Legal Advocacy
What the Future Holds
2008 Supreme Court Preview
Several important decisions from previous Supreme Court terms left unresolved legal issues of critical importance to older people. And, of course, as lower courts issue decisions and legislatures make laws, new issues inevitably arise. This section discusses some of the issues which AARP and its attorneys in AARP Foundation Litigation have on their radar screens.
Health Care
New Hampshire passed a statute that criminalizes the sale of prescriber identifiable health care data for commercial use. This is data that identifies the types of prescriptions specific doctors are prescribing so that drug representatives may target their sales. A U.S. District Court judge enjoined the statute’s implementation, finding that it violated the data supplier’s First Amendment’s rights to engage in commercial speech. The case, IMS v. Ayotte, is now on appeal to the U.S. Court of Appeals for the First Circuit. Vermont and Maine have passed similar laws, and legislation is being considered in other states so more litigation is likely as the data mining companies challenge the states’ authority to regulate their conduct.
States have also attempted to regulate pharmacy benefit managers (PBMs) which are fiscal intermediaries that specialize in the administration and management of prescription benefit programs. The original idea of PBMs was to better manage drug use through formularies and other means and thus lower drug costs to the plans. There are disputes whether this actually occurs. Maine passed a new law which requires PBMs to disclose the amount of rebates they receive from negotiated agreements with drug makers. The idea behind disclosure requirements is to ensure that discounts get passed along to insurers and ultimately consumers. The Pharmaceutical Care Management Association (PCMA), the trade association for the PBMs, filed suit against Maine seeking to block implementation of the law, arguing that ERISA preempts the state law and that the Commerce clause was violated. The First Circuit rejected these arguments. Pharm. Care Mgmt. Ass’n v. Rowe, 429 F.3d 294 (1st Cir. 2005). DC passed a new law similar to Maine’s law which requires PBMs to disclose the amount of rebates they receive from negotiated agreements with drug makers. PCMA filed suit against DC seeking to strike down the provisions which deal with disclosure requirements, making similar arguments it did in front of the First Circuit. Pharm. Care Mgmt Ass’n v. District Columbia, 173 Fed. Appx. 3 (D.C. Cir. 2006). This case was remanded to the district court, where the District Court judge found in favor of the law based on the theory of collateral estoppel. 477 F. Supp.2d 86 (D.D.C. 2007). PCMA’s appeal was remanded to the District Court for a decision on the issue of ERISA preemption. 522 F.3d 443 (D.C.Cir. 2008). AARP filed amicus briefs in support of both state laws.
Finally, the preemptive effect of ERISA on state attempts at health care reform is discussed in ERISA and Employee Benefits, below:
Consumer Rights
State and federal courts continue to be asked to rule on the enforceability of binding, mandatory arbitration clauses in cases involving consumers, employees, investors, and nursing home patients. A key issue decided by state and federal courts in the last few years, and one that may eventually make it up to the Supreme Court, is whether arbitration provisions that bar class wide proceedings - in court and arbitration - are unconscionable and unenforceable under state law. Many lower courts have refused to enforce such bans, particularly for plaintiffs with relatively small amounts in dispute for whom an individual arbitration or court action is economically infeasible. Some courts have declared the entire arbitration clause unenforceable, while others have severed the class action ban and enforced the remainder of the clause. It remains to be seen what defendants will do in the latter cases, as many corporations have made it clear (or at least implied) that they would rather be in court than in arbitration due to their very limited ability to appeal an arbitrator's decision awarding class wide relief.
Employment
In Gomez-Perez v. Potter, 128 S.Ct. 1931 (2008), the Court ruled that the Age Discrimination in Employment Act (ADEA) protects federal employees from retaliation even though the statute contains no language conferring such a right; however, although the ADEA is derived from Title VII and the prohibitions of the two statutes are practically identical, the Court did not extend its ruling to Title VII. The lower courts may do so, and eventually the Court may decide that Title VII protects federal workers from retaliation, even though, like the ADEA, the statute does not address the issue.
Recently, the Court seems to be very interested in employment cases, discrimination cases in particular, and possibly age bias cases most of all. Four of the five age discrimination cases decided last term were favorable to employees (even though the Court in Sprint/United Mgmt. Co. v. Mendelsohn, 128 S.Ct. 1140 (2008), ruled against Appellee Ellen Mendelsohn, the balancing test endorsed by Justice Thomas’ opinion for a unanimous Court for evaluation of so-called “me, too” evidence under F.R.Evid. 401 and 403 bodes well for ADEA plaintiffs). And while the Kentucky Retirement Systems v. EEOC, 128 S.Ct. 2361 (2008) decision is very troubling, it may not portend further rewriting of the ADEA by the Court, since the majority claimed that the decision was made in a narrow context. More potentially troublesome are the various forms of mischief that decision may produce in lower federal courts.
Additionally, since Ledbetter v. Goodyear Tire and Rubber Co., 127 S.Ct. 2162 (2007), the Court seems disinclined to undertake further broad action in employment discrimination law, but rather prefers to issue narrow decisions, leaving to lower federal courts the task of issuing rulings appropriate to specific circumstances, e.g., Sprint/United Mgmt. Co. v. Mendelsohn, 128 S.Ct. 1140 (2008); Federal Exp. Corp. v. Holowecki, 128 S.Ct. 1147 (2008), and also to honor precedent calling for generous (not to say liberal) construction of 1960s and 1970s era (or earlier) civil rights laws such as section 1981, e.g., CBOCS West, Inc. v. Humphries, 128 S.Ct. 1951 (2008), following Sullivan v. Little Hunting Park, 90 S.Ct. 400 (1969); and the ADEA, Meacham v. Knolls Atomic Power Laboratory, 128 S.Ct. 2395 (2008), interpreting ADEA; and Gomez-Perez, interpreting 1974 ADEA amendments.
In January 2007 the Supreme Court granted certiorari in BCI Coca-Cola Bottling Co. v. EEOC, 450 F.3d 476, cert. granted, 127 S.Ct. 852 (Jan. 5, 2007) (No. 06-341). In this case, BCI Coca-Cola sought to overturn a Tenth Circuit ruling that the company could be held liable for employment discrimination where there was no allegation of bias by the manager who ultimately decided to terminate an employee, but where a subordinate who influenced that decision maker allegedly exhibited discriminatory bias. Specifically, the Tenth Circuit held that a subordinate’s animus may support a discrimination claim where that person “possessed leverage, or exerted influence, over the titular decision maker” or “provided factual information or other input that may have affected” the decision maker’s actions (cat’s paw theory).
In an unusual move, BCI Coca-Cola withdrew its petition for certiorari in April 2007, after both sides and numerous “friends of the Court,” including AARP, had submitted briefs, and just a week before the Supreme Court was scheduled to hear oral arguments. With the consent of the EEOC, the Supreme Court agreed to dismiss the case. Although the BCI case involved allegations of race discrimination in violation of Title VII, the question of employer liability for alleged bias by a subordinate of the decision maker also has arisen in age and disability discrimination cases under the ADEA and ADA, and also in the context of other discrimination claims (i.e., sex, religion, national origin) brought under Title VII. This question has produced a split in the lower federal courts on the question of the nature and extent of the proof required to sustain such a claim. The fact that the Supreme Court agreed to hear the BCI case and that the issues in BCI arise with some regularity, suggest that the Court may grant certiorari in another case raising these issues in the near future.
Following the Court’s recent decisions in Smith v. City of Jackson, Miss., 544 U.S. 228 (2005), and General Dynamics Land Systems, Inc. v. Cline, 540 U.S. 581 (2004), and the changing demographics in this country, age discrimination issues are arising more frequently. Among potential issues which may reach the Court is one involving a split between the Ninth and Sixth Circuits – whether language in the National Bank Act giving national banks power to dismiss directors “at pleasure” preempts state age discrimination laws that restrict employer rights to terminate employees. It is well-established that the ADEA provisions supersede those of the National Bank Act, but unresolved is the question of the National Bank Act on state laws comparable to the ADEA (such as the Washington Law Against Discrimination). The second issue which may reach the Court is whether a supposed “ministerial exception” to federal employment discrimination laws – not rooted in the text of any such laws, such as the ADEA - precludes adjudication in federal court of ADEA, Title VII, etc., claims brought by a church employee on grounds that his position is not reserved for members of a particular faith. Finally, another potential issue is the extent of the EEOC’s regulatory authority, which may arise from the pending “Reasonable Factor Other than Age” regulations, especially if the agency decides to define “reasonable” which the Court itself declined to do.
Disability
A major issue left unresolved by recent Court cases concerning the Americans with Disabilities Act (ADA) is how far Congress’ abrogation of v. Garrett, 531 U.S. 356 (2001), the Court held the Eleventh Amendment bars damage award against state employers under Title I of the ADA. Then, in Tennessee v. Lane, 541 U.S. 509 (2004), the Supreme Court declared by a narrow 5-4 margin that, at least in the context of citizen access to state courts, state officials are not immune from liability for damages under Title II of the ADA for discriminating against persons with disabilities. In United States v. Georgia, 546 U.S. 151 (2006), the Court decided that disabled state prisoners may seek ADA damages for violation of their constitutional right to be free of cruel and unusual punishment. These rulings raised as many questions as they resolved. What other kinds of state operations implicate rights for people with disabilities that are so “fundamental” that state officials may not avoid damages for discriminating against them? What about access to polling places? The chance to receive treatment for mental disorders in community settings? The right to marry and raise children? In the first instance, the answers to these questions await future decisions of the lower federal courts. Ultimately, some of these questions may have to be resolved by the Supreme Court itself. Already, for instance, two federal appeal courts have ruled damages are an option in Title II ADA suits against state colleges and universities. See Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d 474 (4th Cir. 2005); Ass’n for Disabled Ams., Inc. v. Florida Int’l Univ., 405 F.3d 954 (11th Cir. 2005).
Another major circuit split concerning the ADA is whether employers must reasonably accommodate employees “regarded as” disabled. In the recent case of D’Angelo v. ConAgra Foods, 422 F.3d 1220, 1235 (11th Cir. 2005), the Eleventh Circuit held that “because a review of the plain language of the ADA yields no statutory basis for distinguishing among individuals who are disabled in the actual-impairment sense and those who are disabled only in the regarded-as sense, we join the Third Circuit in holding that regarded-as disabled individuals also are entitled to reasonable accommodations under the ADA.” In dicta, the First Circuit has concluded likewise. However, the Fifth, Sixth, Eighth, and Ninth Circuits have held to the contrary.
ERISA & Employee Benefits
The Court decided two important ERISA cases in the recently concluded term. Both cases are likely to result in further litigation and potential Supreme Court cases.
In MetLife v. Glenn, 128 S.Ct. 2343 (2008), the Court confirmed that a benefit plan administrator who both determines claimants’ eligibility for benefits under the plan and is the funding source for plan benefits operates under a per se conflict of interest that must be weighed by the trial court upon a claimant’s challenge of an adverse benefit determination by the plan administrator. Because a divided court expressed several different views on just how the conflict factor weighs into the analysis, it would not be surprising if litigants continue to tease the Court toward further clarification in this subtle and perplexing area.
The extent of available remedies under ERISA continues to be an area of controversy in the federal courts, and there are many related issues concerning the distinction between legal and equitable remedies. In LaRue v. DeWolff, Boberg & Associates, Inc., 128 S.Ct. 1020 (2008), the Court opened the door to 401(k) participants seeking relief under ERISA Section 502 (a)(2) for losses to their individual accounts allegedly caused by fiduciary breaches. It now appears that economic losses may be recovered from plan fiduciaries in such circumstances. The Court had before it, but did not decide, the issue of whether a participant may sue a breaching fiduciary for monetary relief under section 502(a)(3) of ERISA. Although the Solicitor General recommended that the Court grant certiorari in the case of Amschwand v. Spherion Corp., 505 F.3d 342 (5th Cir. 2007), cert. denied, 2008 WL 2547370 (June 27, 2008), the Court rejected that case. Amschwand is a particularly troubling case. There, the employer switched life insurance providers, with the new provider making coverage effective upon the completion of one full work day for the covered employees. Although Mr. Amschwand repeatedly called his employer to see if there were any actions he needed to take and he was assured by his employer that he was fully covered, he was still unable to verify the new terms because his employer failed to provide requested policy documents. There was no question that he maintained the premium payments. Following his death, his wife filed a claim for her deceased husband’s life insurance proceeds; her claim was denied because he had not fulfilled the one-day “Active Work Rule” requirement. The Fifth Circuit held that under Supreme Court precedent Mrs. Amschwand had no remedy.
ERISA preemption issues lie on the horizon, as the nation awaits the Ninth Circuit’s decision in Golden Gate Restaurant Ass'n. v. City & County of San Francisco, 535 F. Supp. 2d 968 (N.D. Cal. 2007), emergency stay granted by, 512 F.3d 1112 (9th Cir. 2008). This case will address the authority of state and local governments to pass health care initiatives that impact private employers within their boundaries. Regardless of which side prevails in the Ninth Circuit, it is likely that a petition for certiorari will be filed with the Court.
The Supreme Court has not granted certiorari on the breadth of the insurance savings clause since its decision in Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003). Currently there are two issues that may prompt them to do so. In two of the circuit courts of appeals, there are cases concerning the authority of state insurance commissioners to outlaw discretionary clauses in group insurance policies administered within their states. These cases are being litigated in Montana and Michigan, and insurance commissioners in nine other states (California, Colorado, Hawaii, Illinois, Indiana, New Jersey, New York, Maine, Oregon) have advanced initiatives to limit the use of discretionary clauses. A vigorous battle is in the offing between insurance industry interests on the one hand and the National Association of Insurance Commissioners (NAIC) and individual state insurance officials on the other hand over the states’ authority to act on this issue. Another issue concerning the breadth of insurance commissioner’s authority may reach the Supreme Court. The Fifth Circuit held that a Louisiana insurance commissioner’s directive prohibiting insurers from enforcing subrogation rights until insureds were fully compensated for their injuries was saved by ERISA’s insurance savings clause. Benefit Recovery, Inc. v. Donelon, 521 F.3d 326, 331 (5th Cir. 2008), pet. for cert. filed, 77 U.S.L.W. 3052 (Jul. 7, 2008) (No. 08-45).
Voting Rights
Although the Supreme Court in Crawford v. Marion County Election Board, 128 S. Ct. 1610 (2008), upheld Indiana’s law requiring voters to show photo identification, it left the door open to future challenges in Indiana and elsewhere by registered voters who are denied their right to vote on an “as applied” basis. Moreover, the Stevens plurality would be willing to reexamine laws like these if it could be demonstrated that they had the demonstrated effect of substantial voter disenfranchisement (along with the dissenters that would be six votes). We expect that the Court is likely to allow any such cases to percolate among the circuits before taking another case, perhaps prior to the next federal election in two or four years.
CONCLUSION
It is no exaggeration to state that as baby boomers age, Supreme Court decisions will influence a larger percentage of the American population and will increase in significance. AARP, through its active amicus participation in the Supreme Court, has and will continue to ensure that the Court is made aware of the concerns of its 40 million members. Because AARP considers itself the voice of older people, participation in these cases is an integral part of AARP’s advocacy. It will continue letting the Court know its views in this term.