A lawsuit was recently filed challenging the Long Term Cares Act in the state of Washington. That lawsuit was recently dismissed by a federal judge. The lawsuit sought to have the Long Term Cares Act governed by the same rules and regulations as ERISA, but the judge disagreed. In dismissing the lawsuit, the judge ruled that the Long Term Cares Act is not maintained by the employer and it is not an employee benefit plan. Therefore, the judge reasoned, the Long Term Cares Act is not subject to the same rules and regulations set up by ERISA. In addition, the court system indicated that the premiums collected by the Long Term Cares Act fall under the category of a state tax. As a result, they fall under the jurisdictions of the state courts, and not the federal courts.
The Long Term Cares Act in Washington, which was passed in 2019, was due to start collecting taxes in the form of payroll collections from employees in Washington to help cover the long-term care expenses of those who live in the state. In 2021, the governor of Washington, Jay Inslee, announced that the state would pause the collection of such taxes until the program had been reviewed by lawmakers to make sure the act was clear about how it would collect the money and how it would use it.
A class-action lawsuit was filed against the Long Term Cares Act, and it was reviewed by Judge Zilly of the US District Court. Ultimately, the case was dismissed because the judge felt the court system did not have jurisdiction. The Long Term Cares Act is not governed by ERISA, and the premiums are a tax, which means that the case does not fall under the jurisdiction of the federal court.
The plaintiffs held that the state acted as an employer when passing the Long Term Cares Act. If that were true, then the plan should be governed by ERISA. The plaintiffs also reasoned that, because the Long Term Cares Act assesses premiums on everyone and not just state employees, the state is acting as an employer in this situation. The judge dismissed this notion, but the case could be refiled with the state court system.