You asked for an explanation of how state insurance laws apply to health insurance policies, property insurance policies, and self-insured health benefit plans when the policy is issued in one state but covers people or property in another state. As an example, you cited a situation where a group health benefit plan was issued by a Minnesota insurance company and covers Connecticut residents.

OLR is not authorized to give legal opinions and this report should not be considered one.

SUMMARY

Choice of law is the process of reconciling differences between two different legal jurisdictions, such as states. The outcome will potentially require one state to apply the laws of another when resolving an issue. There are numerous choice of law rules depending on the area of law under consideration (e. g. , contract, property, family, tort). Because property law and contract law have developed as two distinct branches of law, the choice of law rules followed for each differ.

When determining which state law applies to matters relating to property, the majority of states follow the traditional property law choice of law rule: lex situs, “the law of the place where the property is located. ”

When determining which state law to apply under a health insurance policy, the majority of states follow the traditional contracts law choice of law rule: lex loci contractus, “the law of the place of contracting. ” Under this rule, the law of the state where the master health insurance policy was issued controls issues between the (1) policyholder and the insurer and (2) insured individuals and the insurer. Thus, if a policy was issued in Minnesota, the Minnesota law applies to its terms, even for a Connecticut resident covered under the policy. (A Supreme Court case enunciated this rule, Boseman v. Connecticut General Life Insurance Co. , 301 U. S. 196 (1937). )

Based on choice of law rules, therefore, Connecticut property insurance laws are generally concerned with property located in Connecticut (lex situs) and Connecticut health insurance laws are generally concerned with health insurance policies issued in Connecticut (lex loci contractus). The Connecticut Insurance Department's jurisdiction extends along the same lines, i. e. , they lack jurisdiction to regulate a health insurance policy issued in another state, but may exert jurisdiction over a property insurance policy that insures property located in Connecticut.

If the matter under question is a self-insured health benefits plan, then all state insurance agencies lack jurisdiction over the plan. Federal law applies to such plans and the federal Department of Labor has jurisdiction to regulate them. The federal Employee Retirement Income Security Act (ERISA) preempts the application of state benefit mandates for self-insured plans. Therefore, Connecticut laws mandating that insurance policies cover certain health care services do not apply to self-insured plans. See OLR Report 2005-R-0753 (attached) for more information on ERISA.

JLK: ro