On December 2, the U.S. Supreme Court agreed to hear appeals in three ongoing lawsuits challenging the “church plan” status of the pension plans of Advocate Healthcare Network, Dignity Health, and St. Peter’s Healthcare System, which are religiously affiliated healthcare systems. In each of those cases, the lower courts held that the pension plans did not qualify as “church plans” because they were not established and maintained by a church or a convention or association of churches, but rather by a non-profit organization merely affiliated with a religious organization. Church plans are generally exempt from ERISA, including its fiduciary and minimum funding requirements. If the Supreme Court agrees with the lower courts’ rulings, the pension plans of the three healthcare systems, and potentially many other religiously affiliated employers, would have to comply with all of ERISA’s requirements. The Court’s order granting certiorari for the three cases is available here.
On Wednesday, September 21, the U.S. Supreme Court ordered a stay in the ongoing church plan litigation involving the pension plan of Dignity Health, a healthcare system affiliated with the Catholic Church. Earlier this year, the U.S. Court of Appeals for the Ninth Circuit held that Dignity Health’s pension plan did not qualify as a church plan because it was not established and maintained by a church or a convention or association of churches, but rather by a non-profit organization merely affiliated with a religious organization. Consequently, Dignity Health’s plan would no longer be exempt from ERISA. Dignity Health appealed the Ninth Circuit’s ruling to the U.S. Supreme Court, but the Court has yet to announce whether it will hear that appeal or the appeals filed in two other church plan cases involving the pension plans of Advocate Health Care Network and Saint Peter’s Health System. The Supreme Court’s order… Continue Reading
The U.S. Supreme Court held last week, in Obergefell v. Hodges, that the U.S. Constitution requires all states to perform same-sex marriages and recognize same-sex marriages lawfully performed in another state. We recommend employers review their employee benefit plans to determine whether they offer coverage to all legally married couples. Additionally, employers may want to consider whether to continue offering domestic partner benefits. Obergefell v. Hodges, No. 14-556, ___ U.S. ___ (June 26, 2015) can be found here.
The U.S. Supreme Court held last week, in King v. Burwell, that federal subsidies are available under the Affordable Care Act (“ACA“) to purchase health insurance on a federal exchange. A federal exchange operates in states that have not set up state exchanges. The ACA states that federal subsidies are allowed for taxpayers who meet certain requirements and have enrolled in an insurance plan through “an Exchange established by the State.” IRS regulations had interpreted this provision to make federal subsidies available regardless of whether the exchange is established and operated by the state or the federal government. The Court decided that, although the plain-meaning arguments were strong, the ACA’s context and structure compel the conclusion that federal subsidies are permitted with respect to insurance coverage purchased on any exchange-federal or state. This means business as usual for employers, including managing ACA penalty risks and preparing for the onerous reporting… Continue Reading
In Tibble v. Edison International, announced on May 18th, the U.S. Supreme Court confirmed that fiduciaries have an ongoing fiduciary duty to monitor investments in retirement plans and to remove imprudent investments. The Court held that fiduciaries will not avoid potential liability simply because the six-year ERISA limitations period has run from the time the investment alternative for the retirement plan was originally selected, even if that original selection was prudent. The Court did not provide any further guidance on what the “duty to monitor” entails and instead remanded the case to the lower court to determine whether the fiduciaries in the case satisfied their duty to monitor. The opinion can be found here.
Supreme Court Remands Religious-Affiliated Employer’s Challenge to the Affordable Care Act’s Contraception Mandate
On Monday, the U.S. Supreme Court granted certiorari, and at the same time summarily vacated the judgment of the U.S. Court of Appeals for the Seventh Circuit, on a religious-affiliated employer’s challenge to the Affordable Care Act’s contraception mandate. Previously, the Seventh Circuit held that requiring the University of Notre Dame, which is affiliated with the Catholic Church, to complete a waiver claiming an exemption from the Affordable Care Act’s contraception mandate was not a substantial burden on the university’s religious rights. Without elaboration, the Supreme Court remanded the case back to the Seventh Circuit for reconsideration in light of the Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc. For more information on the Hobby Lobby decision, please see our prior post here. The Supreme Court’s order in University of Notre Dame v. Burwell can be found here.
Resolving a more than 30-year split among the circuit courts, a unanimous Supreme Court rejected the U.S. Sixth Circuit Court of Appeals’ “Yard-Man standard” governing claims for retiree medical benefits arising from a collective bargaining agreement (“CBA”) under which retiree medical benefits are presumed to be vested. In Tackett, the Supreme Court ruled there is no inference that parties to a CBA intend to vest retirees with lifetime medical coverage in the absence of an express contractual provision or other evidence to the contrary, and thus ordinary contact principles should govern interpretation of a CBA. Applying ordinary contract principles, the Supreme Court held that retiree medical benefits established by a CBA with a fixed duration are only guaranteed for the duration of the CBA, absent express language in the CBA or health plan stating otherwise. M&G Polymers USA, LLC v. Tackett, 574 U.S. ____ (2015). A copy of the opinion… Continue Reading
The U.S. Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc. was announced on June 30. The Court held that the regulations issued by the U.S. Department of Health and Human Services (“HHS”) under the Affordable Care Act (the “Act”), which require the group health plans of applicable large employers (generally 50 or more full-time employees) to provide their female employees with no-cost access to contraceptives, violated the federal Religious Freedom Restoration Act (“RFRA”) as applied to the plans of closely-held for-profit corporations with sincerely held religious beliefs relating to contraceptives. Background As part of the Act’s requirement that group health plans of applicable large employers must provide “preventive care and screenings” for women without “any cost sharing requirements,” HHS issued regulations requiring full coverage of the 20 contraceptive methods approved by the U.S. Food and Drug Administration. The plaintiffs in Hobby Lobby objected to four of the required… Continue Reading
Recently, the IRS and Treasury Department announced that same-sex couples would be treated as married for all federal income tax purposes if the couple was legally married in a state or jurisdiction that recognizes same-sex marriage (regardless of their state of residence). This is consistent with the IRS’s treatment of common law marriages as set out in IRS Revenue Ruling 58-66. Rev. Rul. 2013-17 can be found here.
Since the ruling in United States v. Windsor on June 26, 2013, employers have been trying to determine what this means for their employees and their employee benefits. While many unanswered questions remain, there are some actions employers can take now. You can find our recent alert discussing the Windsor decision, the issues facing employers and plan sponsors, and steps employers can take now here.