The statute uses the same language in both section 1178(a)(1) and section 264(c)(2) to delineate the general precondition for preemption: the provision of State law must be “contrary” to the relevant federal requirement, standard, or implementation specification; the term “contrary,” however, is not defined. It should be noted that this issue (the meaning of the term “contrary”) does not arise solely in the context of the proposed privacy standard. The term “contrary” appears throughout section 1178(a) and is a precondition for any preemption analysis done under that section.
The definition set out at proposed § 160.202 embodies the tests that the courts have developed to analyze what is known as “conflict preemption.” In this analysis, the courts will consider a provision of State law to be in conflict with a provision of federal law where it would be impossible for a private party to comply with both State and federal requirements or where the provision of State law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” This latter test has been further defined as, where the State law in question “interferes with the methods by which the federal statute was designed to reach [its] goal.” International Paper Co. v. Ouellette, 479 U.S. 481, 494 (1987). In Gade, the Supreme Court applied this latter test to preempt an Illinois law and regulations that imposed additional, non- conflicting conditions on employers, holding that the additional conditions conflicted with the underlying congressional purpose to have one set of requirements apply. This test, then, is particularly relevant with respect to the other HIPAA regulations, where Congress clearly intended uniform standards to apply nationwide.
The Department is of the view that this definition should be workable and is probably what Congress intended in using the term -- as a shorthand reference to the case law. We considered a broader definition (“inconsistent with”), but rejected it on the grounds that it would have less legal support and would be no easier to apply than the statutory term “contrary” itself.