(From the September 10, 2007 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

AARP Takes Retiree Medical Case to the U.S. Supreme Court

The AARP has decided to ask the U.S. Supreme Court to review a Third Circuit Court of Appeals decision permitting the Equal Employment Opportunity Commission (EEOC) to issue an Age Discrimination in Employment Act (ADEA) exemption for retiree medical benefit plans that coordinate with Medicare. This is the beginning of the end for this case, which started almost three years ago when AARP initially sued to stop EEOC from finalizing the exemption, which was proposed in response to a Third Circuit Court of Appeals ruling that ADEA prohibits employers from reducing or terminating retiree medical benefits at Medicare eligibility.

A federal district court originally sided with AARP, and permanently enjoined EEOC from issuing the ADEA exemption. The district court later reversed itself, but left the injunction in place pending AARP's appeal to the Third Circuit Court of Appeals.

A three-judge panel of the Third Circuit Court of Appeals earlier this year ruled the ADEA gives EEOC authority to issue "reasonable" exemptions that are "necessary and proper in the public interest." The court of appeals concluded the EEOC's proposed exemption was a proper exercise of this statutory authority, and that the courts could not block it. The AARP asked the full Third Circuit Court of Appeals to review the three-judge panel`s decision, but that request was denied.

Now, AARP is pursuing its final avenue of appeal. Even though the Third Circuit Court of Appeals・decision orders the district court to lift its injunction against the EEOC, AARP is asking the district court to hold off until the Supreme Court decides if it will hear the case. That should happen sometime after the Supreme Court convenes its next term in October.