U.S. Supreme Court Hears Oral Arguments in Retiree Health Case

The U.S. Supreme Court recently heard oral arguments in the case of M&G Polymers USA, LLC v. Tackett, which involves when retiree health benefits are considered to be vested. In M&G Polymers, certain collectively bargained retirees and their dependents who participated in M&G’s health plan sued when M&G required them to make contributions towards the cost of health benefits. They claimed that they had a contractual right to lifetime contribution-free health care benefits based on the language that was in the collective bargaining agreements (“CBAs”) when they retired. The CBAs do not explicitly address the duration of retiree health benefits and the company argues that they do not provide for vested lifetime benefits.

ERIC members and trial members can read more here.
The 6th Circuit’s decision is available here.

ERIC’s amicus brief is available here.
The transcript of the oral arguments is available here.
Additional information is available here.

Amici Weigh In on Supreme Court Retiree Health Case

In "ERIC Disagrees with Court About Vested Retiree Health Benefits", PlanSponsor.com states:

"The ERISA Industry Committee (ERIC) is urging the U.S. Supreme Court to reverse a federal court ruling that one company’s collectively bargained retiree health benefits are vested for life. In an amicus brief filed with the U.S. Supreme Court, ERIC asks the high court to reverse a decision by the 6th U.S. Circuit Court of Appeals in M&G Polymers v. Tackett."

To read more, click here.

U.S. Supreme Court to Hear Retiree Health Case

The U.S. Supreme Court has announced that it will hear the case of M&G Polymers USA, LLC v. Tackett, which involves when retiree health benefits are considered to be vested.

Earlier this week, the Court agreed to hear the issue of whether courts should presume that silence regarding the duration of retiree health benefits in CBAs means that the parties intended those benefits to vest (or alternatively, whether a clear statement or at least some language regarding vesting must be included). The Court declined to hear the second issue presented of whether different rules of construction should apply when interpreting “pure” ERISA plans rather than collectively bargained plans.

ERIC members and trial members can read more here.
The 6th Circuit’s decision is available here.
Additional information is available here.

Government Reminds Plan Sponsors to Act on ERRP

The government has posted a reminder to plan sponsors, "Reminder Regarding Plan Sponsor's Responsibilities for Phase Down, of ERRP Secure Website" on ERRP.gov. It states:

"As announced in the April 23, 2013 Federal Register Notice (CMS–9996–N4), in preparation for the January 1, 2014 Early Retiree Reimbursement Program (ERRP) sunset date, CMS is phasing down the ERRP Secure Website (SWS) so that it can be taken offline during the first week of January 2014. Accordingly, Authorized Representatives, Account Managers, and Designees supporting Plan Sponsors, should assume that they will not be able to access the SWS on or after January 1, 2014. We encourage Plan Sponsors to review information available in the SWS to determine what, if any, information or data should be printed and/or saved before the system is taken offline.

To read more, click here.

Aon Hewitt Examines the Changing Face of Retiree Health Care

Aon Hewitt reports:

"The individual market for Medicare-eligible retirees dates back to the introduction of the Medicare Part D program in 2006, but rising health care costs and federal health care reform have led a growing number of employers to consider the exchange model as a cost-effective way to provide health coverage to their retirees, according to the Aon Hewitt 2013 Retiree Health Care Surveyof 548 private and public plan sponsors representing 3.8 million retirees.

Key provisions of the law won’t take effect until at least 2014, but nearly two-thirds of survey respondents have already begun reassessing their long-term retiree health strategies. Among those that have decided to make changes in how they provide coverage to their post-65 retirees, more than 40% plan to replace their traditional group retiree health benefit with one that directs retirees to the individual market, often giving them a defined contribution subsidy to offset the cost. More than half of those looking to take action in the future indicate strong interest in the exchange-based DC approach."

For a full copy of the publication, click here.

Participant May Get Relief He Didn’t Even Ask For in Retiree Medical Case

In this case, a company allegedly terminated a retiree’s medical benefits after it realized that it had mistakenly covered him. The retiree claimed that the company had used the promise of medical benefits to induce him to take early retirement. He also claimed that he waived other coverage due to the company’s promises of medical coverage. The retiree sued for past and future medical expenses.

The lower court had dismissed the case as they said that the retiree only sought money damages, which were not available to him.

The 5th Circuit Court of Appeals disagreed with the lower court and said that the retiree might be eligible for a monetary payment. It found that the U.S. Supreme Court’s decision in Cigna Corp. v. Amara expanded the type of relief available to potentially include “surcharge”, a type of monetary relief available historically.

The Circuit Court held that even though the retiree didn’t ask for surcharge, he might be entitled to it because he asked to be “made whole”. The case was sent back to the lower court to decide whether the retiree is entitled to this type of relief.

The case is important because it provides additional circumstances under which participants may be entitled to receive money from benefit plans.

Gearlds v. Entergy Service