Supreme Court Lets Erie Stand

March 6, 2001 ( - The US Supreme Court has declined to consider an appellate court ruling that employee benefit plans that treat retirees differently based on their Medicare eligibility violate age discrimination laws.

By denying certiori in Erie County, Pa. v. Erie County Retirees Assoc., the nation’s highest court has for the moment left standing the lower court’s determination that such differences violate the Age Discrimination in Employment Act (ADEA), unless the plans meet the equal benefit or equal cost standard of the ADEA’s safe harbor provision.

The Supreme Court did, however, grant motions for leave to file a brief as amicus curiae (“friend of the court”) to the Central States Southeast and Southwest Areas Pension Fund, the American Association of Health Plans Inc., and the ERISA Industry Committee (ERIC), which have previously opposed the decision of the Third Circuit.

Critics of the decision have expressed concern about the impact that the coverage requirement would have on retiree health programs, already struggling with cost pressures.

The appeal came from a 2-1 decision of the U.S. Court of Appeals for the Third Circuit that the ADEA applies when an employer offers its Medicare-eligible retirees health insurance coverage that is allegedly inferior to the coverage offered to retired employees not yet eligible for Medicare. The court noted ” Medicare status is a direct proxy for age.”

Code “Blue”

The case arose in 1997 when the Erie County Employees’ Retirement Board selected a Blue Cross/Blue Shield health plan called “SecurityBlue” for its Medicare-eligible retirees, while picking another called “SelectBlue” for those that were not Medicare-eligible. The former was an HMO plan, while the latter was a hybrid ? combining features of an HMO with those of a traditional indemnity plan under a point-of-service arrangement.

Medicare-eligible retirees challenged their assignment to the SecurityBlue plan, alleging that the other program offered better benefits, and that such assignment was made solely on the basis of their having reached age 65.

– Nevin Adams

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