NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Wash-ington, D.C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

No. 95–1594

BARBARA A. DE BUONO, NEW YORK COMMIS-

SIONER OF HEALTH, et al., PETITIONERS v.

NYSA–ILA MEDICAL AND CLINICAL

SERVICES FUND, etc., et al.

on writ of certiorari to the united states court of appeals for the second circuit

[June 2, 1997]

Justice Stevens delivered the opinion of the Court.

This is another Employee Retirement Income Security Act (ERISA) pre-emption case. Broadly stated, the question presented is whether hospitals operated by ERISA plans are subject to the same laws as other hospitals. More precisely, the question is whether the opaque language in ERISA's §514(a) precludes New York from imposing a gross receipts tax on the income of medical centers operated by ERISA funds. We hold that New York may collect its tax.

In 1990, faced with the choice of either curtailing its Medicaid program or generating additional revenue to reduce the program deficit, the New York General Assembly enacted the Health Facility Assessment (HFA). The HFA imposes a tax on gross receipts for patient services at hospitals, residential health care facilities, and diagnostic and treatment centers. The assessments become a part of the State's general revenues.

Respondents are the trustees of the NYSA-ILA Medical and Clinical Services Fund (the Fund), which administers a self-insured, multiemployer welfare benefit plan. The Fund owns and operates three medical centers—two in New York and one in New Jersey—that provide medical, dental and other health care benefits primarily to longshore workers, retirees, and their dependents. The New York centers are licensed by the State as "diagnostic and treatment centers," App. 80, and are thus subject to a 0.6 percent tax on gross receipts under the HFA. N. Y. Pub. Health Law §2807–d(2)(c) (McKinney 1993).

During the period from January through November of 1991, respondents paid HFA assessments totaling $7,066 based on the two New York hospitals' patient care income of $1,177,670. At that time, they discontinued the payments and brought this action against appropriate state officials (petitioners) to enjoin future assessments and to obtain a refund of the tax paid in 1991. The complaint alleged that the HFA is a state law that "relates to" the Fund within the meaning of §514(a) of ERISA, and is therefore pre-empted as applied to hospitals run by ERISA plans.

The District Court denied relief. It concluded that HFA was not pre-empted because it was a "tax of general application" that did not "interfere with the calculation of benefits or the determination of an employee's eligibility for benefits" and thus had only an incidental impact on benefit plans. App. to Pet. for Cert. 21a.

The Court of Appeals for the Second Circuit reversed. It distinguished cases in which we had found that certain "laws of general application" were not pre-empted by ERISA, explaining that the HFA "targets only the health care industry," which is, "by definition, the realm where ERISA welfare plans must operate," NYSA-ILA Medical and Clinical Services Fund v. Axelrod, M. D., 27 F. 3d 823, 827 (1994). The court reasoned that because the HFA "operates as an immediate tax on payments and contributions which were intended to pay for participants' medical benefits," it directly affects "the very operations and functions that make the Fund what it is, a provider of medical, surgical, and hospital care to its participants and their beneficiaries." Ibid. The HFA, concluded the court, thus "related to" the Fund because it reduced the amount of Fund assets that would otherwise be available to provide plan members with benefits, and could cause the plan to limit its benefits, or to charge plan members higher fees.

The first petition for certiorari in this case was filed before we handed down our opinion in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U. S. 645 (1995). In that case we held that ERISA did not pre-empt a New York statute that required hospitals to collect surcharges from patients covered by a commercial insurer but not from patients insured by a Blue Cross/Blue Shield plan. Id., at 649–651. After deciding Travelers, we vacated the judgment of the Court of Appeals in this case and remanded for further consideration in light of that opinion. 514 U. S. 1094 (1995).

On remand the Court of Appeals reinstated its original judgment. The court distinguished the statute involved in Travelers on the ground that—by imposing a tax on the health insurance carriers who provided coverage to plans and their beneficiaries—it had only an indirect economic influence on the decisions of ERISA plan administrators, whereas the HFA "depletes the Fund's assets directly, and thus has an immediate impact on the operations of an ERISA plan," NYSA-ILA Medical and Clinical Services Fund v. Axelrod, M. D., 74 F. 3d 28, 30 (1996). We granted the New York officials' second petition for certiorari, 519 U. S. ___ (1996), and now reverse.

When the Second Circuit initially found the HFA pre-empted as applied to Fund-operated hospitals, that court relied substantially on an expansive and literal interpretation of the words "relate to" in §514(a) of ERISA. 27 F. 3d, at 826. In reconsidering the case on remand, the court appears to have adhered to that approach, failing to give proper weight to Travelers' rejection of a strictly literal reading of §514(a).

In Travelers, as in our earlier cases, we noted that the literal text of §514(a) is "clearly expansive." 514 U. S., at 655. But we were quite clear in that case that the text could not be read to "extend to the furthest stretch of its indeterminacy, [or] 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)." Ibid.

In our earlier ERISA pre-emption cases, it had not been necessary to rely on the expansive character of ERISA's literal language in order to find pre-emption because the state laws at issue in those cases had a clear "connection with or reference to," Shaw v. Delta Air Lines, Inc., 463 U. S. 85, 96–97 (1983), ERISA benefit plans. But in Travelers we confronted directly the question whether ERISA's "relates to" language was intended to modify "the starting presumption that Congress does not intend to supplant state law." 514 U. S., at 654. We unequivocally concluded that it did not, and we acknowledged "that our prior attempt[s] to construe the phrase `relate to' d[o] not give us much help drawing the line here." Id., at 655. In order to evaluate whether the normal presumption against pre-emption has been overcome in a particular case, we concluded that we "must go beyond the 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., at 656. We endorsed that approach once again earlier this Term in concluding that California's prevailing wage law was not pre-empted by ERISA. California Div. of Labor Standards Enforcement v. Dillingham Constr., N. A., Inc., 519 U. S. ___, ___ (1997) (slip op., at 8–9).

Following that approach here, we begin by noting that the historic police powers of the State include the regulation of matters of health and safety. Hillsborough County v. Automated Medical Laboratories, Inc., 471 U. S. 707, 715 (1985). While the HFA is a revenue raising measure, rather than a regulation of hospitals, it clearly operates in a field that "`has been traditionally occupied by the States.'" Ibid (quoting Jones v. Rath Packing Co., 430 U. S. 519, 525 (1977)). Respondents therefore bear the considerable burden of overcoming "the starting presumption that Congress does not intend to supplant state law." Travelers, 514 U. S., at 654.

There is nothing in the operation of the HFA that convinces us it is the type of state law that Congress intended ERISA to supercede. This is not a case in which New York has forbidden a method of calculating pension benefits that federal law permits, or required employers to provide certain benefits. Nor is it a case in which the existence of a pension plan is a critical element of a state law cause of action, or one in which the state statute contains provisions that expressly refer to ERISA or ERISA plans.

A consideration of the actual operation of the state statute leads us to the conclusion that the HFA is one of "myriad state laws" of general applicability that impose some burdens on the administration of ERISA plans but nevertheless do not "relate to" them within the meaning of the governing statute. See Travelers, 514 U. S., at 668; Dillingham Constr., 519 U. S., at ___ (slip op., at 16–17). The HFA is a tax on hospitals. Most hospitals are not owned or operated by ERISA funds. This particular ERISA fund has arranged to provide medical benefits for its plan beneficiaries by running hospitals directly, rather than by purchasing the same services at independently run hospitals. If the Fund had made the other choice, and had purchased health care services from a hospital, that facility would have passed the expense of the HFA onto the Fund and its plan beneficiaries through the rates it set for the services provided. The Fund would then have had to decide whether to cover a more limited range of services for its beneficiaries, or perhaps to charge plan members higher rates. Although the tax in such a circumstance would be "indirect," its impact on the Fund's decisions would be in all relevant respects identical to the "direct" impact felt here. Thus, the supposed difference between direct and indirect impact—upon which the Court of Appeals relied in distinguishing this case from Travelers—cannot withstand scrutiny. Any state tax, or other law, that increases the cost of providing benefits to covered employees will have some effect on the administration of ERISA plans, but that simply cannot mean that every state law with such an effect is pre-empted by the federal statute.

The judgment of the Court of Appeals is reversed.

It is so ordered.