498 U.S. 52 (1990)
FMC Corporation operates the FMC Salaried Health Care Plan, an employee welfare benefit plan within the meaning of ERISA that provides health benefits to FMC employees and their dependents.1 The Plan is self-funded; it does not purchase an insurance policy from any insurance company to satisfy its obligations to its participants.2 Among its provisions is a subrogation clause under which a Plan member agrees to reimburse the Plan for benefits paid if the member recovers on a claim in a liability action against a third party.3
In 1987, Cynthia Ann Holliday, the daughter of FMC employee and Plan member Gerald Holliday, was seriously injured in an automobile accident.4 The Plan paid a portion of her medical expenses.5 Gerald Holliday brought a negligence action on behalf of his daughter in Pennsylvania state court against the driver of the automobile in which she was injured.6 The parties settled the claim.7
While the state court action was pending, FMC notified the Hollidays that it would seek reimbursement for the amounts it had paid for respondent's medical expenses.8 The Hollidays replied that they would not reimburse the Plan, asserting that section 1720 of Pennsylvania's Motor Vehicle Financial Responsibility Law precludes subrogation by FMC because section 1719 refers to benefit payments by any program, group contract or other arrangement.9
Proceeding in diversity, FMC then sought a declaratory judgment in federal district court.10 The district court granted respondent's motion for summary judgment.11 The United States Court of Appeals for the Third Circuit affirmed.12 The Supreme Court granted certiorari to resolve a conflict among the circuits.13
Whether the Employee Retirement Income Security Act of 1974 preempts a Pennsylvania law precluding employee welfare benefit plans from exercising subrogation rights on a claimant's tort recovery?14
ERISA § 514(a) provides that ERISA supersedes state laws insofar as they relate to any employee benefit plan.15 The saving clause in § 514(b)(2)(A) provides that nothing in ERISA shall be construed to exempt any person from state laws which regulate insurance.16 The deemer clause in § 514(b)(2)(B) provides that an employee benefit plan shall not be deemed to be an insurance company. It also provides that the plan shall not be deemed engaged in the business of insurance for purposes of state laws purporting to regulate insurance companies or insurance contracts.
Yes. Pennsylvania's antisubrogation law relates to the FMC Plan.17 The statute has both a reference to benefit plans governed by ERISA and a connection to such plans.18 It prohibits subrogation provisions that would otherwise apply to tort recoveries.19 The law falls within the saving clause because it directly controls the terms of insurance contracts by invalidating subrogation provisions.20 Under the deemer clause, however, the self-funded FMC Plan cannot be deemed an insurer.21 It is therefore exempt from the state regulation.22
Application of the deemer clause to the established facts shows that the Plan is self-funded rather than insured by a separate insurance company.23 The Pennsylvania law does not reach the Plan's subrogation clause.24
ERISA preempts the application of section 1720 of Pennsylvania's Motor Vehicle Financial Responsibility Law to the self-funded FMC Salaried Health Care Plan.25
Related opinions on this issue
Justice Stevens dissented.26 He contended that the majority's construction creates an illogical distinction between self-insured and insured plans that Congress could not have intended.27 Stevens advocated a narrower reading of the preemption clause.28 He sought to reach only state laws that purport to regulate subjects covered by ERISA or that conflict with its central purposes.29 This approach preserves generally applicable state rules such as the antisubrogation provision.30
He further argued that even under a broad reading of the preemption clause, the deemer clause should be read narrowly.31 It would reinject into preemption only those state laws that purport to regulate insurance companies or insurance contracts.32 It would not reach laws like Pennsylvania's Motor Vehicle Financial Responsibility Law that apply to all persons and regulate subrogation agreements regardless of whether an insurance company is involved.33 Stevens concluded that the Pennsylvania law regulates insurance within the meaning of the saving clause.34 It is not brought back within preemption by the narrower deemer clause.35 Therefore, the self-funded plan must comply with it.36