On March 5, 2015, the U.S. Court of Appeals for the Sixth Circuit reversed the finding of a prior Sixth Circuit panel that allowed successful plaintiffs to recover additional equitable relief in the form of disgorgement of profits under a return-on-equity analysis in addition to the recovery of the denied benefits. This decision realigns the Sixth Circuit with the other circuits by requiring that plaintiffs prove a separate injury in order to receive additional equitable relief under ERISA.
On March 4, 2015, the Supreme Court of the United States heard oral arguments in King v. Burwell, the highest profile challenge to the Affordable Care Act (ACA) since the Supreme Court’s 2012 decision to uphold the law. The oral arguments featured sharp questioning of both sides. A decision is anticipated in June to determine whether the high court will maintain the status quo with respect to the availability of premium tax credits to lower-income exchange customers in all states.
M&G Polymers USA, LLC v. Tackett, a recent unanimous decision by the Supreme Court of the United States, is a game changer. By expressly repudiating the U.S. Court of Appeals for the Sixth Circuit’s 1983 Yard-Man decision and the many decisions following it, the Supreme Court rejected three decades of Sixth Circuit law inferring that retiree health benefits are vested for retirees’ lives, and provided new clarity in interpretation of retiree medical benefits under collective bargaining agreements.
Over the past decade, there has been a significant increase in the number of physicians who have dropped out of Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) networks and attempted to negotiate their own financial reimbursement with insurance companies and self-funded health care plans related to medical treatment provided to participants whose plan are governed by the Employee Retirement Income Security Act of 1974, as amended (ERISA).
These moves have led to a corresponding increase in the number of health care benefit suits brought by out-of-network physicians and treatment centers seeking to gain through litigation that which they could not get through direct negotiations with insurers and plan administrators—higher reimbursement amounts for health care treatment from ERISA-governed medical plans.
The Supreme Court of the United States ruled 5–4 in its highly anticipated Hobby Lobby decision that closely held for-profit corporations do not have to comply with the contraception mandate under the Affordable Care Act if doing so would violate their religious beliefs. The Supreme Court based its decision on the Religious Freedom Restoration Act, which protects “persons” from government actions that substantially burden their exercise of religion, unless those government actions are the least restrictive means of furthering a compelling government interest, and determined that because the contraception mandate is not the least restrictive means available to the government, it cannot apply to closely held for-profit corporations that religiously object to the contraception mandate.
The Supreme Court of the United States has agreed to resolve a circuit split about how courts should interpret collective bargaining agreements that provide for health insurance benefits for retired employees in M&G Polymers USA, LLC v. Tackett. The U.S. Court of Appeals for the Sixth Circuit says that such retiree health insurance benefits carry with them an inference that they are vested, or guaranteed to continue for life, while the majority of the other federal appellate courts require specific durational language to find that benefits are vested. Given the high cost of retiree health insurance on many employers’ balance sheets, M&G Polymers USA could represent a game changer for employers’ ability to modify retiree benefits going forward.
Three important legislative changes take effect on 6 April 2014 that will impact employment litigation and dispute resolution strategy in the United Kingdom.
The Supreme Court of the United States has decided in favor of the Internal Revenue Service in United States v. Quality Stores, Inc., holding that severance payments made pursuant to plans that did not tie payments to the receipt of state unemployment insurance are subject to Federal Insurance Contributions Act (FICA) tax. The decision overturns a taxpayer-friendly decision from the U.S Court of Appeals for the Sixth Circuit, which, if upheld, could have resulted in FICA tax refund claims to individuals and employers.
The Supreme Court of the United States granted certiorari in Fifth Third Bancorp v. Dudenhoeffer, suggesting that the Supreme Court will resolve the current division among U.S. circuit courts regarding the application of the “presumption of prudence” in employer stock cases.
The Supreme Court of the United States ruled that an ERISA plan may properly impose a reasonable time limit on filing a lawsuit to recover benefits. Such time may start to run even before completion of the required administrative review process.
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