              United States Court of Appeals
                      FOR THE EIGHTH CIRCUIT
                           ______________

                           No. 97-2221/2226/2229
                             ______________

THE PRUDENTIAL INSURANCE            *
COMPANY OF AMERICA,                 *
PRUDENTIAL HEALTH CARE              *
PLAN, INC., d/b/a PRUDENTIAL        *
HEALTH CARE PLAN OF                 *
ARKANSAS, HMO PARTNERS, INC.,       *
ARKANSAS AFL-CIO, TYSON             *
FOODS, INC., and UNITED PAPER-      *
WORKERS INTERNATIONAL               *
UNION AFL-CIO, CLC,                 *
                                    *
          Plaintiffs-Appellees,     *        Appeals from the United States
          Cross-Appellants,         *        District Court for the Eastern
                                    *        District of Arkansas
v.                                  *
                                    *
NATIONAL PARK MEDICAL               *
CENTER, INC., Y. Y. KING, M.D.,     *
BRYAN W. RUSSELL, D.C.,             *
GEORGE A. HAAS, O.D., and           *
BRYANT ASHLEY, O.D.,                *
                                    *
          Defendants-Appellants.    *
                                    *
STATE OF ARKANSAS,                  *
                                    *
          Intervenor Defendant -    *
          Appellee.                 *
                                     ___________

                              Submitted: March 10, 1998

                                   Filed: September 2, 1998
                                    ___________

                                                                      *
Before MCMILLIAN and FAGG, Circuit Judges, and BENNETT, District Judge.
                           ___________


BENNETT, District Judge.


       This case involves the question of whether the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. § 1001 et seq., preempts Arkansas’ so-called “Patient
Protection Act,” Acts 505 and 1193 passed by the Arkansas General Assembly in 1995
(the Arkansas PPA). The Arkansas General Assembly’s goal in passing the PPA was
to ensure “that patients . . . be given the opportunity to see the health care provider of
their choice.” ARK. CODE ANN. § 23-99-202. However, various “health care insurers”
within the meaning of the Arkansas PPA brought this declaratory judgment action
seeking a declaration that the Arkansas PPA is preempted by ERISA.
       The precise scope of ERISA preemption of state law has left courts, including
the Supreme Court, deeply troubled. As a panel of this court recently explained,
                   The Supreme Court has decided sixteen ERISA
             preemption cases since the statute was enacted in 1974. See
             California Div. of Labor Stds. Enforcement v. Dillingham
             Constr., N.A., Inc., [519] U.S. [316], ___, 117 S. Ct. 832,

   *
    The HONORABLE MARK W. BENNETT, United States District Judge for the
Northern District of Iowa, sitting by designation.

                                            2
      842-43, 136 L. Ed. 2d 791 (1997) (Scalia, J., concurring). Most involved
      the proper scope of “relate to” preemption under § 1144(a), and the Court
      has struggled, particularly in its more recent decisions, with the inherent
      vagueness of that key statutory phrase. Compare New York State Conf.
      of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645,
      652-661, 115 S. Ct. 1671, 1676-80, 131 L. Ed. 2d 695 (1995), with
      Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.
      Ct. 2380, 2388, 85 L. Ed. 2d 728 (1985).
Painter v. Golden Rule Ins. Co., 121 F.3d 436, 438-39 (8th Cir. 1997), cert. denied,
___ U.S. ___, ___ S. Ct. ___, 1998 WL 73018 (April 20, 1998). Since the Supreme
Court’s decision in Dillingham, the Court has considered the scope of ERISA
preemption twice more. See Boggs v. Boggs, ___ U.S. ___, 117 S. Ct. 1754 (1997);
De Buono v. NYSLA-ILA Med. & Clinical Servs. Fund, ___ U.S. ___, 117 S. Ct. 1747
(1997). The very question that has so often and so deeply troubled the Supreme Court
is now before this court.
      The parties asserting the validity of the Arkansas PPA, appellant healthcare
providers, contend that the result of the Supreme Court’s struggles with “relate to”
preemption in its recent ERISA cases has been a “sea change”—ushered in by the
Court’s decision in Travelers and clarified in Dillingham and De Buono—that has
upended the Court’s prior precedent and has established in its place a whole new
framework of presumptions and analysis for ERISA preemption cases. The parties
asserting preemption of the Arkansas PPA, appellees ERISA plan sponsors,
administrators, insurers, and HMO service providers, contend that the Supreme Court’s
most recent decisions have not worked a revolution in ERISA preemption analysis, but
have instead helped clarify line-drawing at the peripheries, while leaving intact, even
strengthening, the importance of the core concerns and inquiries of preemption analysis



                                          3
articulated in prior precedent. Whether the Supreme Court’s recent opinions constitute
a “sea change” or instead command that we “stay the course” in ERISA preemption
analysis, this court must strive to sail the course the Supreme Court has set.


                                 I. BACKGROUND
                              A. Factual Background
      In 1995, the Arkansas General Assembly passed two acts, Act 505 and Act
1193, that combined to form the so-called “Patient Protection Act,” codified at ARK.
CODE ANN. CH. 23-99. The Arkansas General Assembly’s goal was to ensure
             that patients . . . be given the opportunity to see the health
             care provider of their choice. In order to assure the citizens
             of the State of Arkansas the right to choose the provider of
             their choice, it is the intent of the General Assembly to
             provide the opportunity of providers to participate in health
             benefit plans.
ARK. CODE ANN. § 23-99-202. Thus, the centerpiece of the legislation was ARK. CODE
ANN. § 23-99-204, which provides as follows:
                    (a) A health care insurer shall not, directly or
             indirectly:
                    (1)(A) Impose a monetary advantage or penalty
                    under a health benefit plan that would affect a
                    beneficiary’s choice among those health care
                    providers who participate in the health benefit plan
                    according to the terms offered.
                    (B) “Monetary advantage or penalty” includes:
                          (i) a higher co-payment;
                          (ii) a reduction in reimbursement for services;
                          and
                          (iii) promotion of one (1) health care provider
                          over another by these methods;
                    (2) Impose upon a beneficiary of health care services

                                           4
                      under a health benefit plan any co-payment, fee, or
              condition that is not equally imposed upon all
              beneficiaries in the same benefit category, class, or co-
              payment level under the health benefit plan when t h e
              beneficiary is receiving services from a          participating
              health care provider pursuant to that health benefit plan;
              or
                      (3) Prohibit or limit a health care provider that is
                      qualified under § 23-99-203(d) and is willing to
                      accept the health benefit plan’s operating terms and
                      conditions, schedule of fees, covered expenses, and
                      utilization regulations and quality standards, from the
                      opportunity to participate in that plan.
              (b) Nothing in this subchapter shall prevent a health benefit
              plan from instituting measures designed to maintain quality
              and to control costs, including, but not limited to, the
              utilization of a gatekeeper system, as long as such measures
              are imposed equally on all providers in the same class.
ARK. CODE ANN. § 23-99-204. This section is known as the “Any Willing Provider”
provision of the Arkansas PPA.
       The Arkansas PPA defines many, but not all, of its key terms. “Health care
providers” are defined to include twenty-seven categories of licensed or certified
providers, including physicians and hospitals. ARK. CODE ANN. § 23-99-203(d). A
“health benefit plan” is defined as “any entity or program that provides reimbursement,
including capitation, for health care services.” ARK. CODE ANN. § 23-99-203(c).
“Health care insurer” is defined by the statute to include, but is not limited to, insurance
companies, hospital and medical services corporations, health maintenance
organizations, preferred provider organizations, physician hospital organizations, third-
party administrators, and prescription benefit management companies authorized to
administer, offer, or provide health benefit plans. ARK. CODE ANN. § 23-99-203(f).


                                             5
        The Arkansas PPA also includes a specific exclusion:
              The provisions of the [Arkansas PPA] shall not apply to
              self-funded or other health benefit plans that are exempt
              from state regulations by virtue of the federal Employee
              Retirement Income Security Act of 1974, as amended.
ARK. CODE ANN. § 23-99-209.
        The plaintiffs below, appellees here, are “health care insurers” within the
meaning of the Arkansas PPA. They brought this declaratory judgment action seeking
a declaration that the Arkansas PPA is preempted by ERISA and an injunction
prohibiting enforcement of the PPA. The defendants below, appellants here, are
                                                                        1
“health care providers” within the meaning of the Arkansas PPA who sought
admission to the plaintiffs’ limited preferred provider panels, but were denied
admission on the basis of “no need” findings by the plaintiffs. They sought declaratory
and injunctive relief to enforce the Arkansas PPA.


                               B. The Decision Below
        The parties appeal from a decision of the United States District Court for the
                                                 2
Eastern District of Arkansas, Western Division, as amended, on cross-motions for
summary judgment. See Prudential Ins. Co. of Am. v. National Park Medical Ctr.,
Inc., 964 F. Supp. 1285 (E.D. Ark. 1997). In its original decision, filed January 31,
1997, the district court considered whether the Arkansas PPA “relate[s] to” ERISA,


   1
    The State of Arkansas also intervened as a party defendant. However, on appeal,
the State of Arkansas has proffered no separate argument in defense of the Arkansas
PPA.
    2
     The HONORABLE JAMES M. MOODY, United States District Judge for the
Eastern District of Arkansas.

                                           6
such that it is preempted pursuant to ERISA § 514(a), 29 U.S.C. § 1144(a), using the
two-prong analysis employed by the Supreme Court in Shaw v. Delta Air Lines, Inc.,
463 U.S. 85 (1983), and subsequent decisions. The district court concluded, first, that
the state law contains a “reference to” ERISA plans by singling out such plans for
special treatment, in this case, an exemption from the burdens of the Arkansas PPA.
In reaching this conclusion, the district court expressly relied on Mackey v. Lanier
Collection Agency & Serv., 486 U.S. 825 (1988), rather than District of Columbia v.
Greater Wash. Bd. of Trade, 506 U.S. 125 (1992).
      The district court also concluded that the Arkansas PPA had a “connection with”
ERISA plans such that it was also preempted on this ground. In so doing, the court
employed the seven factors used by this court in Arkansas Blue Cross & Blue Shield
v. St. Mary’s Hosp., Inc., 947 F.2d 1341 (8th Cir. 1991), cert. denied, 504 U.S. 957
(1992).   The district court found that the Arkansas PPA negated ERISA plan
provisions; had a significant impact on primary ERISA entities; had a significant impact
on plan structure; had a significant impact on plan administration; and the state law was
inconsistent with ERISA provisions in various respects, although the district court did
not find these inconsistencies particularly significant. One factor on which the district
court found that the Arkansas PPA had insufficient impact to favor preemption was in
direct or acute indirect economic impact. The court also found that the State of
Arkansas had a legitimate interest in regulating health care for its citizens, such that
consideration of whether the state law was an exercise of traditional state power did
not favor preemption.
      Considering all of these factors, the district court concluded that the Arkansas
PPA “relates to” ERISA plans by virtue of making a reference to and having a
connection with ERISA plans, and was therefore preempted. The court concluded

                                           7
further that the Arkansas PPA was not “saved” from preemption by the ERISA
“savings” clause, § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), applying another two-
prong test employed by the Supreme Court. See Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41 (1987); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985).
First, the court concluded that, as a matter of “common sense,” the Arkansas PPA was
not directed specifically at the insurance industry. Furthermore, relying on factors the
Supreme Court has drawn from cases considering the meaning of the “business of
insurance” under the McCarran-Ferguson Act, the district court concluded that the
Arkansas PPA does not regulate the business of insurance by transferring or spreading
a policyholder’s risk; affects only indirectly the relationship between the insured and
the insurer, by affecting the relationship between the insurer and health care providers;
and was not limited solely to entities within the insurance industry. Thus, the Arkansas
PPA did not fulfill either of the prongs of the ERISA “savings” clause test, and hence
was indeed preempted.
       The district court also found that the Arkansas PPA was preempted by the
Federal Health Maintenance Organization Act, 42 U.S.C. § 300e-10. In light of these
conclusions, the court found that the remaining issues—whether the Arkansas PPA was
preempted by the Federal Employment Health Benefit Act, 5 U.S.C. § 8901-8914, and
the plaintiffs’ claims pursuant to 42 U.S.C. § 1983—were moot. The court therefore
granted summary judgment in favor of the plaintiffs, permanently enjoined the
defendants from enforcing the PPA, and denied the defendants’ and intervenors’ cross-
motions for summary judgment.
       In an amended order dated March 14, 1997, and filed on March 17, 1997, the
district court held that the Arkansas PPA is preempted by ERISA only “‘insofar as
[it] . . . relate[s] to any employee benefit plan described in section 1003(a). . . .’”

                                            8
Amended Order of March 14, 1997 (quoting 29 U.S.C. § 1144(a)). Similarly, the court
ordered that the defendants are permanently enjoined from enforcing the Arkansas PPA
only “‘insofar as [it] . . . relate[s] to any employee benefit plan described in section
1003(a). . . .’” Id. (quoting 29 U.S.C. § 1144(a)).
      The appellant health care providers have appealed the district court’s conclusions
that the Arkansas PPA is preempted by ERISA and not “saved” from preemption as a
law that regulates insurance. Prudential Insurance Company of America cross-
appealed the district court’s amendment of the original order granting summary
judgment.


                               II. LEGAL ANALYSIS
                      A. Standards For Summary Judgment
      This court has often stated that it will review the grant or denial of summary
judgment de novo, applying the same standards used by the district court. See, e.g.,
Union Pac. R.R. Co. v. Beckham, 138 F.3d 325, 329 (8th Cir. 1998); Kneibert v.
Thomson Newspapers, Mich., Inc., 129 F.3d 444, 451 (8th Cir. 1997); Snow v.
Ridgeview Med. Ctr., 128 F.3d 1201, 1205 (8th Cir. 1997). Summary judgment is
appropriate only if, after viewing the facts and the inferences to be drawn from them
in the light most favorable to the nonmoving party, the record shows that there is no
genuine issue of material fact and that the moving party is entitled to judgment as a
matter of law. FED. R. CIV. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986); Beckham, 138 F.3d at 329; Kneibert, 129 F.3d at
451; Snow, 128 F.3d at 1205. More specifically, “‘[w]e review the District Court’s
decision on ERISA preemption de novo because it is a question of federal law
involving statutory interpretation.’” Wilson v. Zoellner, 114 F.3d 713, 715 (8th Cir.

                                           9
1997) (quoting In Home Health, Inc., v. Prudential Ins. Co., 101 F.3d 600, 604 (8th
Cir. 1996)).


                                B. ERISA Preemption
       The court must now attempt to unravel the Gordian knot of the scope of ERISA
                       3
“relate to” preemption, the question that has so troubled the courts of appeals and the
Supreme Court. See Painter v. Golden Rule Ins. Co., 121 F.3d 436, 438-39 (8th Cir.
1997) (noting the Supreme Court’s struggles with the scope of “relate to” preemption
under § 1144(a)), cert. denied, ___ U.S. ___, ___ S. Ct. ___, 1998 WL 73018 (April
          4
20, 1998). Pursuant to the express preemption provision of ERISA, section 514(a),


   3
     Gordius, King of Phrygia, tied his chariot to a hitching post before the temple of
an oracle with an intricate knot, which, it was prophesied, none but the future ruler of
all Asia could untie. See, e.g., Funk and Wagnalls Standard Dictionary of Folklore,
Mythology, and Legend 460 (Maria Leach, ed., Funk & Wagnalls, 1972); Bulfinch’s
Mythology 44 (Richard P. Martin, ed., 1991). In the course of his conquests,
Alexander the Great came to Phrygia, and, frustrated with his inability to untangle the
“Gordian knot,” simply sliced through it with his sword. His subsequent success in his
Asian campaign has been taken to mean that his solution to the “Gordian knot” fulfilled
the prophesy. See, e.g., Funk and Wagnalls Standard Dictionary of Folklore,
Mythology, and Legend 460 (Maria Leach, ed., Funk & Wagnalls, 1972); Bulfinch’s
Mythology 44 (Richard P. Martin, ed., 1991). However, this court does not have the
luxury of applying a sword to the problem of interpretation of the scope of ERISA
preemption, no matter how troubled this and other courts may be by the question.
   4
    In Painter, this court noted that, in addition to or instead of “relate to” preemption,
             some ERISA cases involve the distinct question of conflict
             preemption—whether a state law is preempted because it
             conflicts with a specific portion of the complex ERISA
             statute. If there is a conflict, state law is preempted,
             whether or not “the statutory phrase ‘relate to’ provides
                                                                              (continued...)

                                            10
codified at 29 U.S.C. § 1144(a), the Arkansas PPA, like any other state law, is
preempted “insofar as [it] may now or hereafter relate to any [ERISA] employee
              5
benefit plan.” But does the Arkansas PPA “relate to” ERISA in a prohibited way?
       Congress included the express preemption clause of § 1144(a) in ERISA to
provide for “‘the displacement of State action in the field of private employee benefit
programs.’” Wilson, 114 F.3d at 716 (quoting Morstein v. National Ins. Servs., Inc.,
93 F.3d 715, 719 n.6 (11th Cir. 1996) (en banc), cert. denied, ___ U.S. ___, 117 S. Ct.
769 (1997), which in turn quotes 120 Cong. Rec. 29,942 (1974) (comments of Senator
Javits)). Yet, Congress did not define what it meant by state laws that “relate to” an
ERISA benefit plan anywhere in the statute.
       As this court noted in Wilson,



   4
     (...continued)
               further and additional support for the pre-emption claim.”
               Boggs v. Boggs, ___ U.S. ___, ___, 117 S. Ct. 1754, 1761,
               138 L. Ed. 2d 45 (1997).
Painter, 121 F.3d at 439 (emphasis in the original). In Painter, in the court’s view, the
case before it was one of “conflict preemption.” Id. However, neither the parties nor
the district court in the case presently before this court ever suggested the applicability
of “conflict preemption.” Thus, we will consider only the “relate to” species of ERISA
preemption here.
   5
    This provision of ERISA states, in its entirety, as follows:
                   Except as provided in subsection (b) of this section,
            the provisions of this subchapter and subchapter III of this
            chapter shall supersede any and all State laws insofar as
            they may now or hereafter relate to any employee benefit
            plan described in section 1003(a) of this title and not exempt
            under section 1003(b) of this title. This section shall take
            effect on January 1, 1975.
29 U.S.C. § 1144(a).

                                            11
               In analyzing this clause, the Supreme Court has “long
               acknowledged that ERISA’s pre-emption provision is
               clearly expansive.” California Division of Labor Standards
               Enforcement v. Dillingham Constr., [519] U.S. [316], ___,
               117 S. Ct. 832, 837, 136 L. Ed. 2d 791 (1997) (quotations
               and citations omitted). The Supreme Court has variously
               described the ERISA preemption clause as having “a broad
               scope, and an expansive sweep, and [as being] broadly
               worded, deliberately expansive, and conspicuous for its
               breadth.” Id. (quotations and citations omitted).
Wilson, 114 F.3d at 716. However, the Supreme Court has also made clear,
particularly in its most recent decisions, that the ERISA preemption clause cannot be
read “to ‘extend to the furthest stretch of its indeterminacy.’” De Buono, ___ U.S. at
___, 117 S. Ct. at 1751 (quoting Travelers, 514 U.S. at 655).
      In addition to recognizing these general principles, the Supreme Court has also
provided more concrete guidance on the scope of “relate to” preemption by formulating
a two-part inquiry to determine whether a state law “relate[s] to” an employee benefit
plan covered by ERISA. See Dillingham, 519 U.S. at ___, 117 S. Ct. at 837; Wilson,
114 F.3d at 716.
               A “law ‘relate[s] to’ a covered employee benefit plan for
               purposes of § 514(a) ‘if it [1] has a connection with or
               [2] reference to such a plan.’” District of Columbia v.
               Greater Washington Bd. of Trade, 506 U.S. 125, 129, 113
               S. Ct. 580, 583, 121 L. Ed. 2d 513 (1992) (quoting Shaw v.
               Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S. Ct. 2890,
               2899-2900, 77 L. Ed. 2d 490 (1983)).
Dillingham, 519 U.S. at ___, 117 S. Ct. at 837; accord Travelers, 514 U.S. at 656;
Wilson, 114 F.3d at 716. The nature of this two-prong inquiry must be explored in
more detail.




                                           12
      1.     The effect of Travelers
      The critical question put by the parties in this case is the effect of the Supreme
Court’s decision in New York State Conf. of Blue Cross & Blue Shield Plans v.
Travelers Ins. Co., 514 U.S. 645 (1995), upon this two-prong ERISA preemption
analysis. The appellants suggest that Travelers largely supplanted the entire two-prong
inquiry, replacing it with a “starting presumption” that state laws will not be preempted,
and relying on determinations of congressional intent to preempt only those laws that
are of the type Congress intended ERISA to preempt. This inquiry, appellants assert,
depends upon the purpose and effects of the state statute. The appellees counter that
Travelers and its progeny have only put limits on the broadest scope of ERISA
preemption without altering the essential inquiries stated in prior precedent.
      In Travelers, the Supreme Court considered whether ERISA preempted “[a]
New York statute [that] require[d] hospitals to collect surcharges from patients covered
by a commercial insurer but not from patients insured by a Blue Cross/Blue Shield plan,
and [that also] subject[ed] certain health maintenance organizations (HMOs) to
surcharges that var[ied] with the number of Medicaid recipients each enroll[ed].”
Travelers, 514 U.S. at 649. As appellants contend, the Court did begin its discussion
of the preemption issue by noting that “we have never assumed lightly that Congress
has derogated state regulation, but instead have addressed claims of pre-emption with
the starting presumption that Congress does not intend to supplant state law.” Id. at
654. The Court also reiterated the assumption that Congress did not intend to bar state
action in fields of traditional state regulation or historic police powers. Id. at 655.
Appellants focus particularly on the following passage:
                     Since pre-emption claims turn on Congress’s intent,
             Cipollone [v. Liggett Group, Inc., 505 U.S. 504], ___, 112
             S. Ct., at 2617-18; Shaw, supra, at 95, 103 S. Ct., at 2898,



                                           13
      we begin as we do in any exercise of statutory construction with the text
      of the provision in question, and move on, as need be, to the structure and
      purpose of the Act in which it occurs. See, e.g., Ingersoll-Rand, 498
      U.S., at 138, 111 S. Ct., at 482. The governing text of ERISA is clearly
      expansive. Section 514(a) [29 U.S.C. § 1144(a)] marks for pre-emption
      “all state laws insofar as they . . . relate to any employee benefit plan”
      covered by ERISA, and one might be excused for wondering, at first
      blush, whether the words of limitation (“insofar as they . . . relate”) do
      much limiting. If “relate to” were taken to extend to the furthest stretch
      of indeterminacy, then for all practical purposes pre-emption would never
      run its course, for “[r]eally, universally, relations stop nowhere,” H.
      James, Roderick Hudson xli (New York ed., World’s Classics 1980). But
      that, of course, would be to read Congress’s words of limitation as mere
      sham, and to read the presumption against pre-emption out of the law
      whenever Congress speaks to the matter with generality. That said, we
      have to recognize that our prior attempt to construe the phrase “relate
      to” does not give us much help drawing the line here.
Travelers, 514 U.S. at 655 (emphasis added). The appellants contend that the
highlighted statement shows that the Supreme Court’s decision in Travelers constituted
a “sea change” in ERISA preemption analysis.
      However, we do not read Travelers to reject all of its prior precedent on the
scope of ERISA preemption or as a wholesale rejection of the mode of analysis
employed in the Court’s prior precedent. Although in Travelers the Court found its
prior attempts to construe the phrase “relate to” did not give it much help drawing the
line in that particular case, id. (“[W]e have to recognize that our prior attempt to
construe the phrase ‘relate to’ does not give us much help drawing the line here”;
emphasis added), the Court’s analysis in Travelers nonetheless began with precisely




                                          14
the two-prong inquiry established years before in Shaw v. Delta Air Lines, Inc., 463
U.S. 85 (1983). Travelers, 514 U.S. at 656 (“In Shaw, we explained that ‘[a] law
“relates to” an employee benefit plan, in the normal sense of the phrase, if it has a
connection with or reference to such a plan.’ 463 U.S., at 96-97, 103 S. Ct., at
2900.”).
         The Court quickly dispensed with the applicability of the “reference to” prong
of the inquiry in the case before it, however:
               The latter alternative, at least, can be ruled out. The
               surcharges are imposed upon patients and HMOs, regardless
               of whether the commercial coverage or membership,
               respectively, is ultimately secured by an ERISA plan,
               private purchase, or otherwise, with the consequence that
               the surcharge statutes cannot be said to make “reference to”
               ERISA plans in any manner. Cf. Greater Wash. Bd. of
               Trade, 506 U.S., at ___, 113 S. Ct., at 583 (striking down
               District of Columbia law that “specifically refers to welfare
               benefit plans regulated by ERISA and on that basis alone is
               pre-empted”).
Travelers, 514 U.S. at 656. Thus, the “reference to” inquiry was unhelpful in that
case, because that alternative could be so completely “ruled out.” Id.
         This conclusion, however, still left the Court with the second prong of the
inquiry, the “connection with” prong. Id. It was with respect to this prong of the
inquiry that the decision in Travelers arguably changed the direction of or emphasis in
ERISA preemption analysis, because the Court found that as to the “connection with”
prong,
               an uncritical literalism is no more help than in trying to
               construe “relate to.” For the same reasons that infinite
               relations cannot be the measure of pre-emption, neither can
               infinite connections. We simply must go beyond the




                                            15
      unhelpful text and the frustrating difficulty of defining its key term, and
      look instead to the objectives of the ERISA statute as a guide to the scope
      of the state law that Congress understood would survive.
Id. Thus, where there was no “reference to” ERISA in the state law, the court’s further
preemption inquiry was governed by the objectives of the ERISA statute as a guide to
what state laws Congress intended to preempt.
      The Court’s subsequent decisions also do not indicate a wholesale abandonment
of prior precedent concerning the “reference to” prong of the inquiry. For example, in
Dillingham, the Court again stated the two-part inquiry for ERISA “relate to”
preemption cases. Dillingham, ___ U.S. at ___, 117 S. Ct. at 837. The Court’s
explanation of the “reference to” prong of the analysis relied entirely on pre-Travelers
precedent:
             Under the [“reference to”] inquiry, we have held pre-empted
             a law that “impos[ed] requirements by reference to [ERISA]
             covered programs,” Greater Washington Bd. of Trade,
             supra, at 130-31, 113 S. Ct., at 584; a law that specifically
             exempted ERISA plans from an otherwise generally
             applicable garnishment provision, Mackey v. Lanier
             Collection Agency & Service, Inc., 486 U.S. 825, 828, n.2,
             829-830, 108 S. Ct. 2182, 2184, n.2, 2185-2186, 100 L. Ed.
             2d 836 (1988); and a common-law cause of action premised
             on the existence of an ERISA plan, Ingersoll-Rand Co.,
             supra, at 140, 111 S. Ct., at 483-484. Where a State’s law
             acts immediately and exclusively upon ERISA plans, as in
             Mackey, or where the existence of ERISA plans is essential
             to the law’s operation, as in Greater Washington Bd. of
             Trade and Ingersoll-Rand, that “reference” will result in
             pre-emption.
Dillingham, 117 S. Ct. at 837-38. Without once referring to the decision in Travelers
or to a presumption against preemption, the Court in Dillingham concluded that the




                                          16
California apprentice wage law at issue in that case did not make a prohibited
“reference to” ERISA, because approved apprenticeship programs did not necessarily
need to be ERISA plans. Id. at 838. Apparently, nowhere did the California act make
an express reference to ERISA. Furthermore,
             [The California apprentice wage law] “functions irrespective
             of . . . the existence of an ERISA plan.” An apprenticeship
             program meeting the substantive standards set forth in the
             Fitzgerald Act regulations can be approved whether or not
             its funding apparatus is of a kind as to bring it under ERISA.
             [The California law] is indifferent to the funding, and
             attendant ERISA coverage, of apprenticeship programs.
             Accordingly, California’s prevailing wage statute does not
             make reference to ERISA plans.
Dillingham, ___ U.S. at ___, 117 S. Ct. at 839.
      It was when the Court turned to analysis of the “connection with” prong of the
inquiry that the standards stated in Travelers, and specific citation of that authority,
figured prominently. Id. at 839-42. Indeed, it was only when the Court turned from
the “reference to” prong of the inquiry to the “connection with” prong that it noted that
Travelers had refocused the inquiry:
             A law that does not refer to ERISA plans may yet be pre-
             empted if it has a “connection with” ERISA plans. Two
             terms ago, we recognized that an “uncritical literalism” in
             applying this standard offered scant utility in determining
             Congress’ intent as to the extent of § [1144(a)]’s reach.”
             Travelers, 514 U.S., at [656], 115 S. Ct., at 1677. Rather,
             to determine whether a state law has the forbidden
             connection, we look both to “the objectives of the ERISA
             statute as a guide to the scope of the state law that Congress
             understood would survive,” ibid., as well as to the nature of
             the effect of the state law on ERISA plans, id., at ___, 115
             S. Ct., at 1677.




                                           17
Dillingham, ___ U.S. at ___, 117 S. Ct. at 838. Thus, while the Court in Dillingham
recognized a significant change in the mode of analysis under the “connection with”
prong of the inquiry in Travelers, it saw no such change in the analysis under the
“reference to” prong.
      Furthermore, in De Buono, although the Court explained that the decision in
Travelers had “unequivocally concluded” that the “relate to” language was not
“intended to modify ‘the starting presumption that Congress does not intend to supplant
state law,’” De Buono, ___ U.S. at ___, 117 S. Ct. at 1751 (quoting Travelers, 514
U.S. at 654), the Court still identified as among the types of state laws that Congress
intended to supersede “one[s] in which the state statute contains provisions that
expressly refer to ERISA or ERISA plans.” Id. at 1752 & n.15 (citing Mackey, 486
U.S. at 828-30, and Greater Wash. Bd. of Trade, 506 U.S. at 130-31, and finding the
law in question in that case was not one that “contains provisions that expressly refer
to ERISA or ERISA plans”).
      Thus, we conclude that although Travelers certainly reaffirmed—in the context
of ERISA preemption—the importance of the presumption that Congress did not intend
to supplant state law unless that intention was clear, that refocusing of the preemption
inquiry was specifically in the context of the “connection with” prong of the inquiry.
Nothing in Travelers or its recent progeny supplants the “reference to” prong of the
ERISA preemption analysis as stated in pre-Travelers precedent, specifically Mackey
and Greater Washington Board of Trade. To put it another way, we believe that the
presumption that Congress does not intend to supplant state law is necessarily
overcome when the state law has an inappropriate “reference to” ERISA or ERISA
plans, as such an improper reference is defined in pre-Travelers precedent. See




                                          18
Travelers, 514 U.S. at 655-56; accord De Buono, ___ U.S. at ___, 117 S. Ct. at 1752
& n.15; Dillingham, ___ U.S. at ___, 117 S. Ct. at 839. Therefore, we turn to the
question of whether the Arkansas PPA has a prohibited “reference to” ERISA or
ERISA plans.
      2.     “Reference to” ERISA in the Arkansas PPA
      A state law has a prohibited “reference to” ERISA or ERISA plans when that
law (1) “‘impos[es] requirements by reference to [ERISA] covered programs,’”
Dillingham, ___ U.S. at ___, 117 S. Ct. at 837 (quoting Greater Wash. Bd. of Trade,
506 U.S. at 130-31); (2) “specifically exempt[s] ERISA plans from an otherwise
generally applicable [statute],” id. (citing Mackey, 486 U.S. at 828 n.2); or (3) premises
a cause of action on the existence of an ERISA plan, id. (citing Ingersoll-Rand, 498
U.S. at 140). Thus, “[w]here a State’s law acts immediately and exclusively upon
ERISA plans, as in Mackey, or where the existence of ERISA plans is essential to the
law’s operation, as in Greater Washington Board of Trade and Ingersoll-Rand, that
“reference” will result in pre-emption.” Id. at 837-38; accord Wilson, 114 F.3d at 716-
17.
      The appellants contend that the Arkansas PPA makes no forbidden “reference
to” ERISA, although it expressly states that its provisions “shall not apply to self-
funded or other health benefit plans that are exempt from state regulation by virtue of
the federal Employee Retirement Income Security Act of 1974, as amended.” ARK.
CODE ANN. § 23-99-209. First, they contend that the Arkansas PPA exempts only self-
funded ERISA plans, not insured ERISA plans, and hence merely restates ERISA’s so-
called “deemer clause.” The “deemer clause” states that no self-funded ERISA plan
“shall be deemed to be an insurance company or other insurer . . . for purposes of any
law of any State purporting to regulate insurance companies, insurance contracts,



                                           19
banks, trust companies, or investment companies.” 29 U.S.C. § 1144(b)(2)(B). They
contend further that the Arkansas PPA does not single out any plans, ERISA or non-
ERISA, because the PPA does not regulate plans at all, but only insurers.
      Appellees counter that the express exemption for plans regulated by ERISA in
the Arkansas PPA is not limited solely to self-funded ERISA plans, because it also
specifically encompasses “other health benefit plans.” Further, they contend that ARK.
CODE ANN. § 23-99-209 does not parallel ERISA’s “deemer clause,” because it plainly
is not limited to insurance companies or insured relationships. In any event, they
contend that the Arkansas PPA has a forbidden “reference to” ERISA, because in § 23-
99-209, the Arkansas PPA singles out ERISA plans for special treatment. Finally, they
contend that throughout the Arkansas PPA, statutory provisions belie the assertion that
the act only regulates insurers, not plans.
      In Wilson, this court applied the considerations identified in Dillingham to the
question of whether the Missouri common-law tort of negligent misrepresentation
contained a forbidden “reference to” ERISA, revisiting its prior holding in In Home
Health, Inc. v. Prudential Ins. Co., 101 F.3d 600 (8th Cir. 1996):
             Upon considering th[e] elements of the tort, we concluded
             “that the state common law on negligent misrepresentation
             is of general application. It does not actually or implicitly
             refer to ERISA plans.                The state law on
             misrepresentation . . . is of general application as it makes
             no reference to and functions irrespective of the existence of
             an ERISA plan.” [In Home Health, 101 F.3d] at 605 n.6
             (quotations and citations omitted). Because “the existence
             of ERISA plans is not essential to the operation of Missouri
             state common-law tort of negligent misrepresentation,
             Dillingham, ___ U.S. at ___, 117 S. Ct. at 838, and because
             the tort of negligent misrepresentation does not “impos[e]
             requirements by reference to ERISA covered programs,” id.



                                              20
      at ___, 117 S. Ct. at 837 (quotations, citations, and alterations omitted),
      nor “acts immediately and exclusively upon ERISA plans,” id. at ___,
      117 S. Ct. at 838, Wilson’s tort action for negligent misrepresentation
      against Zoellner is not preempted by ERISA on the basis of any reference
      to ERISA.
Wilson, 114 F.3d at 717.
      Unlike the common-law tort action at issue in Wilson, however, the Arkansas
PPA does, both actually and implicitly, refer to ERISA plans. Id. Again, the Arkansas
PPA expressly states that its provisions “shall not apply to self-funded or other health
benefit plans that are exempt from state regulation by virtue of the federal Employee
Retirement Income Security Act of 1974, as amended.” ARK. CODE ANN. § 23-99-209.
In keeping with post-Travelers precedent, and the pre-Travelers precedent specifically
embraced in Travelers and its progeny, this reference to ERISA is sufficient to preempt
the Arkansas PPA.
      In Mackey, the Supreme Court held that a Georgia garnishment statute that
“singles out ERISA employee welfare benefit plans for different treatment under state
garnishment procedures, is pre-empted under § [1144(a)].” Mackey, 486 U.S. at 830.
The Court stated, “The state statute’s express reference to ERISA plans suffices to
bring it within the federal law’s pre-emptive reach.” Id. Next, in Ingersoll-Rand, the
Supreme Court considered whether ERISA preempted a Texas law authorizing a cause
of action for wrongful discharge to avoid making contributions to an employee’s
pension fund. Ingersoll-Rand, 498 U.S. at 135. In that case, the Court reaffirmed
Mackey’s recognition that “‘we have virtually taken it for granted that state laws which
are “specifically designed to affect employee benefit plans” are pre-empted under
§ [1144(a)].’” Ingersoll-Rand, 498 U.S. at 140 (quoting Mackey, 486 U.S. at 829).




                                          21
The Court explained, “In Mackey the statute’s express reference to ERISA plans
established that it was so designed; consequently, it was pre-empted.” Id. The Court
then held that the Texas common-law cause of action it was asked to consider was
preempted, because “there simply is no cause of action if there is no plan.” Id. In
Greater Washington Board of Trade, the Court took the “reference to” analysis one
step further, finding that a District of Columbia law that specifically referred to benefit
plans that were regulated by ERISA was preempted “on that basis alone.” Greater
Wash. Bd. of Trade, 506 U.S. at 130. The Court reasoned thus:
             The health insurance coverage that [the District of Columbia
             law] requires employers to provide for eligible employees is
             measured by reference to “the existing health insurance
             coverage” provided by the employer and “shall be at the
             same benefit level.” D.C. Code Ann. § (a-1)(1) and (3)
             (Supp. 1992). The employee’s “existing health insurance
             coverage,” in turn, is a welfare benefit plan under ERISA
             § 3(a), because it involves a fund or program maintained by
             an employer for the purpose of providing health benefits for
             the employee “through the purchase of insurance or
             otherwise.” § 3(a), 29 U.S.C. § 1002(1). Such employer-
             sponsored health insurance programs are subject to ERISA
             regulation, see § 4(a), 29 U.S.C. § 1003(a), and any state
             law imposing requirements by reference to such covered
             programs must yield to ERISA.
Id. at 130-31. These precedents require the conclusion that the Arkansas PPA is
preempted.
      First, § 23-99-209 of the Arkansas PPA undeniably makes an express reference
to ERISA and attempts to exclude from coverage of the PPA at least some ERISA




                                            22
         6
plans.       Thus, it “singles out ERISA employee welfare benefit plans for different
treatment under state [law], [and therefore] is pre-empted under § [1144(a)].” Mackey,
486 U.S. at 830. As in Mackey, “[t]he state statute’s express reference to ERISA plans
suffices to bring it within the federal law’s pre-emptive reach.” Id. The Arkansas PPA
is “‘”specifically designed to affect employee benefit plans,”’” even if the effect is to
exclude them from coverage of the PPA, and thus the PPA “‘[is] pre-empted under
§ [1144(a)].’” Ingersoll-Rand, 498 U.S. at 140 (quoting Mackey, 486 U.S. at 829).
To put it another way, the Arkansas PPA “specifically exempt[s] ERISA plans from an
otherwise generally applicable [statute],” and it is consequently preempted.
Dillingham, ___ U.S. at ___, 117 S. Ct. at 837 (citing Mackey, 486 U.S. at 828 n.2).
         Even if it were true that § 23-99-209 of the Arkansas PPA merely reflects
ERISA’s “deemer clause,” an assertion we find unpersuasive, that would be immaterial
to our conclusion that § 23-99-209’s express reference to ERISA plans “bring[s] it
within the federal law’s pre-emptive reach.” Mackey, 486 U.S. at 830. The fact that
a state law is enacted to help effectuate ERISA’s provisions or is in accord with
ERISA’s dictates “is not enough to save the state law from pre-emption.” Id. at 829.
“‘The pre-emption provision [of ERISA] . . . displace[s] all state laws that fall within
its sphere, even including state laws that are consistent with ERISA’s substantive
requirements.’” Id. (quoting Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S.
724, 739 (1985)); accord Greater Wash. Bd. of Trade, 506 U.S. at 130 (also citing
Metropolitan Life Ins. Co., 471 U.S. at 739); Ingersoll-Rand, 498 U.S. at 139 (“Pre-




   6
    We find it unnecessary to address the appellants’ argument that the Arkansas PPA
attempts to exclude from its coverage only self-funded ERISA plans; it suffices, as we
read Supreme Court precedent, that the Arkansas PPA attempts to exempt any ERISA
plans.
                                           23
emption is also not precluded simply because a state law is consistent with ERISA’s
substantive requirements,” also citing Metropolitan Life Ins. Co., 471 U.S. at 739). In
short, “legislative ‘good intentions’ do not save a state law within the broad pre-
emptive scope of § [1144(a)].” Id. at 830.
      Second, appellants’ contentions notwithstanding, the Arkansas PPA has several
provisions that make implicit reference to ERISA, see Wilson, 114 F.3d at 717
(considering both actual and implicit reference to ERISA or ERISA plans), through
regulation of “health benefit plans” that are necessarily subject to ERISA regulation.
Cf. Greater Wash. Bd. of Trade, 506 U.S. at 130-31. For example, the Arkansas PPA
provides that “[i]t is a violation of this subchapter for any health care insurer or other
person or entity to provide any health benefit plan providing for health care services
that does not conform to this chapter.” ARK. CODE ANN. § 23-99-206 (emphasis
added). Similarly, the Arkansas PPA was intended “to provide the opportunity of
providers to participate in health benefit plans,” ARK. CODE ANN. § 23-99-202
(emphasis added), and the Act states that “[n]othing in this subchapter shall prevent a
health benefit plan from instituting measures designed to maintain quality and to
control costs . . . so long as such measures are imposed equally on all providers in the
same class.” ARK. CODE ANN. § 23-99-204(b) (emphasis added). Thus, it cannot be
said that the Arkansas PPA “functions irrespective of . . . the existence of an ERISA
plan.” Dillingham, ___ U.S. at ___, 117 S. Ct. at 839; Wilson, 114 F.3d at 717; In
Home Health, 101 F.3d at 605 n.6. Rather, the Arkansas PPA is “specifically designed
to affect employee benefit plans,” Ingersoll-Rand, 498 U.S. at 140 (quoting Mackey,
486 U.S. at 829), it “‘impos[es] requirements by reference to [ERISA] covered
programs,’” Dillingham, ___ U.S. at ___, 117 S. Ct. at 837 (quoting Greater Wash.




                                           24
Bd. of Trade, 506 U.S. at 130-31), and “the existence of ERISA plans is essential to
the law’s operation.” Id. at 837-38; accord Wilson, 114 F.3d at 716-17.
      Finally, by letter pursuant to FED. R. APP. P. 28(j), the appellants recently
brought to the court’s attention the decision of the Ninth Circuit Court of Appeals in
Washington Physicians Serv. Ass’n v. Gregoire, ___ F.3d ___, 1998 WL 318759 (9th
Cir. June 18, 1998), which they assert directly relates to their argument that the
Arkansas PPA regulates health care insurers, not health benefit plans. In Gregoire, the
Ninth Circuit Court of Appeals concluded that Washington’s so-called “Alternative
Provider Statute” was not preempted by ERISA. Gregoire, ___ F.3d at ___, 1998 WL
318759 at *1. The court found that the Washington statute did not “relate to” ERISA
plans in the most obvious way by referring to or acting directly upon such plans. Id.
at ___, 1998 WL 318759 at *3. However, unlike the Arkansas statute, which is not so
restricted, as explained above, the Washington statute made clear that the term “health
plans” referred only to plans offered by a “health carrier,” not a benefit plan offered by
an employer, and defined “health carrier” to include only a disability insurer, a health
care service contractor, or an HMO, and excluded employer-sponsored, self-funded
health plans. Id. Nor did the Washington act make the kind of express attempt to
exclude ERISA-regulated plans found in the Arkansas PPA in ARK. CODE ANN. § 23-
99-209, because it simply identified the very narrow “health plans” to which it referred,
which were not ERISA-regulated plans, even though the way the Washington act was
drawn was “quite obviously intended to save the Act from ERISA preemption.” Id.
Indeed, the Ninth Circuit Court of Appeals recognized that the narrow language of the
Washington act distinguished the case “from the numerous cases that have found a
‘reference’ to ERISA plans in a state’s regulation of health plans,” in which “the state
laws . . . all included ERISA plans in the definition of ‘health plan’ or otherwise



                                           25
expressly referred to ERISA plans.” Id. at ___, 1998 WL 318759 at *4. Thus,
“[b]ecause the [Washington] Act is different from these other state laws in that it does
not expressly refer to ERISA plans and does not operate directly on them,” the Ninth
Circuit Court of Appeals did “not find this string of precedent relevant,” and held “that
the [Washington] Act does not have a ‘reference’ to ERISA plans.” Id. Again, this
court holds that the Arkansas PPA does have both express and implicit references to
ERISA plans.
      Thus, the Arkansas PPA makes impermissible “reference to” ERISA or ERISA
plans, and as such is preempted by 29 U.S.C. § 1144(a). Dillingham, ___ U.S. at ___,
117 S. Ct. at 837-38; accord Wilson, 114 F.3d at 716-17. Because the PPA is
preempted under the “reference to” prong of the ERISA preemption analysis, we find
it unnecessary to reach the question of whether it is also preempted under the
“connection with” prong. However, having concluded that the Arkansas PPA is
preempted, we turn to the question of whether it is nonetheless “saved” from ERISA
preemption as a state law that regulates insurance.


                              C. The “Savings” Clause
      Although the Arkansas PPA would otherwise be preempted, it will escape the
effects of that preemption if it falls within ERISA’s so-called “savings” clause,
§ 514(b)(2)(A), codified at 29 U.S.C. § 1144(b)(2)(A). See, e.g., Pilot Life Ins. Co.
v. Dedeaux, 481 U.S. 41, 45 (1987) (“To summarize the pure mechanics of [§ 514(a)
and § 514(b)]: If a state law ‘relate[s] to . . . employee benefit plan[s],’ it is pre-
empted. § 514(a). The saving clause excepts from the pre-emption clause laws that
‘regulat[e] insurance.’ § 514(b)(2)(A).”); Metropolitan Life Ins. Co., 471 U.S. at 733
(“While § 514(a) of ERISA broadly pre-empts state laws that relate to an employee-



                                           26
benefit plan, that pre-emption is substantially qualified by an ‘insurance savings
clause,’ § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A). . . .”); United of Omaha v.
Business Men’s Assur. Co., 104 F.3d 1034, 1039 (8th Cir. 1997). The “savings”
clause provides that “[n]othing in this subchapter shall be construed to exempt or
relieve any person from any law of any State which regulates insurance . . . .” 29
U.S.C. § 1144(b)(2)(A); see also Metropolitan Life Ins. Co., 471 U.S. at 733; United
of Omaha, 104 F.3d at 1039 (“The savings clause excepts from preemption certain
categories of state law, including state law that regulates insurance.”).
      The appellants contend that the district court erred when it held that the Arkansas
PPA was not “saved” from ERISA preemption, because the PPA did not “regulate
insurance.” They contend that the court’s error arose from its failure to follow United
States Dep’t of Treasury v. Fabe, 508 U.S. 491 (1993), which they assert is the
Supreme Court’s most recent decision addressing the manner in which courts are to
determine whether a state law regulates insurance. They argue that Fabe departed from
rigid application of the tests found in Group Life & Health Ins. Co. v. Royal Drug Co.,
440 U.S. 205 (1979), Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (1982), and
Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985), instead applying a
broad interpretation of which state laws regulate the “business of insurance” outside
of the antitrust arena. They assert that under this broad interpretation, the Arkansas
PPA is unequivocally a law affecting the “business of insurance,” and as such is saved
from ERISA preemption.
      The appellees once again disagree with the appellants’ assertion that the rules
have changed. They argue that Fabe is factually unrelated and legally irrelevant to the
question of the scope of the ERISA savings clause. They point out that the definition
of “health care insurer” under the Arkansas PPA is definitely not limited to “insurance



                                          27
companies” and that as a matter of both common sense and application of the factors
cited in Royal Drug, Pireno, and Metropolitan Life Insurance, the Arkansas PPA is not
a law regulating insurance. Therefore, they argue that the district court correctly held
that the Arkansas PPA is not “saved” from preemption.
      Whatever its import for the present case, Fabe is not a case directly considering
the scope of the ERISA “savings” clause; rather, it was a case considering whether an
Ohio law establishing priority of claims for an insolvent insurance company was
exempt by virtue of the McCarran-Ferguson Act from preemption by the federal
priority statute, 31 U.S.C. § 3713. Fabe, 508 U.S. at 493. Therefore, we look first to
Supreme Court decisions specifically interpreting the scope of the ERISA “savings”
clause.
      1.     Scope of the ERISA “savings” clause
      The Supreme Court first considered the scope of the ERISA “savings” clause in
Metropolitan Life:
                    [T]he sphere in which § 514(a) operates [to preempt
             state law] was explicitly limited by § 514(b)(2). The
             insurance saving clause preserves any state law “which
             regulates insurance, banking, or securities.” The two pre-
             emption sections, while clear enough on their faces, perhaps
             are not a model of legislative drafting, for while the general
             pre-emption clause broadly pre-empts state law, the saving
             clause appears broadly to preserve the States’ lawmaking
             power over much of the same regulation. While Congress
             occasionally decides to return to the States what it has
             previously taken away, it does not normally do both at the
             same time.
Metropolitan Life Ins. Co., 471 U.S. at 739-40. In determining the proper scope of the
savings clause, the Court began by taking a “common-sense” view of the question of
whether a state law was one “which regulates insurance.” Id. at 740. The Court then



                                          28
drew upon cases interpreting the scope of the McCarran-Ferguson Act, which had
identified three criteria relevant to determining whether a particular practice falls within
that Act’s reference to the “business of insurance.” Id. at 743. The three criteria
suggested by those cases were the following:
              “first, whether the practice has the effect of transferring or
              spreading a policyholder’s risk; second, whether the practice
              is an integral part of the policy relationship between the
              insurer and the insured; and third, whether the practice is
              limited to entities within the insurance industry.” Union
              Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129, 102 S. Ct.
              3002, 3008, 73 L. Ed. 2d 647 (1982) (emphasis in the
              original). See also Group Life & Health Ins. Co. v. Royal
              Drug Co., 440 U.S. 205 (1979).
Metropolitan Life Ins. Co., 471 U.S. at 743. The Court noted further that the focus of
the statutory term under the McCarran-Ferguson Act was “‘the relationship between
the insurance company and the policyholder.’” Id. at 744 (quoting SEC v. National
Sec., Inc., 393 U.S. 453, 460 (1969)).
       These principles were reaffirmed two years later in Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 48-49 (1987) (citing Metropolitan Life Ins. Co., 471 U.S. at
740). In that case, the Court explained further that “[a] common-sense view of the
word ‘regulates’ would lead to the conclusion that in order to regulate insurance, a law
must not just have an impact on the insurance industry, but must be specifically directed
toward that industry.” Id. at 50. Even though the Mississippi Supreme Court had
identified the state law in question in that case, the Mississippi common law of bad
faith, with the insurance industry, “the roots of this law are firmly planted in the general
principles of Mississippi tort and contract law.” Id. at 50. Turning to the McCarran-
Ferguson factors, the Court concluded that the Mississippi law did not “effect a




                                            29
spreading of policyholder risk.” Id. Although the state common law did concern “the
policy relationship between the insurer and the insured,” the Court found that “[t]he
connection to the insurer-insured relationship is attenuated at best,” because it did not
“define the terms of the relationship between the insurer and the insured,” and hence
was “no more ‘integral’ to the insurer-insured relationship than any State’s general
contract law is integral to a contract made in that State.” Id. at 50-51. Finally, because
the state common-law had developed from general principles of tort and contract law
available in any breach-of-contract case, it was not limited to entities within the
insurance industry. Id. at 51. In addition to the factors stated in Metropolitan Life, the
Court also considered the role of the savings clause in ERISA as a whole, concluding
that, because the common-law cause of action addressed remedies for improper
processing of a claim for benefits, the understanding of the savings clause “must be
informed by the legislative intent concerning” comparable portions of the ERISA
statute, its enforcement provisions. Id. at 51-52. The Court concluded that it was not
the intent of Congress to “save” from preemption conflicting remedies provisions of
state law. Id. at 53-56.
      The appellants assert that United States Dep’t of Treasury v. Fabe, 508 U.S. 491
(1993), changed this analysis, because it changed the way in which courts are to
determine which state laws regulate insurance under the McCarran-Ferguson Act. In
Fabe, the Court noted that Royal Drug and Pireno—the cases from which the Court
in Metropolitan Life had drawn the three factors for determining what is the “business
of insurance” within the meaning of the ERISA savings clause—both involved the
scope of the “antitrust immunity” located in the second clause of § 2(b) of the
McCarran-Ferguson Act, 15 U.S.C. § 1012(b), rather than the first clause, which
commits to the states laws “enacted . . . for the purpose of regulating the business of



                                           30
            7
insurance.”     Fabe, 508 U.S. at 504. The Court concluded that the first clause was
“not so narrowly circumscribed,” because the Court refused to equate “laws
‘enacted . . . for the purpose of regulating the business of insurance’ with the ‘business
of insurance’ itself.” Id. The Court concluded further that laws “enacted . . . for the
purpose of regulating the business of insurance” “necessarily encompasses more than
just the ‘business of insurance.’” Id. at 505.
       While it is not for us to quibble with the Supreme Court’s interpretation of the
McCarran-Ferguson Act in Fabe, we can observe that that decision’s interpretation of
laws “enacted . . . for the purpose of regulating the business of insurance” in the
McCarran-Ferguson Act, 15 U.S.C. § 1012(b), does not supplant that Court’s own
interpretation of the meaning of “business of insurance” or “law of any State which
regulates insurance” in the ERISA savings clause. 29 U.S.C. § 1144(b)(2)(A). We
decline to adopt Fabe’s interpretation of laws “enacted . . . for the purpose of
regulating the business of insurance” in the McCarran-Ferguson Act, 15 U.S.C.
§ 1012(b), as necessarily the interpretation the Supreme Court would adopt for the
ERISA savings clause if it were now given the opportunity to rethink Metropolitan




   7
     The two clauses of the McCarran-Ferguson Act to which the Court referred state
the following:
                    No Act of Congress shall be construed to invalidate,
             impair, or supersede any law enacted by any State for the
             purpose of regulating the business of insurance, or which
             imposes a fee or tax upon such business, unless such Act
             specifically relates to the business of insurance: Provided,
             That after June 30, 1948 the [antitrust acts], shall be
             applicable to the business of insurance to the extent that
             such business is not regulated by State law.
15 U.S.C. § 1012(b) (emphasis added).
                                           31
        8
Life.        The Supreme Court has already expressly interpreted the meaning of the
pertinent terms of the ERISA savings clause, and it is that interpretation we will apply
here.
            As this court explained in its most recent decision addressing the scope of the
ERISA “savings” clause,
                  The Supreme Court has explained that a state law “regulates
                  insurance” if (1) it is directed specifically toward the
                  insurance industry and (2) it applies to the “business of
                  insurance” within the meaning of the McCarran-Ferguson
                  Act, which gives to the states the authority to regulate the
                  business of insurance, see 15 U.S.C. §§ 1011-1015. Pilot
                  Life, 481 U.S. at 48, 107 S. Ct. at 1553; Metropolitan Life,
                  471 U.S. at 742-43, 105 S. Ct. at 2390-91; Baxter v. Lynn,
                  886 F.2d 182, 185 (8th Cir. 1989). A law applies to the
                  business of insurance under the McCarran-Ferguson Act if
                  it (1) has the effect of transferring or spreading the
                  policyholder’s risk; (2) is an integral part of the policy
                  relationship between the insurer and the insured; and (3) is
                  limited to entities within the insurance industry.
                  Metropolitan Life, 471 U.S. at 743, 105 S. Ct. at 2391.
United of Omaha, 104 F.3d at 1039-40. Thus, several years after Fabe, this court
applied precisely the same test to the scope of the “savings” clause as it had applied
before Fabe. Indeed, we can find no decisions of our sister Circuit Courts of Appeals
abandoning Metropolitan Life in favor of an analysis of the meaning of “business of
insurance” under Fabe in ERISA “savings” clause cases in the four years, and myriad
ERISA preemption cases, since Fabe was decided.




   8
    The Supreme Court did not address the interpretation of the savings clause in its
recent ERISA decisions interpreting the preemption clause.
                                               32
       2.     Applicability of the ERISA “savings” clause to the Arkansas PPA
       Contrary to appellants’ assertions, we conclude that the district court correctly
held that the Arkansas PPA is not “saved” from preemption by the ERISA savings
clause. First, the Arkansas PPA is not a state law that “regulates insurance” under a
common-sense approach, Metropolitan Life Ins. Co., 471 U.S. at 740, because it is not
a law that is “specifically directed toward that industry.” Pilot Life Ins. Co., 481 U.S.
at 50; United of Omaha, 104 F.3d at 1039. Rather, as the district court found, it was
the intent of the Arkansas General Assembly in enacting the Arkansas PPA “to provide
the opportunity of providers to participate in health benefit plans.” ARK. CODE ANN.
§ 23-99-202. Furthermore, the statutory term “health benefit plans” includes far more
than just insurance or the insurance industry, because the Arkansas PPA defines that
term to include “any entity or program that provides reimbursement, including
capitation, for health care services.” ARK. CODE ANN. § 23-99-203(c). An act that
purports to regulate “health benefit plans” defined so broadly as to include employers
and administrators of self-insured plans, as well as traditional insurance, simply does
not fit within a common-sense view of a law directed specifically toward the insurance
industry. Pilot Life Ins. Co., 481 U.S. at 50; United of Omaha, 104 F.3d at 1039.
Even if we were to accept appellants’ argument that the Arkansas PPA regulates
“health care insurers,” as defined, rather than “health benefit plans,” it is clear that the
statutory term “health care insurers” also goes well beyond the scope of the insurance
industry, because it is defined by the statute to include, but not be limited to, insurance
companies, hospital and medical services corporations, health maintenance
organizations, preferred provider organizations, physician hospital organizations, third-
party administrators, and prescription benefit management companies authorized to
administer, offer, or provide health benefit plans. ARK. CODE ANN. § 23-99-203(f).



                                            33
Again, this scope of the Arkansas PPA must be contrasted with the narrowly drawn act
at issue in Gregoire upon which the appellants rely. Compare Gregoire, ___ F.3d at
___, 1998 WL 318759 at *5 (the Washington law was “specifically directed” toward
the insurance industry, “because it operates directly on HMOs and [Health Care
Service Contractors], entities engaged in the business of health insurance”).
      Appellants’ argument that the Arkansas PPA has been codified as part of the
Arkansas insurance code is unpersuasive, because the law reaches so far beyond the
insurance industry. Cf. Pilot Life Ins. Co., 481 U.S. at 50 (even though the Mississippi
Supreme Court had identified the state law in question with the insurance industry, “the
roots of this law are firmly planted in the general principles of Mississippi tort and
contract law.”). Furthermore, the Arkansas PPA is not simply an “innovative”
insurance law, as appellants contend, citing Metropolitan Life, 471 U.S. at 741 (nothing
in the “deemer clause” purports to distinguish between “traditional” and “innovative”
insurance laws); it is not a law directed at the insurance industry at all, but a law
directed at regulation of broadly defined health benefit plans, only some of which fall
within the insurance industry.
      Nor does the Arkansas PPA satisfy any of the McCarran-Ferguson factors
identified in Metropolitan Life. First, it plainly does not have the effect of transferring
or spreading the policyholder’s risk. Metropolitan Life, 471 U.S. at 743; United of
Omaha, 104 F.3d at 1040; and compare Gregoire, ___ F.3d at ___, 1998 WL 318759
at *6-*7 (concluding that the Washington act did transfer or spread the policyholder’s
risk by mandating coverage of additional treatments or conditions). Appellants do not
argue to the contrary, asserting instead that failure to meet any one of the McCarran-
Ferguson factors is not dispositive. However, the Arkansas PPA also is not an integral
part of the policy relationship between the insurer and the insured. Id.; United of



                                            34
Omaha, 104 F.3d at 1040. If not preempted, it might be an integral part of the
relationship between the insurer and a third-party to the insured-insurer relationship,
the health care provider. See ARK. CODE ANN. § 23-99-206 (making it a violation of
the PPA for any provider participation provisions of health benefit plans not to conform
to the PPA).     As with the Mississippi law in Pilot Life, the Arkansas PPA’s
“connection to the insurer-insured relationship is attenuated at best,” because it does
not “define the terms of the relationship between the insurer and the insured,” but only
the terms of the relationship between the insurer and a third party, and hence is “no
more ‘integral’ to the insurer-insured relationship” than any contract an insurer might
make with any other third party. Pilot Life, 481 U.S. at 50-51; and compare Gregoire,
___ F.3d at ___, 1998 WL 318759 at *6 (rejecting the argument that the Washington
act regulated only the relationship between the carrier and provider, rather than the
relationship between the carrier and the insured, because the Washington act “confers
a benefit on insureds by expanding the treatments that their health carriers must provide
or pay for,” and contrasting this act with “any willing provider” statutes, which “do not
expand the conditions covered by the policy, nor . . . expand the types of treatments
available under the policy,” but only “require[] a health carrier to allow an insured to
see any doctor willing to abide by the terms of the insurance plan and willing to provide
only those treatments specified in the plan.”).
      Finally, the Arkansas PPA is not limited to entities within the insurance industry.
Metropolitan Life, 471 U.S. at 743, 105 S. Ct. at 2391. As noted above, the Arkansas
PPA defines “health benefit plans,” the terms of which must comply with the PPA, to
include “any entity or program that provides reimbursement, including capitation, for
health care services.” ARK. CODE ANN. § 23-99-203(c). It defines “health care
insurers” as including, but not being limited to, insurance companies, hospital and



                                           35
medical services corporations, health maintenance organizations, preferred provider
organizations, physician hospital organizations, third-party administrators, and
prescription benefit management companies authorized to administer, offer, or provide
health benefit plans. ARK. CODE ANN. § 23-99-203(f). An act that purports to regulate
“health benefit plans” and “health care insurers” defined so broadly as to include
entities well outside the insurance industry plainly is not limited to entities within the
insurance industry. Compare Gregoire, ___ F.3d at ___, 1998 WL 318759 at *8 (the
Washington Act did not reach entities beyond those in the insurance industry).
      Thus, the district court correctly held that the Arkansas PPA is preempted by
ERISA under 29 U.S.C. § 1144(a), and is not saved from that preemption under 29
U.S.C. § 1144(b)(2)(A), the ERISA “savings” clause. We believe that this conclusion
is compelled by applicable precedent. Although we recognize that various courts have
expressed concern about the scope of ERISA preemption, it is for Congress, not the
courts, to reassess ERISA in light of modern insurance practices and the national
debate over health care. See, e.g., Kuhl v. Lincoln Nat’l Health Plan of Kansas City,
Inc., 999 F.2d 298, 304 (8th Cir. 1993) (Judge Beam observed that although it may
well be true that Congress had not foreseen certain scenarios “when it enacted a
preemption clause so broad that it relieves ERISA-regulated plans of most tort
liability . . . modification of ERISA in light of questionable modern insurance practices
must be the job of Congress, not the courts”); accord Bast v. Prudential Ins. Co. of
Am., ___ F.3d ___, ___, 1998 WL 279217, *9 (9th Cir. June 2, 1998) (Judge
Thompson held that the district court properly concluded that state law claims were
preempted by ERISA, remarking, “The Basts’ state law claims are preempted by
ERISA, and ERISA provides no remedy. Unfortunately, without action by Congress,
there is nothing we can do to help the Basts and others who may find themselves in this



                                           36
same unfortunate situation.”); Texas Pharmacy Ass’n v. The Prudential Ins. Co. of
Am., 105 F.3d 1035, 1039-40 (5th Cir. 1997) (Judge Reavley wrote, “There is room
to doubt if ERISA’s drafters intended that it would preempt any-willing-provider
statutes. We nevertheless conclude that the result in this case is compelled by the
unmistakable breadth of ERISA preemption recognized by the Supreme Court. A
different result will require further guidance from the Supreme Court or further action
from Congress.”);Cannon v. Group Health Serv. of Okla., Inc., 77 F.3d 1270, 1271
(10th Cir. 1996) (Judge Porfilio held that claims against an insurer were preempted by
ERISA, stating, “Although moved by the tragic circumstances of this case and the
seemingly needless loss of life that resulted, we conclude the law gives us no choice
but to affirm.”); Tolton v. American Biodyne, Inc., 48 F.3d 937, 943 (6th Cir. 1995)
(Judge Kennedy noted that “[o]ne consequence of ERISA preemption, therefore, is that
plan beneficiaries or participants bringing certain types of state actions—such as
wrongful death—may be left without a meaningful remedy”); Turner v. Fallon
Community Health Plan, Inc., 953 F. Supp. 419, 424 (D. Mass. 1997) (Judge Gorton
observed that “[p]laintiff’s state common law claims are preempted by the broadly
sweeping arm of ERISA. Plaintiff is left without any meaningful remedy even if he
were to establish that Fallon wrongfully refused to provide the . . . treatment his wife
urgently sought. Notwithstanding the merits of plaintiff’s argument, this Court cannot
legislate by judicial decree nor apply a statute, such as ERISA, other than as drafted
by Congress.”); Pomeroy v. Johns Hopkins Med. Servs., Inc., 868 F. Supp. 110, 116
(D. Md. 1994) (Judge Garbis stated, “Ultimately, whether the ERISA civil enforcement
provisions must be reexamined and reformed in light of modern health care is an issue
which must be addressed and resolved by the legislature rather than the courts.”).




                                          37
            D. The Extent To Which The Arkansas PPA Is Preempted
      Because we conclude that the Arkansas PPA is preempted by ERISA and not
saved by the “savings” clause, we must address the cross-appeal of Prudential
Insurance Company of America that the district court erred by amending its grant of
summary judgment in favor of appellees to state that the Arkansas PPA is
unenforceable only “insofar as” it relates to ERISA plans. Prudential contends that the
amendment creates a state statute that was never enacted or considered by the
Arkansas legislature. Prudential argues that the “savings” clause requirement that the
statute be limited to entities within the insurance industry would be meaningless if the
court could simply sever out portions of the statute that applied to non-insurance
entities. They contend instead that the Arkansas PPA is preempted in its entirety. The
appellants initially agreed that the district court’s amended judgment is inadequate,
because it begs the question of the extent to which the Arkansas PPA is preempted and
does not consider the preemptive effect of other statutes. However, in their reply brief,
they contend that the district court properly amended its order in light of severability
clauses in both of the acts that became the Arkansas PPA.
      As Prudential has asserted, in Texas Pharmacy Ass’n v. Prudential Ins. Co., 105
F.3d 1035 (5th Cir. 1997), cert. denied, ___ U.S. ___, 118 S. Ct. 75 (1997), the Fifth
Circuit Court of Appeals held that a Texas law containing an “any willing provider”
provision was preempted in its entirety by ERISA. Texas Pharmacy Ass’n, 105 F.3d
at 1039. That court wrote,
                   The TPA [Texas Pharmacy Association], in the final
             footnote of its brief, suggests that if the statute is preempted
             because it does not apply exclusively to insurers, then we
             should find preemption only insofar as the statute regulates
             non-insurers. Stated another way, the TPA suggests that the
             preempted portions of the statute are severable. We reject



                                           38
             this argument for three reasons. First, [CIGNA Healthplan
             of Louisiana v. Louisiana, 82 F.3d 642 (5th Cir.), cert.
             denied, ___ U.S. ___, 117 S. Ct. 387 (1996),] implicitly
             rejected this argument. It did not hold the statute valid as to
             PPOs offered by or affiliated with insurers. Second, our
             court has recognized as an independent requirement for the
             applicability of the savings clause that the state statute “be
             limited to entities within the insurance industry.” This
             requirement would be meaningless if a court could simply
             sever out those portions of the statute which applied to
             noninsurance entities.
                     Third, the Texas statute is not severable because it so
             states.
Texas Pharmacy Ass’n, 105 F.3d at 1039 (footnote citations omitted). They urge us
to follow the Fifth Circuit Court of Appeals and hold that the Arkansas PPA is
preempted in its entirety, rather than to engage in the process of determining whether
PPOs offered by or affiliated with insurers may still be controlled by the Arkansas PPA.
      However, as appellants have noted, also citing Texas Pharmacy Ass’n, 105 F.3d
at 1039, severability is a matter of state law. Appellants point out that, unlike the
Texas act in Texas Pharmacy—which specifically stated that it was not severable,
Texas Pharmacy Ass’n, 105 F.3d at 1039—the two legislative acts that combined to
form the Arkansas PPA do contain severability clauses. Those clauses state “[i]n the
event any portion of this act is found to be in violation of federal law or in conflict
therewith, or held to be unconstitutional, that portion shall hereby be repealed and all
other portions of this act shall remain in force.” Act 1193 of 1995, § 9; Act 505 of
1995, § 12. Furthermore, these acts provide that “[i]f any provision of this act or the
application hereof to any person or circumstance is held invalid, such invalidity shall
not affect other provisions or applications of the act which can be given effect without




                                           39
the invalid provision or application, and to this end the provisions of this act are
declared to be severable.” Act 1193 of 1995, § 7; Act 505 of 1995, § 10.
      We conclude that, even recognizing the Arkansas General Assembly’s intention
that the Arkansas PPA be severable, because of the grounds on which we have
concluded that the act is preempted by ERISA, it is preempted in its entirety. The
Arkansas PPA is not preempted because some discrete portion of it is in “conflict” with
federal law or “unconstitutional.” See Act 1193 of 1995, § 9; Act 505 of 1995, § 12.
Nor is preemption here a question of “any provision of this act or any application
hereof to any person or circumstance” being “invalid.” Act 1193 of 1995, § 7; Act 505
of 1995, § 10. Rather, as explained above, the Arkansas PPA is invalid because the
act makes improper references to ERISA. Those references—notably the improper
reference that attempts to exclude from the Arkansas PPA “self-funded or other health
benefit plans that are exempt from state regulation by virtue of the federal Employee
Retirement Income Security Act of 1974, as amended,” ARK. CODE ANN. § 23-99-
209—permeate and are fundamental to each and every provision of the Arkansas PPA.
Thus, there is no severable portion of the Arkansas PPA that can be removed from the
act, while other portions are given effect, and the Arkansas PPA is preempted in its
entirety. The district court erred in holding to the contrary.


                                 III. CONCLUSION
      Like the district court, we conclude that the Arkansas PPA is preempted,
because this state law has an improper “reference to” ERISA or ERISA plans, and the
state law is not “saved” from preemption, because it is not a state law that “regulates
insurance.” Consequently, we affirm the district court’s order of January 31, 1997,
granting summary judgment in favor of appellees and denying appellants’ cross-motion



                                           40
for summary judgment. However, we reverse the district court’s amendment of its
judgment in its order of March 14, 1997, which found the Arkansas PPA preempted
only “insofar as” it relates to ERISA plans. We hold instead that the Arkansas PPA is
preempted in its entirety and that appellees are entitled to injunctive relief permanently
enjoining appellants from enforcing the Arkansas PPA in its entirety.
      Therefore, the orders of the district court are affirmed in part, reversed in part,
and this case is remanded to the district court with directions to enter judgment in
accord with this decision.


      A true copy.


             Attest:


                     CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT




                                           41
