U.S. Circuit Judge Brett Kavanaugh — President Donald Trump’s pick to serve on the U.S. Supreme Court — sees himself as a judge who does his best to determine what the drafters of legislation meant, and to apply the legislation as they intended for it to apply.
Kavanaugh, 53, was born in Washington. He earned his bachelor’s degree and law degree from Yale.
President George W. Bush appointed Kavanaugh to serve as a judge on the U.S. Court of Appeals for the District of Columbia Circuit in 2006.
Some of Kavanaugh’s opinions, and dissenting opinions, have dealt with cases of interest to insurance agents and brokers, including cases relating to matters such as financial professional discipline, health insurance company acquisitions, the constitutionality of the Affordable Care Act, Medicare program administration, pension benefits disputes, and the structure of the Consumer Financial Protection Bureau.
Here’s a look at some of what Kavanaugh said about seven cases that could affect producers in the life insurance, health insurance and annuity markets.
1. Saad v. SEC: Financial professional discipline
This case dealt with the procedures the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) used when it disciplined a financial professional. The financial professional, who was associated with a Penn Mutual Life Insurance Company broker-dealer affiliate, was accused of misappropriating employer funds.
One question was whether a lifetime expulsion from the securities industry was “remedial” in nature or “punitive” in nature.
Kavanaugh wrote in 2017, in a concurring opinion, that lifetime bars are punitive, rather than remedial, meaning that the FINRA and the SEC should “have to reasonably explain in each individual case why an expulsion or suspension serves the purposes of punishment and is not excessive or oppressive.”
“FINRA and the SEC will no longer be able to simply wave the ‘remedial card’ and thereby evade meaningful judicial review,” Kavanaugh wrote.
2. United States of America et al. v. Anthem Inc. and Cigna Corp.: Antitrust
The court ruled in this case, in 2017, that federal antitrust regulators had the authority to block efforts by Anthem to acquire Cigna.
Kavanaugh wrote, in a dissenting opinion, that he believed Anthem complete the Cigna deal would have helped the companies’ large-employer health plan customers, rather than hurting them.
The combined company might have charged employers more for its health care cost negotiation and management services, “but the record overwhelmingly demonstrates that the cost savings to employers would far exceed any increased fees paid by employers,” Kavanaugh wrote.
3. Susan Seven-Sky et al. v. Eric Holder Jr. et al.: Affordable Care Act constitutionality
In this case, the appeals court agreed, in a ruling issued in 2011, with a district court determination that the ACA individual coverage mandate was constitutional. The mandate provision imposes a penalty on many people who fail to have what the government classifies as solid major medical coverage.
Kavanaugh wrote in a dissenting opinion that the court had no jurisdiction over the case because, in his view, the ACA individual coverage mandate penalty was a tax, and because the federal Anti-Injunction Act usually prohibits pre-enforcement suits that could restrain the assessment or collection of a tax.
“As the court has stressed time and again, although the act may seem an inconvenient technicality in the context of a particular case, it is essential to the overall system of orderly and prompt federal tax administration,” Kavanaugh wrote.
The U.S. Supreme Court eventually cited the Anti-Injunction Act when it blessed Internal Revenue Service efforts to proceed with efforts to impose the penalty.
4. Brian Hall et al. v. Kathleen Sebelius and Michael Astrue: Medicare Part A
The plaintiffs in this case wanted to be able to get out of having Medicare Part A coverage, or being considered officially eligible for Medicare Part A coverage, without having to re-pay all of the Social Security retirement benefits.
The plaintiffs objected to the idea of the government seeing their health records, and some said they wanted to be able to continue to contribute to health savings accounts.
A three-judge appeals court panel ruled 2-1, in 2012, that federal law does not give older U.S. residents a legal right to disclaim their legal entitlement to Medicare Part A benefits.
“Plaintiffs’ position is inconsistent with the statutory text,” Kavanaugh wrote in an opinion explaining the court’s ruling. “Because plaintiffs are entitled to Social Security benefits and are 65 or older, they are automatically entitled to Medicare Part A benefits. The statute offers no path to disclaim their legal entitlement to Medicare Part A benefits. Therefore, the agency was not required to offer plaintiffs a mechanism for disclaiming their legal entitlement, and its refusal to do so was lawful.”
5. Stephens and Mahoney v. US Airways Group Inc. et al.: Pension calculations
The airline pilots in this case wanted to withdraw their pension benefits in the form of a lump sum. The airline took 45 days to send the pilots their lump sum. The appeals court decided, in a 2011 ruling, that, because the Employee Retirement Income Security Act (ERISA) requires a plan’s lump sum payments to be the actuarial equivalent of the plan’s annuity payments, the airline had to adjust the lump sum to add interest as a result of what appeared to be unreasonable 45-day payment delay.
“Plan administrators may demonstrate in any given case a delay is reasonable because it relates to the administrative calculation of lump sum benefits — a task, undoubtedly, made more difficult the longer the delay,” Kavanaugh wrote in an opinion for the court. “In this way, the probability of litigation is correlated with the length of delay. Settlement is likely when delays are lengthy and difficult to tie to administrative necessity; litigation is unlikely when delays are small and any potential recovery may not cover the costs of litigation.”
This opinion could give clues to how Kavanaugh might look at other matters involving pension plans, annuities and ERISA, because it appears to be his only opinion that uses terms such as “actuary” and “actuarial.”
6. Louis P. Cannon et al. v. District of Columbia: Local pension rules
This case involved retired D.C. metropolitan police officers who got jobs from a separate agency that protects D.C. government buidlings. D.C. pension rules are supposed to keep employees who retire, then get new D.C. government jobs, from collecting two separate pensions.
Kavanaugh wrote, in a 2015 opinion upholding a lower-court judgement, that the D.C. anti-double-dipping is valid, not a tax on plainttiffs’ pensions.
The opinion here refers to annuities in connection with D.C. pension rules.
7. PHH Corp. et al. v. Consumer Financial Protection Bureau: CFPB leadership
President Donald Trump has been involved in a legal fight over the leadership of the CFPB. The D.C.Circuit appeals court ruled in January that the Dodd-Frank Act provision shielding the CFPB director from removal without cause is consistent with the U.S. Constitution.
Kavanaugh wrote in a dissenting opinion that he believes the Dodd-Frank CFPB leadership structure is unconstitutional.
He also expressed concerns about independent federal agencies, such as the CFPB, the SEC and the Federal Trade Commission, in general.
“Those and other independent agencies exercise executive power by bringing enforcement actions against private citizens,” Kavanaugh wrote. “Those agencies often promulgate legally binding regulations pursuant to statutes enacted by Congress, and they adjudicate disputes involving private parties. So those agencies exercise executive, quasi-legislative, and quasi-judicial power. The independent agencies collectively constitute, in effect, a headless fourth branch of the U.S. government. They hold enormous power over the economic and social life of the United States. Because of their massive power and the absence of presidential supervision and direction, independent agencies pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances.”
Kavanaugh wrote only about how the CFPB is governed, not his views on the mission of the CFPB or on its actions.
In a dissenting opinion issued in 2013, in connection with another, older case, Kavanaugh asserted that a debt settlement attorney challenging the constitutionality of the CFPB appeared to have standing to challenge the constitutionality of the CFPB.
— Read Divided Appeals Court Backs FPA Appeal Of SEC Ruling, on ThinkAdvisor.