In the case of New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Company, the U.S. Supreme Court was asked to determine whether a New York state law that imposed surcharges on hospital services paid by commercial insurers but not those paid by nonprofit health service corporations violated the Employee Retirement Income Security Act (ERISA). The plaintiffs argued that this law indirectly regulated insurance rates and thus fell under ERISA's preemption clause, which prohibits states from enacting laws relating to employee benefit plans covered by ERISA. However, in 1995, the court ruled unanimously in favor of Travelers Insurance Company. It held that while ERISA does preempt some state laws affecting employee benefits plans, it doesn't apply when a state law has only an indirect economic influence on such choices rather than binding plan administrators to any particular choice and therefore did not violate ERISA's preemption clause.

In the dissenting opinion for New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Company, Justice O'Connor argued that the surcharges imposed by New York on insurers other than Blue Cross and Blue Shield effectively influenced employers' choices in health insurance plans, thereby relating to employee benefit plans. This influence was seen as a violation of ERISA's preemption clause which prohibits states from enacting laws related to private employer-sponsored health insurance plans. The majority held that these surcharges did not relate closely enough to warrant federal intervention but Justice O'Connor disagreed, stating that any state law with connections or references affecting such plans should be preempted under ERISA. She believed this broad interpretation better served Congress’s intent in creating uniformity among national benefits plan regulations.