Because of a US Supreme Court case
earlier this year providing greater judicial deference to rule
interpretations by federal agencies, US District Judge
Anita Brody of the US District Court for the
Eastern District of Pennsylvania reversed
her March 2005 decision barring
the Equal Employment Opportunity Commission (EEOC) from pursuing new
rules on retiree health care coverage (See Federal
Judge Tosses EEOC Retiree Health Benefit Exemption).
Based on a challenge by the AARP,
which claimed employers who only provided benefits for those not old
enough to qualify for Medicare violated federal age employment
discrimination bars, Brody originally prohibited the EEOC from
implementing a rule permitting employers to differentiate their
retiree health coverage by age.
In Tuesday's ruling, however,
Brody relied on the Supreme Court case in National Cable and Telecommunications Association
versus Brand X Internet Services, which she noted "dramatically
altered the respective roles of courts and agencies under (previous
Court precedent)."
While Brody may have handed the
government a narrow technical victory based on the Supreme Court
case, she ordered that the effect of Tuesday's ruling be delayed
until AARP can pursue its challenge in the US 3rd Circuit
Court of Appeals.
In reacting to Brody's latest
decision:
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the HR Policy Association said
it "applauds" the move. It had urged the judge to uphold the rule
"to prevent the further erosion of retiree health
benefits."
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Mark Ugoretz, president of The
ERISA Industry Committee (ERIC), a trade group representing major
employer health and retirement plans, called the decision "an
important victory in the effort to ensure continuation of many
retiree health plans."
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"The American Benefits Council
is greatly encouraged by yesterday's reversal in the AARP
v. EEOC case," said Council President James Klein, in
a statement. We hope this decision means that we are getting
closer to the publication by the Equal Employment Opportunity
Commission (EEOC) of much needed regulations on age discrimination
and retiree health plans. It is vitally important that we remove
the legal limbo surrounding these plans and allow employers to
continue providing benefits for all of their retirees - both those
eligible for Medicare and those who are not."
In 2000, the 3rd Circuit ruled in
the Erie County case that an employer who provides early retirement
medical benefits violates the ADEA if it provides a lower level of
health benefits to retirees after they become eligible for Medicare.
Because of soaring health care costs, employers argued that the most
feasible way for most to comply is by reducing or eliminating
benefits to pre-Medicare retirees, as Erie County did
for its retirees following the decision.
In April 2004, the EEOC exercised
its statutory authority to provide exemptions to the ADEA and
permitted employers to coordinate retiree health benefits with
eligibility for Medicare.