If you read our blog piece about whether ERISA preemption is available as a defense to criminal charges brought against companies that provide group health plan coverage for equal reproductive rights, you know that there is a risk of state criminal prosecution against company executives for aiding and abetting state abortion bans. Most corporate bylaws and executive indemnification agreements require companies to indemnify executives for acts they take on behalf of their corporations. But does indemnity extend to acts the corporate officer knows or has reason to believe is criminal? Companies considering modifying their group health insurance plans to provide for equal reproductive access might also consider examining corporate bylaws and indemnity agreements to understand when the CSuite is -- and isn't -- financially accountable for these claims.
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Can the CSuite be indemnified for aiding and abetting a violation of a state abortion ban?
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Based on this precedent, it appears that a state law targeting group health plans that aid and abet violations of a state law barring abortion would appear to be preempted, because it would not qualify as “generally applicable.” This is especially true where the law is specifically directed towards the conduct of the employer or its executives in their capacity as corporate officers. The central purpose of the ERISA preemption provision is, after all, to prevent state laws from dictating plan terms. But employers should closely watch how the Supreme Court (and other courts) respond to laws that target any person, with no limitations on group health plans and employers as violators, and we strongly recommend employers seek counsel regarding this sensitive issue.
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