The AARP, the EEOC and interested retirees are waiting to hear from the U.S. District Court for the Eastern District of Pennsylvania whether four is greater than nine or whether nine is greater than four. The district court previously enjoined the EEOC from publishing regulations that would explicitly permit employers to coordinate retiree health care benefits with Medicare eligibility. Those regulations were designed to overturn the Third Circuit's ruling in the Erie County case in 2000 that it was a violation of the ADEA age discrimination rules for benefit plans to reduce coverage when retirees became eligible for Medicare. The district court ruled that in the wake of the Third Circuit's ruling, the ADEA was not ambiguous and, therefore, the EEOC had no authority to issue contrary regulations.
The Supreme Court's Brand X decision however, opened the door for the district court to take a second look at the issue. In Brand X, the Supreme Court held that "[o]nly a judicial precedent holding that the statute unambiguously forecloses the agency's interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction." According to the EEOC, Brand X requires the district court to ignore Erie County in determining whether the EEOC has the authority to issue the challenged regulations.
While the EEOC concedes that Section 4 of the ADEA prohibits the practice of coordinating retiree health benefits with Medicare, Section 9 specifically authorizes the EEOC to issue regulatory exemptions as necessary and proper. Because Erie County analyzed Section 4 only, the EEOC believes that Erie County simply doesn't apply to the EEOC's regulatory activity under Section 9. In short, 9 is greater than 4.
The AARP, by contrast, argues that after Erie County, the ADEA is clear on its face that health benefits cannot be reduced when retirees become Medicare eligible. As such, there is no ambiguity and no gap for the EEOC to fill with a new regulation. In essence, the AARP is arguing that there is no need to analyze the ADEA beyond Section 4. In short, 4 is greater than 9.
Calling Judge Roberts?
The AARP and EEOC briefs can be found at the ERISA Industry Committe website here.
