Supreme Court Turns Back AARP

Written by: Nick Curabba

It looks like SCOTUS knows how to turn down an ERISA case, after all. 

In a term that has seen the High Court hand down a landmark decision in LaRue, and grant certiorari in two other cases with significant potential ERISA implications, the Justices yesterday let the Third Circuit Court of Appeals ruling stand in AARP v. EEOC.  The decision to deny cert. effectively ended a nearly decade long legal battle over the application of federal age discrimination laws to retiree health insurance benefit plans.

At issue before the Court was a Third Circuit decision upholding the validity of EEOC regulations that permit employers to coordinate their retiree benefit plans with Medicare eligibility.  Those regulations, which were challenged by the AARP, were promulgated by the EEOC following outcry from plan sponsors over a prior decision by the Third Circuit in 2000 striking down as age discriminatory the practice of providing higher retiree health benefits to pre-Medicare eligible retirees. 

Following that decision in Erie County Retirees Association v. County of Erie, plan sponsors and their trade associations, together with organized labor groups, engaged in vigorous advocacy to convince the EEOC to reverse its position and permit plan coordination with Medicare.  They were able to successfully argue the retiree benefit plans – a voluntary offering by employers – would simply no longer be provided if the Erie County decision were left in place.  

The decision not only caps an extremely successful lobbying and legal campaign by the top benefits-related trade associations in D.C. against the extraordinarily powerful AARP, but may also result in more retiree health plans being offered by employers and unions in the future.

The case also serves as a reminder – if one is needed – that despite ERISA's strong federal preemption of state laws, other federal laws, like the Age Discrimination and Employment Act, and federal securities laws do impact benefit plans and must be taken into consideration.  As we have pointed out in the past, securities laws are certainly making their presence felt more and more in the benefit plan world, particularly with 403(b) plans. The practice of law in this area, we think, will increasingly depend on a grasp of a diverse set of laws enforced by various federal agencies that often are themselves not coordinated.