What Gorsuch’s Supreme Court confirmation means for employers
The Senate on Friday confirmed President Donald Trump’s nomination of Neil Gorsuch to the Supreme Court — a move, benefits experts say, that will likely be good for employers.
Based on his previous track record, experts predict that Gorsuch will generally side with the four other conservative judges who most often favor a pro-business approach. But they also recognize that, because benefits issues are very nuanced, it is near impossible to predict how particular judges will rule in specific cases in spite of their perceived personal biases.
Ryan Mick, a partner in the international law firm Dorsey & Whitnet, said recently that employers who wanted a new Supreme Court justice in the mold of late-Justice Antonin Scalia “should be very pleased.”
“Gorsuch’s published opinions on employment-related issues tend to favor employers, with many of those decisions granting employers summary judgment,” he says.
Gorsuch is currently a judge on the Denver-based 10th U.S. Circuit Court of Appeals. In 2013, he joined a majority ruling that said owners of private companies can object on religious grounds to a provision of the Affordable Care Act requiring employers to provide birth control coverage for women.
“His record shows a tendency toward narrow opinions, which, along with his overall judicial conservatism, suggests that he is unlikely to readily expand burdens on employers through court rulings,” Mick says.
James McElligott, an ERISA lawyer and a partner at McGuireWoods in Richmond, Virginia, agrees that the addition of Justice Gorsuch to the Court means the majority will continue to be more pro-business and pro-employer in regard to health and retirement issues. But, he says, “it’s not crystal clear. You have to look at each situation on a case-by-case basis.”
He cites several benefits issues that have either been accepted by the Court already or may come before it in the near future, and considers how the treatment of these issues by the re-constituted Court could impact employers.
ERISA is a federal law governing benefits plans. The goal of the statute is to protect employers from having to administer and comply with rules on a state-by-state basis. Nevertheless, jurisdictions such as California and Illinois have passed statutes governing pension plans at the state level. There are no ERISA presumption cases before the court currently, but McElligott believes some of these cases will reach the court in a year or two.
While uniform national benefit laws are generally viewed as pro-employer, that doesn’t mean they are always supported by conservatives. “Gorsuch has taken a fairly limited view of the presumption, and in several cases he has rejected the ERISA presumption and ruled in favor of state laws,” McElligott says. “Judge Thomas has similar opinions.”
Perry Braun, executive director of the Benefit Advisors Network, agrees. “If Gorsuch is aligned to Scalia’s way of thinking,” he says, “we can assume that he would look to preserve individual and state’s rights over perceived federal government overreach.”
The four liberal justices on the Court generally have been extremely supportive of the Affordable Care Act. Chief Justice Roberts has been a moderate on this issue. Litigation is expected involving the Trump administration’s enforcement and non-enforcement of the ACA. There will also be legislative change and litigation challenging whatever replacement statute is put in place.
“While predicting the future is difficult, in terms of the day-to-day administration from the employer standpoint, there are not going to be any radical changes in the short-term,” McElligott says. “However, in the individual market there may well be substantial uncertainty, and there will also be considerable ambiguity for insurance companies.”
ERISA contains exceptions for many of its rules for so-called church plans. The issue is whether a religiously affiliated hospital falls under the church plan exemptions. In several cases the court has agreed to consider, hospitals maintain they should be subject to more relaxed pension funding rules because they fit within the ERISA church plan exemptions.
McElligott believes that Gorsuch and the other four conservative judges will support the more expanded definition of church plans that also may capture pension plans offered by religious schools and other such institutions.
“Within the past five weeks, five federal agencies, including the IRS, Department of Labor and the Pension Benefit Guarantee Corporation, have filed an amicus brief supporting the hospital’s position,” he notes.
401(k) fee/stock drop cases
Class actions have been filed and in some cases settled by employee groups that maintain that employers did not fulfill their fiduciary duties to plan members by negotiating reasonable fee structures for investments they hold in their 401(k) plans. “The Supreme Court has only ruled in one such case until now, but they really haven’t dealt with this issue on the merits,” McElligott says.
He believes that conservative justices such as Gorsuch are more likely to take a pro-employer approach discouraging litigation in these cases, as opposed to awarding damages for groups of employees. Similarly, in “stock drop” cases, he says, “The pro-business conservative view is to let securities law deal with the problem instead of creating and promoting another type of lawsuit under ERISA.”
But James A. Klein, president of the American Benefits Council, strongly believes that on employee benefit issues, judges don’t necessarily break down on a conservative vs liberal perspective.
“A perfect example is that Chief Justice Roberts wrote the opinion for the Court upholding the individual mandate under the ACA, much to the surprise of many people,” Klein says.