Recent SCOTUS Benefit Decisions Pose New Questions for Litigation, Panelists Say

Recent decisions from the U.S. Supreme Court this past term have provided new questions for practitioners in employee benefits law, according to panelists at a webinar hosted by the American Bar Association's Joint Committee on Employee Benefits on July 15.

The panel summarized the holdings and expected effects of three decisions of the high court that addressed three very different aspects of employee benefits law: 

 Burwell v. Hobby Lobby, 2014 BL 180313, U.S., No. 13-354 6/30/14

Fifth-Third Bancorp v. Dudenhoeffer, 2014 BL 175777, (U.S. 2014) and

Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604, 57 EBC 1265 (U.S. 2013).       

Plan Independence         

According to Teresa Renaker, a shareholder at Lewis Feinberg Lee Renaker & Jackson P.C. in Oakland, Calif., the court's decision in Hobby Lobby has raised concerns about employee benefit plans as independent from the plan sponsor.       

“Essentially none of these decisions up to and including Hobby Lobbytalks about the plan as a separate legal entity,” she said.  

In Hobby Lobby, the court held that the Affordable Care Act's requirement that a plan provide preventive care for women without co-payments or deductibles, including coverage of all FDA-approved contraceptives, was invalid under the Religious Freedom Restoration Act as applied to closely-held corporations where the owners of the corporation have sincerely-held religious beliefs that forbid certain forms of contraception.   

Renaker argued that this holding could change the strategy for suit brought for violations of the Employee Retirement Income Security Act by an employee benefit plan to include claims against the plan sponsor.    

She claimed that, because the court's decision seems to impute a burden that is placed by the ACA on the plan to the plan sponsor, the effect of the holding could be to reverse that effect for suits against the plan.     

“If the requirement on the plan burdens the religious beliefs of the plan's sponsor and owner, then what does that say about the independence of the plan and the ability to pierce the corporate veil,” she said.

Renaker also expressed her concern that the scope of the court's holding could be expanded to other claims for infringement on religious belief.

“Are there other types of medical benefits that there might be religious objections to,” she asked. As an example, she brought up the recent IRS regulations that required tax qualified plans to treat same-sex spouses as legally married in order to maintain their qualification.

Excerpted from a story that ran in Pension & Benefits Daily (07/16/2014).