Over the past four decades, one of the oddities in the work of the Supreme Court is the frequency with which it takes up cases involving retirement, health, disability, life insurance, leave or other benefit arrangements for private or public employees.
By our count, in the Court’s last 43 terms starting with the October 1975 term—the Employee Retirement Income Security Act of 1974, as amended (ERISA), in the main took effect on January 1, 1975—the Court has issued merits opinions in: – 125 argued cases and two unargued cases directly involving employee benefit arrangements including IRAs, and – two additional argued cases substantially implicating these arrangements even though employee benefits were not directly involved on the facts, for an astonishing total of 129 decisions. As of this writing, the Court has one employee benefit case scheduled for argument during its October 2018 term,1 although other interesting petitions for certiorari are pending. The Supreme Court’s body of work About half of the Court’s employee benefits cases have involved the labor law titles of ERISA, including the administration and enforcement of the remedies provided under that statute available to plan fiduciaries, participants and beneficiaries, which accounts for 67 of the 129 cases. That subtotal also includes cases considering the defined benefit plan termination insurance program administered by the Pension Benefit Guaranty Corporation (PBGC), including: – Nachman Corp. v. PBGC (1980), the Court’s first holding under ERISA and the source of the Court’s often-quoted observation that ERISA is a “comprehensive and reticulated statute” enacted by Congress after almost a decade of studying the private retirement system, and – Two cases considering the constitutionality of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), which modified the operation of that termination insurance program for private-sector plans that cover employees of more than one employer (usually in a union setting).
The Court’s non-ERISA employee benefit decisions primarily arise under other federal statutes, including: – The National Labor Relations Act (NLRA) or Labor Management Relations Act (LMRA)—19 cases, including cases involving the interpretation of collective bargaining agreements (CBA) providing for employee benefits; – Federal statutes specific to benefits provided to federal civilian and military personnel—16 cases. These statutes include: » The Federal Employees’ Group Life Insurance Act of 1954 (FEGLIA) and Federal Employees Health Benefits Act of 1959 (FEHBA), which created systems through which employee life and health benefits are provided to federal government civilian employees and annuitants; » The Public Salary Tax Act of 1939 (PSTA), which inter alia prohibits discrimination in State taxation between State and federal public employees; » The Servicemen’s Group Life Insurance Act of 1965 (SGLIA), which created the current government-provided life insurance program for members of the US armed services; » The Military Selective Services Act of 1967 (MSSA), which inter alia requires that a military service member who applies for re-employment if still qualified be restored by his or her employer to his or her former position or a position of like seniority, status and pay; and » The Uniformed Services Former Spouses’ Protection Act of 1982 (USFSPA), which changed prior law (as declared by the Court) by permitting the States to treat military retirement pay as community property. – The federal employment discrimination statutes—14 cases, consisting of 8 cases considering Title VII (including the amendments enacted in the Pregnancy Discrimination Act of 1978 (PDA)) and 6 cases considering the Age Discrimination in Employment Act of 1967 (ADEA); – The federal Bankruptcy Code—6 cases; – The Internal Revenue Code (IRC)—5 cases. This is perhaps surprising, given the substantial role that tax law plays in regulating employee benefits, but the Court has a practice of leaving tax decisions to other adjudicators. Tax rules for employee benefits have figured prominently in other Supreme Court cases, such as Alessi v. Raybestos-Manhattan, Inc. (1981);
The Family and Medical Leave Act of 1993 (FMLA), which requires specified employers to allow up to 12 weeks of unpaid leave to eligible employees for certain family or medical reasons—3 cases; – The Coal Industry Retiree Health Benefit Act of 1992 (Coal Act), which restructured the system for providing private health care benefits to coal industry retirees—2 cases; – The Affordable Care Act (ACA)—2 cases; and – 1 case each under the federal antitrust laws, the federal securities laws, and several other statutes. Constitutional questions are the exception in this body of decisions. In addition to the MPPAA cases, there is: – A 1976 Eleventh Amendment case deciding whether sovereign immunity bars a retroactive award of retirement benefits in a Title VII case against a State; – A 1978 Contract Clause case considering a pre-ERISA Minnesota statute imposing a funding surcharge on the termination of a pension plan affecting Minnesota residents; – A 1994 Due Process Clause case concerning State remedies for unconstitutionally taxed retirement benefits for federal employees; – Another 1994 Due Process Clause case addressing a retroactive IRC amendment limiting an estate tax benefit plan deduction; – A 1998 Takings Clause case considering the Coal Act; and – 2 Eleventh Amendment/sovereign immunity cases under the FMLA in suits against States (in 2003 and 2012).
That is, the Court has been concerned with who can bring claims involving employee benefits, what kind of claims can they bring, what kind of remedies can they seek—issues uniquely in the purview of courts, as distinguished from plan sponsors, administrators, fiduciaries or regulators—and whether State laws implicating employee benefits will be enforced, as frequently as it has considered substantive issues affecting employee benefits. Of the 129 cases, 69 involved retirement arrangements, 33 involved health plans, 19 involved disability benefits, and 15 involved life insurance, leave or fringe benefit arrangements.6 Why so many cases? On its face, the Supreme Court’s recurring interest in employee benefit issues is mystifying. The Court has regularly accepted cases involving employee benefits even as it has purposefully reduced the size of its docket, from a total of about 180 merits opinions in its October 1975 term to about 80 in its most recent October 2017 term. (The inflection point for the Court’s docket occurred during the Rehnquist Court.) As distinguished from its usual practice, the Court has even been willing to return to a benefit issue without taking a hiatus for the issue to “percolate” in the lower courts. And this recurring interest flies in the face of some evidence that not every Justice regards writing ERISA opinions as the most stimulating work handled inside 1 First Street NE. For example, Chief Justice Rehnquist had this to say in 2003: At his annual talk to the Fourth Circuit Court of Appeals, Chief Justice William Rehnquist described ERISA as “The Employee Retirement, etc., law,” saying that “you get so used to these acronyms that you forget what they stand for.” As [a published press report] notes, the Chief Justice said that “[t]he thing that stands out about [ERISA cases] is that they’re dreary,” and the only reason they grant review to them was “duty, not choice.”7 Justice Ginsburg once referred to ERISA cases as “sloughly,”8 while Justice O’Connor apparently preferred “tedious.”9 6 Again, some cases involved more than one type of benefit arrangement. 7 Note, Not Just Old Wine In New Bottles: Kentucky Ass’n Of Health Plans, Inc. v. Miller Bottles A New Test For State Regulation Of Insurance, 38 Akron L. Rev. 253 at n.3 (2005)(citing Mauro, Courtside (July 14, 2003); citations omitted). 8 “True there was an occasional grumble, for example, from the Justice assigned to write in a sloughly ERISA case.” Ginsburg, In Memoriam: William H. Rehnquist, 119 Harvard L. Rev. 1, 6 (2005). 9 See infra at 10. 10 Center for Medicare and Medicaid Services, National Health Expenditures 2016 Highlights (Jan. 8, 2018) 11 CNN Money, Disability claims skyrocket: Here’s why (April 11, 2013). 12 Investment Company Institute, Retirement Assets Total $28.3 Trillion in Second Quarter 2018 (September 27, 2018) The place of employee benefits in the national economy and in the civil caseload of the federal courts may provide some of the explanation. For example: – The United States spends 18% of GDP annually (more than $3.3 trillion) on health care, and private health plans provided through the workplace currently cover 49% of the US population.10 – About 1 million working-age Americans are drawing benefits from private disability plans.11 – As of June 30, 2018, more than $28 trillion had been accumulated in US retirement plans—which constitutes 30% to 35% of American household wealth.12 In general, access to those benefits and funds is controlled by the plan sponsor, fiduciary and/or benefit provider rather than by the worker/participant/beneficiary. This structure predictably will lead to disputes, which seem to scale to the significance of benefits in the economy and in the financial health of American households. – Benefits litigation makes up an appreciable share of the civil caseload of the US District Courts. In the data published by the Administrative Office of the US Courts for the 12 months ending March 31, 2017 and 2018, approximately 7,900 cases identifiably raising employee benefit issues (ERISA or FMLA) were filed in US District Courts during each 12-month period, or about 4% of the roughly 180,000 to 200,000 civil cases commenced under federal statutes during each of those periods. » Much of that is claims litigation; ERISA federalized most private retirement, health and disability claims litigation. » The employee benefit filings exceed the total District Court filings in the same periods under the federal antitrust, banking, civil forfeiture, environmental, immigration, securities and tax statutes combined. In taking and addressing benefit issues, specifically including litigation process issues, the Court can be seen as performing its function of managing the workload of the federal judicial system. 5 Step by step Employee Benefits in the Supreme Court – This volume of litigation produces a correlative volume of lower court splits—i.e., different outcomes among the 13 Circuits, typically. Another traditional function of the Court is to resolve lower court splits in the interest of finality, certainty and national uniformity, which is particularly pertinent here in light of the Congressional determination embedded in ERISA that the benefit plans of multistate employers should be governed by the same rules across all jurisdictions. Of the 129 cases in our count, the Court in its opinion expressly noted a split among the courts below in 33 of those cases. This is not to say that the Court uniformly achieves this objective. As Justice Scalia drily noted in his concurring opinion in California Division of Labor Standards Enforcement v. Dillingham Construction NA, Inc. (1997)(footnotes omitted): Since ERISA was enacted in 1974, this Court has accepted certiorari in, and decided, no less than 14 cases to resolve conflicts in the Courts of Appeals regarding ERISA pre-emption of various sorts of State law. The rate of acceptance, moreover, has not diminished (we have taken two more ERISA pre-emption cases so far this Term), suggesting that our prior decisions have not succeeded in bringing clarity to the law. Justice Scalia himself was perhaps more successful; of the 6 cases in our count where he authored the majority opinion, arguably 5 of them addressed the issue to be decided with sufficient clarity that a return visit to the Court was not required. Nelson, The Late Justice Scalia and the Development of ERISA Jurisprudence, ABA Section of Employment and Labor Law Employee Benefits Committee Newsletter (Summer 2016). 13 As a matter of drafting style, not every Justice reflects in a majority opinion the basis on which the Court decided to take the case. We expect that most benefit cases were accepted by the Court to address an important question or lower court split, whether or not the majority opinion so states. 14 CSPAN Supreme Court Project at 00:56:55 (Oct. 9, 2009). 15 California Division of Labor Standards Enforcement v. Dillingham Construction NA Inc. (1997). The Court also traditionally takes cases that it deems to raise important questions, and significant new laws are often a source of important issues warranting the Court’s attention. ERISA and the PDA, FMLA and ACA were all substantial to monumental pieces of legislation enacted at the start of or during the period we surveyed. While it may not always find them interesting, the Court often finds benefit issues to be “important” and accepts cases on that basis (expressly noted in the majority opinion 18 times in our count).13 In a 2009 interview,14 Justice Thomas recounted that, when he first came on board the Court in 1991, ERISA (17 years after enactment) along with the amended Bankruptcy Code was important new legislation that had “changed the legal landscape” and was generating “cert-worthy” cases. Finally, the import of employee benefits in the economy and to workers/voters regularly draws the attention of State governments. Consider, as an example, the recent interest of a few States in mandating State-run retirement plans for employers that are not otherwise providing such benefits (following the failure of the auto-IRA concept to gain traction at the federal level during the previous Administration). Given the preeminent place of federal law in governing employee benefits for private sector and federal employees—expressed by Congress in ERISA, FEHBA, and elsewhere—the courts are left to mediate the role if any left for State law, and the Supreme Court has the final and most respected authority to resolve those questions. [T]o determine whether a state law has the forbidden connection [to an ERISA plan], we look both to “the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive,” as well as to the nature of the effect of the state law on ERISA plans ….15 Step by step Employee Benefits in the Supreme Court 6 Inside the numbers Starting with the October 1975 term, the Court has issued at least one merits opinion involving employee benefits in every term. By our count, the Court decided: – The most employee benefit cases (7) in the October 1992 term; – 6 cases in the October 1981 and 1988 terms; – 5 cases in 4 different terms, most recently in the October 2013 term; – 4 cases in 7 different terms, most recently in the October 2003 term; – 3 cases in 11 different terms, including in the most recent October 2015 and 2016 terms; – 2 cases in 11 terms, most recently in the October 2014 term; and – A single case in 7 terms, most recently in the October 2017 term. The trend line shows a modestly falling linear regression currently predicting 2 to 3 decisions per term, with the heavier concentration of cases weighted to the front half of this period. This time period covers more than half of the Burger Court (1969-1986), the Rehnquist Court (1986-2005) and the Roberts Court (starting in 2005). During this period, the Burger and Rehnquist Courts each averaged about 3.2 employee benefit cases per term, and the Roberts Court about 2.3 cases.