Spencer Testifies Before the House Employer-Employee Subcommittee

Steven Spencer, partner in the Labor and Employment Law and Employee Benefits and Executive Compensation Practices of Morgan Lewis, testified on April 28, 2005 before the House Employer-Employee Relations Subcommittee on the impact of the 2000 federal court ruling in Erie County Retirees Association v. County of Erie. Mr. Spencer, who appeared on behalf of the U.S. Chamber of Commerce, testified in support of an Equal Employment Opportunity Commission (EEOC) regulation that effectively reverses the Erie County decision.

In Erie County, the Court of Appeals for the Third Circuit held that the County violated the Age Discrimination in Employment Act (ADEA) when it provided Medicare eligible retirees with a Medicare HMO and younger retirees with a point of service plan. The Court’s decision called into question plan designs that provide either no or different benefits to older retirees than those provided to younger retirees. In April 2004, the EEOC voted to move forward with an exemption to the ADEA that would permit employers to provide lesser health benefits to retirees who were Medicare eligible. On March 30, 2005, Judge Brody of the Eastern District of Pennsylvania enjoined the EEOC from issuing the exemption in response to an AARP lawsuit. The government is expected to appeal the ruling.

In his testimony, Mr. Spencer stressed the importance of the exemption. Specifically, he said, "In the absence of the proposed exemption, plan sponsors will either terminate their retiree health plans or structure them in a way that reduces the level of benefits to early retirees while producing no additional benefits to Medicare-eligible retirees. The exemption merely recognizes the reality that an interpretation of ADEA that would result in a net loss of employer-sponsored retiree health benefits does not promote the purposes of the ADEA and is not in the public interest."

The EEOC exemption is supported by various labor unions and employer groups, including the AFL-CIO, the American Federation of State, County and Municipal Employees, the International Association of Fire Fighters, the American Federation of Teachers, the American Benefits Council, the National Education Association and the U.S. Chamber of Commerce.

Click here to access the hearing webcast.

Click here to view the Chamber’s Litigation Center Case Alert "EEOC Rule Allowing Coordination of Retiree Health Benefits with Medicare Permanently Enjoined."

Click here to view pictures from the hearing.

• Privacy Policy
• Terms of Use
• Site Map
• Contact Us
• Client/Alumni Login