Wagner Header

The Wagner Law Group

The Wagner Law Group is a nationally recognized practice in the areas of ERISA and employee benefits, estate planning, employment, labor and human resources and  investment management.



Established in 1996, The Wagner Law Group is dedicated to the highest standards of integrity, excellence and thought leadership and is considered to be amongst the nation's premier ERISA and employee benefits law firms. The firm has six offices across the country, providing unparalleled legal advice to its clients, including large, small and nonprofit corporations as well as individuals and government entities worldwide. The Wagner Law Group's 28 attorneys, senior benefits consultant and three paralegals combine many years of experience in their fields of practice with a variety of backgrounds. Seven of the attorneys are AV-rated by Martindale-Hubbell and six are Fellows of the American College of Employee Benefits Counsel, an invitation-only organization of nationally recognized employee benefits lawyers.  Seven of the firm's attorneys have been named to the prestigious Super Lawyers list for 2016, which highlights outstanding lawyers based on a rigorous selection process.




Contact Info

The Wagner Law Group


  Integrity | Excellence



Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Washington, D.C.

Tel: (202) 969-2800

  Fax: (202) 969-2568

800 Connecticut Ave., N.W.

Suite 810

Washington, D.C. 20006


Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418



Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 


San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

300 Montgomery Street

Suite 600

San Francisco, CA 94104


St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
25 W. Moody Avenue
St. Louis, MO  63119







July 20, 2017


 Health and Welfare Law Alert




  State Law Prohibiting Discretionary Clauses

Not Preempted by ERISA




The Ninth Circuit Court of Appeals, in Orzechowski v. The Boeing Co Non-Union Long-Term Disability Plan, has ruled that ERISA preemption does not apply to a California law prohibiting discretionary clauses in insured plans. Moreover, the Ninth Circuit determined that the law applied to the plan even though the plan document containing the provision became effective before the legislation.


Law. In general, ERISA preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." However, ERISA's "savings clause" says ERISA does not preempt "any law of any State which regulates insurance, banking, or securities." With regards to insurance laws, a law is not preempted if it satisfies the following two elements: (i) it must be "specifically directed toward entities engaged in insurance"; and (ii) it "must substantially affect the risk pooling arrangement between the insurer and the insured."


Background. In Orzechowski, an employee who participated in her employer's insured long-term disability ("LTD") plan took a leave of absence due to multiple chronic illnesses. The insurer initially approved her LTD claim for two years. However, it denied the employee's request to extend benefit payments after it determined the medical evidence did not support her extension request. The insurer's adverse determination was based on a plan provision that granted it discretion to make plan interpretations. 


The district court hearing the matter dismissed the employee's claim, finding that the law, which became effective in 2012, did not apply retroactively to the LTD plan, which was established in 2011. In making this determination, the court used an abuse of discretion standard to review the claim and found that there was substantial evidence in the record to support the insurer's adverse determination. Consequently, the court dismissed the employee's claim, and in turn, the employee appealed the adverse decision to the Ninth Circuit.


Ninth Circuit. On appeal, the insurer argued that: (i) ERISA preemption applied to the California law; and (ii) the law should not be retroactively applied to the LTD plan. The Ninth Circuit disagreed and reversed the district court's decision, remanding the matter to the district court for de novo review. 


In reversing the district court, the Ninth Circuit rejected the insurer's ERISA preemption argument, finding that the law satisfied both elements of ERISA's savings clause. Specifically, the Ninth Circuit concluded that the law regulated insurance and that it significantly impacted risk-pooling arrangements between the insurer and the insured. 


The Ninth Circuit next determined that the law applied to the LTD plan, even though the LTD plan originated before the law became effective. The court reasoned that the plan's LTD insurance policy was renewed on an annual basis and became subject to the law when it was renewed in 2012. 






This Newsletter is protected by copyright. Material appearing herein may be reproduced with appropriate credit.


This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.