A federal appeals court in Philadelphia says employers can spend more on health insurance benefits for retirees who are not yet eligible for Medicare than on retirees who qualify for Medicare.
The Equal Employment Opportunity Commission has the legal authority to create a regulation that would exempt employer coordination of retirement benefits with Medicare benefits from the federal Age Discrimination in Employment Act, according to a unanimous decision by 3 judges who sit on the 3rd U.S. Circuit Court of Appeals.
The EEOC issued the early retiree health benefits ADEA exemption regulation in 2004.
Section 9 of the ADEA “clearly and unambiguously grants to the EEOC the authority to provide, at least, narrow exemptions from the prohibitions of the ADEA,” Jane Restani writes in an opinion for the court concerning the case, American Association of Retired Persons et al. vs. Equal Employment Opportunity Commission.
Restani, chief judge of the U.S. Court of International Trade, sat on the AARP case panel “by designation.”
The 3rd Circuit appellate court has jurisdiction over Delaware and New Jersey as well as over Pennsylvania.
The 3rd Circuit panel affirmed a ruling by a judge in the U.S. District Court in Philadelphia, who sided with the EEOC, but the appellate panel based its decision on a different line of reasoning.
The district court judge first sided with the AARP, Washington.
Later, the U.S. Supreme Court issued a 2005 ruling holding that “prior judicial interpretation of a statute bars subsequent agency interpretations only where the precedent ‘unambiguously forecloses the agency’s interpretation, and therefore contains no gap for the agency to fill.”
The district court judge responded to the Supreme Court decision by vacating the first decision and siding with the EEOC.