, 471 U. S., at 741. While the statute designed
to do this undeniably eliminates whatever may have re-
mained of a plan sponsor’s option to minimize scrutiny of
benefit denials, this effect of eliminating an insurer’s auton-
omy to guarantee terms congenial to its own interests is the
stuff of garden variety insurance regulation through the im-
position of standard policy terms. See id., at 742 (“[S]tate
laws regulating the substantive terms of insurance contracts
were commonplace well before the mid-70’s”). It is there-
fore hard to imagine a reservation of state power to regulate
insurance that would not be meant to cover restrictions of
the insurer’s advantage in this kind of way. And any linger-
ing doubt about the reasonableness of § 4–10 in affecting the
application of § 1132(a) may be put to rest by recalling that
regulating insurance tied to what is medically necessary is
probably inseparable from enforcing the quintessentially
state-law standards of reasonable medical care. See Pe-
gram v. Herdrich, 530 U. S., at 236. “[I]n the field of health
care, a subject of traditional state regulation, there is no
ERISA preemption without clear manifestation of congres-
sional purpose.” Id., at 237. To the extent that benefit
litigation in some federal courts may have to account for the
effects of § 4–10, it would be an exaggeration to hold that the
objectives of § 1132(a) are undermined. The saving clause is
entitled to prevail here, and we affirm the judgment.
It is so ordered.

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388 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
Justice Thomas, with whom The Chief Justice, Jus-
tice Scalia, and Justice Kennedy join, dissenting.
This Court has repeatedly recognized that ERISA’s civil
enforcement provision, § 502 of the Employee Retirement In-
come Security Act of 1974 (ERISA), 29 U. S. C. § 1132, pro-
vides the exclusive vehicle for actions asserting a claim for
benefits under health plans governed by ERISA, and there-
fore that state laws that create additional remedies are pre-
empted. See, e. g., Pilot Life Ins. Co. v. Dedeaux, 481 U. S.
41, 52 (1987); Massachusetts Mut. Life Ins. Co. v. Russell,
473 U. S. 134, 146–147 (1985). Such exclusivity of remedies
is necessary to further Congress’ interest in establishing a
uniform federal law of employee benefits so that employers
are encouraged to provide benefits to their employees: “To
require plan providers to design their programs in an envi-
ronment of differing state regulations would complicate the
administration of nationwide plans, producing inefficiencies
that employers might offset with decreased benefits.” FMC
Corp. v. Holliday, 498 U. S. 52, 60 (1990).
Of course, the “expectations that a federal common law of
rights and obligations under ERISA-regulated plans would
develop . . . would make little sense if the remedies available
to ERISA participants and beneficiaries under § 502(a) could
be supplemented or supplanted by varying state laws.”
Pilot Life, supra, at 56. Therefore, as the Court concedes,
see ante, at 377, even a state law that “regulates insurance”
may be pre-empted if it supplements the remedies provided
by ERISA, despite ERISA’s saving clause, § 514(b)(2)(A), 29
U. S. C. § 1144(b)(2)(A). See Silkwood v. Kerr-McGee Corp.,
464 U. S. 238, 248 (1984) (noting that state laws that stand as
an obstacle to the accomplishment of the full purposes and
objectives of Congress are pre-empted).1 Today, however,
1 I would assume without deciding that 215 Ill. Comp. Stat., ch. 125,
§ 4–10 (2000) is a law that “regulates insurance.” We can begin and end
the pre-emption analysis by asking if § 4–10 conflicts with the provisions

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389 Cite as: 536 U. S. 355 (2002)
Thomas, J., dissenting
the Court takes the unprecedented step of allowing respond-
ent Debra Moran to short circuit ERISA’s remedial scheme
by allowing her claim for benefits to be determined in the
first instance through an arbitral-like procedure provided
under Illinois law, and by a decisionmaker other than a court.
See 215 Ill. Comp. Stat., ch. 125, § 4–10 (2000). This decision
not only conflicts with our precedents, it also eviscerates the
uniformity of ERISA remedies Congress deemed integral to
the “careful balancing of the need for prompt and fair claims
settlement procedures against the public interest in encour-
aging the formation of employee benefit plans.” Pilot Life,
supra, at 54. I would reverse the Court of Appeals’ judg-
ment and remand for a determination whether Moran was
entitled to reimbursement absent the independent review
conducted under § 4–10.
I
From the facts of this case one can readily understand why
Moran sought recourse under § 4–10. Moran is covered
by a medical benefits plan sponsored by her husband’s em-
ployer and governed by ERISA. Petitioner Rush Pruden-
tial HMO, Inc., is the employer’s health maintenance organi-
zation (HMO) provider for the plan. Petitioner’s Member
Certificate of Coverage (Certificate) details the scope of
coverage under the plan and provides petitioner with “the
broadest possible discretion” to interpret the terms of the
plan and to determine participants’ entitlement to benefits.
1 Record, Exh. A, p. 8. The Certificate specifically excludes
from coverage services that are not “medically necessary.”
Id., at 21. As the Court describes, ante, at 360–362, Moran
underwent a nonstandard surgical procedure.2 Prior to
of ERISA or operates to frustrate its objects. See, e. g., Boggs v. Boggs,
520 U. S. 833, 841 (1997).
2 While the Court characterizes it as an “unconventional treatment,” the
Court of Appeals described this surgery more clinically as “rib resection,
extensive scale-nectomy,” and “microneurolysis of the lower roots of the
brachial plexus under intraoperative microscopic magnification.” 230

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390 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
Moran’s surgery, which was performed by an unaffiliated
doctor, petitioner denied coverage for the procedure on at
least three separate occasions, concluding that this surgery
was not “medically necessary.” For the same reason, peti-
tioner denied Moran’s request for postsurgery reimburse-
ment in the amount of $94,841.27. Before finally determin-
ing that the specific treatment sought by Moran was not
“medically necessary,” petitioner consulted no fewer than six
doctors, reviewed Moran’s medical records, and consulted
peer-reviewed medical literature.3
In the course of its review, petitioner informed Moran that
“there is no prevailing opinion within the appropriate spe-
cialty of the United States medical profession that the proce-
dure proposed [by Moran] is safe and effective for its in-
tended use and that the omission of the procedure would
adversely affect [her] medical condition.” 1 Record, Exh. E,
at 2. Petitioner did agree to cover the standard treatment
for Moran’s ailment, see n. 2, supra; n. 4, infra, concluding
that peer-reviewed literature “demonstrates that [the stand-
ard surgery] is effective therapy in the treatment of [Moran’s
condition].” 1 Record, Exh. E, at 3.
Moran, however, was not satisfied with this option. After
exhausting the plan’s internal review mechanism, Moran
F. 3d 959, 963 (CA7 2000). The standard procedure for Moran’s condition,
as described by the Court of Appeals, involves (like the nonstandard sur-
gery) rib resection with scale-nectomy, but it does not include “microneu-
rolysis of the brachial plexus,” which is the procedure Moran wanted and
her primary care physician recommended. See id., at 963–964. In any
event, no one disputes that the procedure was not the standard surgical
procedure for Moran’s condition or that the Certificate covers even non-
standard surgery if it is “medically necessary.”
3 Petitioner thus appears to have complied with § 503 of ERISA, which
requires every employee benefit plan to “provide adequate notice in writ-
ing to any participant or beneficiary whose claim for benefits under the
plan has been denied,” and to “afford a reasonable opportunity to any
participant whose claim for benefits has been denied for a full and fair
review by the appropriate named fiduciary of the decision denying the
claim.” 29 U. S. C. § 1133.

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391 Cite as: 536 U. S. 355 (2002)
Thomas, J., dissenting
chose to bypass the relief provided by ERISA. She invoked
§ 4–10 of the Illinois HMO Act, which requires HMOs to pro-
vide a mechanism for review by an independent physician
when the patient’s primary care physician and HMO disagree
about the medical necessity of a treatment proposed by the
primary care physician. See 215 Ill. Comp. Stat., ch. 125,
§ 4–10 (2000). While Moran’s primary care physician ac-
knowledged that petitioner’s affiliated surgeons had not rec-
ommended the unconventional surgery and that he was not
“an expert in this or any other area of surgery,” 1 Record,
Exh. C, he nonetheless opined, without explanation, that
Moran would be “best served” by having that surgery, ibid.
Dr. A. Lee Dellon, an unaffiliated physician who served as
the independent medical reviewer, concluded that the sur-
gery for which petitioner denied coverage “was appropriate,”
that it was “the same type of surgery” he would have done,
and that Moran “had all of the indications and therefore the
medical necessity to carry out” the nonstandard surgery.
Appellant’s Separate App. (CA7), pp. A42–A43.4 Under § 4–
10, Dr. Dellon’s determination conclusively established Mor-
an’s right to benefits under Illinois law. See 215 Ill. Comp.
Stat., ch. 125, § 4–10 (“In the event that the reviewing physi-
cian determines the covered service to be medically neces-
sary, the [HMO] shall provide the covered service” (empha-
sis added)). 230 F. 3d 959, 972–973 (CA7 2000).
Nevertheless, petitioner again denied benefits, steadfastly
maintaining that the unconventional surgery was not medi-
cally necessary. While the Court of Appeals recharacter-
ized Moran’s claim for reimbursement under § 4–10 as a claim
for benefits under ERISA § 502(a)(1)(B), it reversed the judg-
4 Even Dr. Dellon acknowledged, however, both that “[t]here is no partic-
ular research study” to determine whether failure to perform the non-
standard surgery would adversely affect Moran’s medical condition and
that the most common operation for Moran’s condition in the United States
was the standard surgery that petitioner had agreed to cover. Appel-
lant’s Separate App. (CA7), p. A43.

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392 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
ment of the District Court based solely on Dr. Dellon’s judg-
ment that the surgery was “medically necessary.”
II
Section 514(a)’s broad language provides that ERISA
“shall supersede any and all State laws insofar as they . . .
relate to any employee benefit plan,” except as provided in
§ 514(b). 29 U. S. C. § 1144(a). This language demonstrates
“Congress’s intent to establish the regulation of employee
welfare benefit plans ‘as exclusively a federal concern.’ ”
New York State Conference of Blue Cross & Blue Shield
Plans v. Travelers Ins. Co., 514 U. S. 645, 656 (1995) (quot-
ing Alessi v. Raybestos-Manhattan, Inc., 451 U. S. 504, 523
(1981)). It was intended to “ensure that plans and plan
sponsors would be subject to a uniform body of benefits law”
so as to “minimize the administrative and financial burden of
complying with conflicting directives among States or be-
tween States and the Federal Government” and to prevent
“the potential for conflict in substantive law . . . requiring the
tailoring of plans and employer conduct to the peculiarities of
the law of each jurisdiction.” Ingersoll-Rand Co. v. Mc-
Clendon, 498 U. S. 133, 142 (1990). See also Egelhoff v.
Egelhoff, 532 U. S. 141, 148 (2001).
To be sure, this broad goal of uniformity is in some tension
with the so-called “saving clause,” which provides that
ERISA does not “exempt or relieve any person from any law
of any State which regulates insurance, banking, or securi-
ties.” § 514(b)(2)(A) of ERISA, 29 U. S. C. § 1144(b)(2)(A).
As the Court has suggested on more than one occasion, the
pre-emption and saving clauses are almost antithetically
broad and “ ‘are not a model of legislative drafting.’ ” John
Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank,
510 U. S. 86, 99 (1993) (quoting Pilot Life, 481 U. S., at 46).
But because there is “no solid basis for believing that Con-
gress, when it designed ERISA, intended fundamentally to
alter traditional pre-emption analysis,” the Court has con-

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Thomas, J., dissenting
cluded that federal pre-emption occurs where state law gov-
erning insurance “ ‘stands as an obstacle to the accomplish-
ment of the full purposes and objectives of Congress.’ ”
Harris Trust, supra, at 99 (quoting Silkwood, 464 U. S., at
248).
Consequently, the Court until today had consistently held
that state laws that seek to supplant or add to the exclusive
remedies in § 502(a) of ERISA, 29 U. S. C. § 1132(a), are pre-
empted because they conflict with Congress’ objective that
rights under ERISA plans are to be enforced under a uni-
form national system. See, e. g., Ingersoll-Rand Co., supra,
at 142–145; Metropolitan Life Ins. Co. v. Taylor, 481 U. S.
58, 64–66 (1987); Pilot Life, supra, at 52–57. The Court has
explained that § 502(a) creates an “interlocking, interrelated,
and interdependent remedial scheme,” and that a beneficiary
who claims that he was wrongfully denied benefits has
“a panoply of remedial devices” at his disposal. Russell, 473
U. S., at 146. It is exactly this enforcement scheme that
Pilot Life described as “represent[ing] a careful balancing of
the need for prompt and fair claims settlement procedures
against the public interest in encouraging the formation of
employee benefit plans,” 481 U. S., at 54. Central to that
balance is the development of “a federal common law of
rights and obligations under ERISA-regulated plans.” Id.,
at 56.
In addressing the relationship between ERISA’s remedies
under § 502(a) and a state law regulating insurance, the
Court has observed that “[t]he policy choices reflected in the
inclusion of certain remedies and the exclusion of others
under the federal scheme would be completely undermined
if ERISA-plan participants and beneficiaries were free to ob-
tain remedies under state law that Congress rejected in
ERISA.” Id., at 54. Thus, while the preeminent federal
interest in the uniform administration of employee benefit
plans yields in some instances to varying state regulation of
the business of insurance, the exclusivity and uniformity of

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394 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
ERISA’s enforcement scheme remains paramount. “Con-
gress intended § 502(a) to be the exclusive remedy for rights
guaranteed under ERISA.” Ingersoll-Rand Co., supra, at
144. In accordance with ordinary principles of conflict pre-
emption, therefore, even a state law “regulating insurance”
will be pre-empted if it provides a separate vehicle to assert
a claim for benefits outside of, or in addition to, ERISA’s
remedial scheme. See, e. g., Pilot Life, supra, at 54 (citing
Russell, supra, at 146); Harris Trust, supra, at 99 (citing
Silkwood, supra, at 248).
III
The question for the Court, therefore, is whether § 4–10
provides such a vehicle. Without question, Moran had a
“panoply of remedial devices,” Russell, supra, at 146, avail-
able under § 502 of ERISA when petitioner denied her claim
for benefits.5 Section 502(a)(1)(B) of ERISA provided the
most obvious remedy: a civil suit to recover benefits due
under the terms of the plan. 29 U. S. C. § 1132(a)(1)(B).
But rather than bring such a suit, Moran sought to have her
right to benefits determined outside of ERISA’s remedial
scheme through the arbitral-like mechanism available under
§ 4–10.
Section 4–10 cannot be characterized as anything other
than an alternative state-law remedy or vehicle for seeking
benefits. In the first place, § 4–10 comes into play only if the
HMO and the claimant dispute the claimant’s entitlement to
benefits; the purpose of the review is to determine whether
a claimant is entitled to benefits. Contrary to the majority’s
characterization of § 4–10 as nothing more than a state law
5 Commonly included in the panoply constituting part of this enforce-
ment scheme are: suits under § 502(a)(1)(B) (authorizing an action to re-
cover benefits, obtain a declaratory judgment that one is entitled to bene-
fits, and to enjoin an improper refusal to pay benefits); suits under
§§ 502(a)(2) and 409 (authorizing suit to seek removal of the fiduciary); and
a claim for attorney’s fees under § 502(g). See Russell, 473 U. S., at 146–
147; Pilot Life Ins. Co. v. Dedeaux, 481 U. S. 41, 53 (1987).

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395 Cite as: 536 U. S. 355 (2002)
Thomas, J., dissenting
regarding medical standards, ante, at 383–384, it is in fact a
binding determination of whether benefits are due: “In the
event that the reviewing physician determines the covered
service to be medically necessary, the [HMO] shall provide
the covered service.” 215 Ill. Comp. Stat., ch. 125, § 4–10
(2000) (emphasis added). Section 4–10 is thus most precisely
characterized as an arbitration-like mechanism to settle ben-
efits disputes. See Brief for United States as Amicus Cu-
riae 23 (conceding as much).
There is no question that arbitration constitutes an alter-
native remedy to litigation. See, e. g., Air Line Pilots v.
Miller, 523 U. S. 866, 876, 880 (1998) (referring to “arbitral
remedy” and “arbitration remedy”); DelCostello v. Team-
sters, 462 U. S. 151, 163 (1983) (referring to “arbitration rem-
edies”); Great American Fed. Sav. & Loan Assn. v. Novotny,
442 U. S. 366, 377–378 (1979) (noting that arbitration and
litigation are “alternative remedies”); 3 D. Dobbs, Law of
Remedies § 12.23 (2d ed. 1993) (explaining that arbitration
“is itself a remedy”). Consequently, although a contractual
agreement to arbitrate—which does not constitute a “State
law” relating to “any employee benefit plan”—is outside
§ 514(a) of ERISA’s pre-emptive scope, States may not cir-
cumvent ERISA pre-emption by mandating an alternative
arbitral-like remedy as a plan term enforceable through an
ERISA action.
To be sure, the majority is correct that § 4–10 does not
mirror all procedural and evidentiary aspects of “common
arbitration.” Ante, at 381–383. But as a binding decision
on the merits of the controversy the § 4–10 review resembles
nothing so closely as arbitration. See generally 1 I. Mac-
Neil, R. Spediel, & T. Stipanowich, Federal Arbitration Law
§ 2.1.1 (1995). That the decision of the § 4–10 medical re-
viewer is ultimately enforceable through a suit under § 502(a)
of ERISA further supports the proposition that it tracks the
arbitral remedy. Like the decision of any arbitrator, it is
enforceable through a subsequent judicial action, but judicial

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396 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
review of an arbitration award is very limited, as was the
Court of Appeals’ review in this case. See, e. g., Paperwork-
ers v. Misco, Inc., 484 U. S. 29, 36–37 (1987) (quoting Steel-
workers v. American Mfg. Co., 363 U. S. 564, 567–568 (1960)).
Although the Court of Appeals recharacterized Moran’s
claim for reimbursement under § 4–10 as a claim for benefits
under § 502(a)(1)(B) of ERISA, the Court of Appeals did not
interpret the plan terms or purport to analyze whether the
plan fiduciary had engaged in the “full and fair review” of
Moran’s claim for benefits that § 503(2) of ERISA, 29 U. S. C.
§ 1133(2), requires. Rather, it rubberstamped the independ-
ent medical reviewer’s judgment that Moran’s surgery was
“medically necessary,” granting summary judgment to
Moran on her claim for benefits solely on that basis. Thus,
as Judge Posner aptly noted in his dissent from the denial
of rehearing en banc below, § 4–10 “establishes a system of
appellate review of benefits decisions that is distinct from
the provision in ERISA for suits in federal court to enforce
entitlements conferred by ERISA plans.” 230 F. 3d, at 973.
IV
The Court of Appeals attempted to evade the pre-emptive
force of ERISA’s exclusive remedial scheme primarily by
characterizing the alternative enforcement mechanism cre-
ated by § 4–10 as a “contract term” under state law.6 Id., at
972. The Court saves § 4–10 from pre-emption in a some-
what different manner, distinguishing it from an alternative
enforcement mechanism because it does not “enlarge the
6 The Court of Appeals concluded that § 4–10 is saved from pre-emption
because it is a law that “regulates insurance,” and that it does not conflict
with the exclusive enforcement mechanism of § 502 because § 4–10’s inde-
pendent review mechanism is a state-mandated contractual term of the
sort that survived ERISA pre-emption in UNUM Life Ins. Co. of America
v. Ward, 526 U. S. 358, 375–376 (1999). In the Court of Appeals’ view, the
independent review provision, like any other mandatory contract term,
can be enforced through an action brought under § 502(a) of ERISA, 29
U. S. C. § 1132(a), pursuant to state law. 230 F. 3d, at 972.

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Thomas, J., dissenting
claim beyond the benefits available in any action brought
under § 1132(a),” and characterizing it as “something akin to
a mandate for second-opinion practice in order to ensure
sound medical judgments.” Ante, at 379–380, 384. Neither
approach is sound.
The Court of Appeals’ approach assumes that a State may
impose an alternative enforcement mechanism through man-
dated contract terms even though it could not otherwise im-
pose such an enforcement mechanism on a health plan gov-
erned by ERISA. No party cites any authority for that
novel proposition, and I am aware of none. Cf. Fort Halifax
Packing Co. v. Coyne, 482 U. S. 1, 16–17 (1987) (noting that
a State cannot avoid ERISA pre-emption on the ground that
its regulation only mandates a benefit plan; such an approach
would “permit States to circumvent ERISA’s pre-emption
provision, by allowing them to require directly what they
are forbidden to regulate”). To hold otherwise would be to
eviscerate ERISA’s comprehensive and exclusive remedial
scheme because a claim to benefits under an employee bene-
fits plan could be determined under each State’s particular
remedial devices so long as they were made contract terms.
Such formalist tricks cannot be sufficient to bypass ERISA’s
exclusive remedies; we should not interpret ERISA in such
a way as to destroy it.
With respect to the Court’s position, Congress’ intention
that § 502(a) be the exclusive remedy for rights guaranteed
under ERISA has informed this Court’s weighing of the
pre-emption and saving clauses. While the Court has pre-
viously focused on ERISA’s overall enforcement mechanism
and remedial scheme, see infra, at 393–394, the Court today
ignores the “interlocking, interrelated, and interdependent”
nature of that remedial scheme and announces that the rele-
vant inquiry is whether a state regulatory scheme “provides
[a] new cause of action” or authorizes a “new form of ultimate
relief.” Ante, at 379. These newly created principles have
no roots in the precedents of this Court. That § 4–10 also

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398 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
effectively provides for a second opinion to better ensure
sound medical practice is simply irrelevant to the question
whether it, in fact, provides a binding mechanism for a par-
ticipant or beneficiary to pursue a claim for benefits because
it is on this latter basis that § 4–10 is pre-empted.
The Court’s attempt to diminish § 4–10’s effect by charac-
terizing it as one where “the reviewer’s determination would
presumably replace that of the HMO,” ante, at 380 (emphasis
added), is puzzling given that the statute makes such a deter-
mination conclusive and the Court of Appeals treated it as a
binding adjudication. For these same reasons, it is trou-
bling that the Court views the review under § 4–10 as noth-
ing more than a practice “of obtaining a second [medical]
opinion.” Ante, at 383. The independent reviewer may,
like most arbitrators, possess special expertise or knowledge
in the area subject to arbitration. But while a second medi-
cal opinion is nothing more than that—an opinion—a deter-
mination under § 4–10 is a conclusive determination with re-
spect to the award of benefits. And the Court’s reference
to Pegram v. Herdrich, 530 U. S. 211 (2000), as support for
its Alice in Wonderland-like claim that the § 4–10 proceeding
is “far removed from any notion of an enforcement scheme,”
ante, at 383, is equally perplexing, given that the treatment
is long over and the issue presented is purely an eligibility
decision with respect to reimbursement.7
7 I also disagree with the Court’s suggestion that, following Pegram v.
Herdrich, 530 U. S. 211 (2000), HMOs are exempted from ERISA when-
ever a coverage or reimbursement decision relies in any respect on medi-
cal judgment. Ante, at 383, 386, n. 17. Pegram decided the limited ques-
tion whether relief was available under § 1109 for claims of fiduciary
breach against HMOs based on its physicians’ medical decisions. Quite
sensibly, in my view, that question was answered in the negative because
otherwise, “for all practical purposes, every claim of fiduciary breach by
an HMO physician making a mixed decision would boil down to a malprac-
tice claim, and the fiduciary standard would be nothing but the malpractice
standard traditionally applied in actions against physicians.” 530 U. S.,
at 235.

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399 Cite as: 536 U. S. 355 (2002)
Thomas, J., dissenting
As we held in Metropolitan Life Ins. Co. v. Massachusetts,
471 U. S. 724 (1985), a State may, of course, require that em-
ployee health plans provide certain substantive benefits.
See id., at 746 (holding that a state law mandating mental
health benefits was not within ERISA’s pre-emptive reach).
Indeed, were a State to require that insurance companies
provide all “medically necessary care” or even that it must
provide a second opinion before denying benefits, I have lit-
tle doubt that such substantive requirements would with-
stand ERISA’s pre-emptive force. But recourse to those
benefits, like all others, could be sought only through an ac-
tion under § 502 and not, as is the case here, through an
arbitration-like remedial device. Section 4–10 does not, in
any event, purport to extend a new substantive benefit.
Rather, it merely sets up a procedure to conclusively deter-
mine whether the HMO’s decision to deny benefits was cor-
rect when the parties disagree, a task that lies within the
exclusive province of the courts through an action under
§ 502(a).
By contrast, a state law regulating insurance that merely
affects whether a plan participant or beneficiary may pursue
the remedies available under ERISA’s remedial scheme, such
as California’s notice-prejudice rule, is not pre-empted be-
cause it has nothing to do with § 502(a)’s exclusive enforce-
ment scheme. In UNUM Life Ins. Co. of America v. Ward,
526 U. S. 358 (1999), the Court evaluated California’s so-
called notice-prejudice rule, which provides that an insurer
cannot avoid liability in cases where a claim is not filed in
a timely fashion absent proof that the insurer was actually
prejudiced because of the delay. In holding that it was not
pre-empted, the Court did not suggest that this rule pro-
vided a substantive plan term. The Court expressly de-
clined to address the Solicitor General’s argument that the
saving clause saves even state law “conferring causes of ac-
tion or affecting remedies that regulate insurance.” See id.,
at 376–377, n. 7 (internal quotation marks omitted). While

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400 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
a law may “effectively creat[e] a mandatory contract term,”
id., at 374 (internal quotation marks omitted), and even pro-
vide the rule of decision with respect to whether a claim
is out of time, and thus whether benefits will ultimately be
received, such laws do not create an alternative enforcement
mechanism with respect to recovery of plan benefits. They
merely allow the participant to proceed via ERISA’s enforce-
ment scheme. To my mind, neither Metropolitan Life nor
UNUM addresses, let alone purports to answer, the question
before us today.
* * *
Section 4–10 constitutes an arbitral-like state remedy
through which plan members may seek to resolve conclu-
sively a disputed right to benefits. Some 40 other States
have similar laws, though these vary as to applicability, pro-
cedures, standards, deadlines, and consequences of independ-
ent review. See Brief for Respondent State of Illinois 12,
n. 4 (citing state independent review statutes); see also Kai-
ser Family Foundation, K. Politz, J. Crowley, K. Lucia, & E.
Bangit, Assessing State External Review Programs and the
Effects of Pending Federal Patients’ Rights Legislation (May
2002) (comparing state program features). Allowing dispar-
ate state laws that provide inconsistent external review re-
quirements to govern a participant’s or beneficiary’s claim to
benefits under an employee benefit plan is wholly destructive
of Congress’ expressly stated goal of uniformity in this area.
Moreover, it is inimical to a scheme for furthering and pro-
tecting the “careful balancing of the need for prompt and fair
claims settlement procedures against the public interest in
encouraging the formation of employee benefit plans,” given
that the development of a federal common law under
ERISA-regulated plans has consistently been deemed cen-
tral to that balance.8 Pilot Life, 481 U. S., at 54, 56. While
8 The Court suggests that a state law’s impact on cost is not relevant
after New York State Conference of Blue Cross & Blue Shield Plans

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Thomas, J., dissenting
it is true that disuniformity is the inevitable result of the
congressional decision to save local insurance regulation, this
does not answer the altogether different question before the
Court today, which is whether a state law “regulating insur-
ance” nonetheless provides a separate vehicle to assert a
claim for benefits outside of, or in addition to, ERISA’s reme-
dial scheme. See, e. g., id., at 54 (citing Russell, 473 U. S.,
at 146); Harris Trust, 510 U. S., at 99 (citing Silkwood, 464
U. S., at 248). If it does, the exclusivity and uniformity of
ERISA’s enforcement scheme must remain paramount and
the state law is pre-empted in accordance with ordinary prin-
ciples of conflict pre-emption.9
v. Travelers Ins. Co., 514 U. S. 645, 662 (1995), which holds that a state
law providing for surcharges on hospital rates did not, based solely on
their indirect economic effect, “bear the requisite ‘connection with’ ERISA
plans to trigger pre-emption.” But Travelers addressed only the ques-
tion whether a state law “relates to” an ERISA plan so as to fall within
§ 514(a)’s broad pre-emptive scope in the first place and is not relevant to
the inquiry here. The Court holds that “[i]t is beyond serious dispute,”
ante, at 365, that § 4–10 does “relate to” an ERISA plan; § 4–10’s economic
effects are necessarily relevant to the extent that they upset the object of
§ 1132(a). See Ingersoll-Rand Co. v. McClendon, 498 U. S. 133, 142 (1990)
(“Section 514(a) was intended to ensure that plans and plan sponsors would
be subject to a uniform body of benefits law; the goal was to minimize the
administrative and financial burden of complying with conflicting direc-
tives among States or between States and the Federal Government. Oth-
erwise, the inefficiencies created could work to the detriment of plan
beneficiaries”).
9 The Court isolates the “plan” from the HMO and then concludes that
the independent review provision does not “threaten the object of 29
U. S. C. § 1132” because it does not affect the plan, but only the HMO.
Ante, at 381, n. 11. To my knowledge such a distinction is novel.
Cf. Pegram, 530 U. S., at 223 (recognizing that the agreement between an
HMO and an employer may provide elements of a plan by setting out the
rules under which care is provided). Its application is particularly novel
here, where the Court appears to view the HMO as the plan administrator,
leaving one to wonder how the myriad state independent review proce-
dures can help but have an impact on plan administration. Ante, at 363,
n. 3.

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402 RUSH PRUDENTIAL HMO, INC. v. MORAN
Thomas, J., dissenting
For the reasons noted by the Court, independent review
provisions may sound very appealing. Efforts to expand
the variety of remedies available to aggrieved beneficiaries
beyond those set forth in ERISA are obviously designed to
increase the chances that patients will be able to receive
treatments they desire, and most of us are naturally sympa-
thetic to those suffering from illness who seek further op-
tions. Nevertheless, the Court would do well to remember
that no employer is required to provide any health benefit
plan under ERISA and that the entire advent of managed
care, and the genesis of HMOs, stemmed from spiraling
health costs. To the extent that independent review provi-
sions such as § 4–10 make it more likely that HMOs will have
to subsidize beneficiaries’ treatments of choice, they under-
mine the ability of HMOs to control costs, which, in turn,
undermines the ability of employers to provide health care
coverage for employees.
As a consequence, independent review provisions could
create a disincentive to the formation of employee health
benefit plans, a problem that Congress addressed by making
ERISA’s remedial scheme exclusive and uniform. While it
may well be the case that the advantages of allowing States
to implement independent review requirements as a supple-
ment to the remedies currently provided under ERISA out-
weigh this drawback, this is a judgment that, pursuant to
ERISA, must be made by Congress. I respectfully dissent.