Stop-loss insurance, state regulation, and ERISA: Defining the scope of federal preemption

The Employee Retirement Income Security Act of 1974 preempts state laws relating to employee welfare benefit plans. ERISA does not, however, preempt state laws regulating insurance. Stop-loss insurance, by which an employer that self-funds its benefit plan insures against the risk of excessive payouts, does not fit neatly into ERISA's regulatory framework. As a result, the Circuit Courts of Appeal have split over how to treat stop-loss plans for preemption purposes. In this Note, Troy Paredes argues that ERISA's dual regulatory scheme, precedent, basic insurance principles, and the legislative history of the Act suggest that ERISA should not be construed to preempt states from enforcing their insurance laws against a stop-loss plan's insurer.