Various ERISA cases are pending at the U.S. Supreme Court and lower federal courts that could significantly affect ERISA law. Here is an overview of the cases you may wish to monitor in the upcoming months.
High Court Could Consider Challenge to State Automatic-IRA Programs
California Secure Choice Retirement Savings Program, or CalSavers, requires California workers to have a portion of their earnings automatically deposited into a retirement savings account. Employers that do not have their retirement plans must enroll their workers, who can then increase or decrease their payroll deductions, which are set at five percent of their wages. The workers also can opt out of the program altogether. Various other states have adopted similar programs.
An anti-tax group sued CalSavers, alleging that ERISA blocks the CalSavers program. A federal district court dismissed the suit, and the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of the case. The anti-tax group now has filed a petition for writ of certiorari with the U.S. Supreme Court in the case of Howard Jarvis Taxpayers Association, et al. v. California Secure Choice Retirement Savings Plan, et al., case number 21-558, Supreme Court of the United States. Most recently, the state of California submitted its brief, and Jarvis submitted its reply.
Anthem Policyholders Seek to Revive Class Action on Higher Drug Prices
One of many cases dealing with alleged ERISA violations by PBMs or pharmacy benefits managers is John Doe 1 et al., Petitioners v. Express Scripts Inc. et al., case number 21-471, in the Supreme Court of the United States. In this case, Anthem policyholders accused Anthem and PBM Express Scripts, Inc., of violating ERISA by overcharging them for prescription drugs. However, the U.S. Court of Appeals for the Second Circuit dismissed the case in December 2020.
The outcome of this case will determine the liability of PBMs and insurance companies when they make decisions about drug prices. The central question is whether PBMs have a fiduciary responsibility to plan members to keep drug costs low or whether setting drug prices is a business decision exempt from ERISA oversight.
Challenge to Seattle Hotel Worker Rule Continues at U.S. Supreme Court
The ERISA Industry Committee (ERIC) will continue its challenge to a Seattle health care law that requires big hotels to either enroll their workers in health care plans or give them money to purchase insurance. ERIC sued to strike down the law, which it claims conflicts with Supreme Court precedent, as well as precedent from the U.S. Courts of Appeals of the First and Fourth Circuits.
The U.S. Court of Appeals for the Ninth Circuit dismissed ERIC’s lawsuit seeking to invalidate the Seattle law on federal preemption grounds. In response, ERIC has filed a petition for writ of certiorari in The ERISA Industry Committee, Applicant v. City of Seattle, Washington, docket number 21A104, Supreme Court of the United States.
Massachusetts Health System Faces Challenge to Pension Payment Calculation Methodology
Turning to the lower federal courts, retirees have filed a class action lawsuit against Mass General Brigham, the most extensive health system in the state, concerning how its retirement plan calculates pension payments to them. In the suit, retirees allege that the company relies on decades-old actuarial tables indicating lower life expectancies that lower their annuity payouts. Belknap v. Partners Healthcare System Inc., case number 1:19-cv-11437, U.S. District Court for the District of Massachusetts, is now proceeding through the discovery stage of litigation.
Suit Challenges Washington Long-Term Care Insurance Program
Washington created the WA Cares program in 2019. The program withholds money from employees’ paychecks and deposits it into the state’s Long-Term Services and Support Trust Fund. A group of businesses and workers filed a proposed class action suit challenging the plan, which they allege is preempted by ERISA and violates federal age discrimination laws. The legal challenge in Pacific Bells LLC et al. v. Inslee et al., case number 2:21-cv-01515, U.S. District Court for the Western District of Washington, is the first of its kind. The outcome of this case may determine the validity and feasibility of similar programs in other states.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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