<nobr>Sep 27, 2005</nobr>

ERIC: Employers Applaud Court Ruling Supporting EEOC Authority

Washington, D.C. – September 27, 2005 – The ERISA Industry Committee (ERIC), the trade group representing major employer health and retirement plans, applauded today's U. S. district court upholding the Equal Employment Opportunity Commission's (EEOC) authority to grant an exemption from the Age Discrimination in Employment Act (ADEA) of employer plans that coordinate retiree health benefits with Medicare. ERIC president Mark Ugoretz called district court Judge Anita Brody's decision "an important victory in the effort to ensure continuation of many retiree health plans."

The decision handed down today by U.S. District Court Judge Anita Brody in AARP, et al. v. Equal Employment Opportunity Commission reversed Brody’s own earlier opinion in light of a subsequent Supreme Court case – National Cable and Telecommunications Association v. Brand X Internet Services. The Brand X decision held that federal courts should defer to a federal agency in interpreting the breadth of statutes for which the agency has regulatory authority. Judge Brody held that the EEOC exemption – which protected employers who coordinate benefits with Medicare from age discrimination claims – was lawful.

“This is a step in the right direction towards protecting the ability of private employers, local governments, and unions to provide retiree health benefits,” said ERIC president Mark Ugoretz. “If the court's decision sticks on appeal, employers will not be forced by a court decision to reduce or eliminate benefits for retirees and possibly many active employees. There are millions of retirees who are not yet eligible for Medicare and who may lose their health benefits without the EEOC exemption.”

The AARP v. EEOC is a continuation of a lawsuit filed in Erie County, Pennsylvania, that deemed illegal the county government’s coordination of retiree health benefits with Medicare. On a budget and forced to change its retiree health benefits, Erie County significantly reduced coverage for early retirees because of the decision.

The EEOC then created a regulatory exemption, authorized by the age discrimination statute, to protect employers who offer Medicare bridge benefits from Age Discrimination in Employment Act (ADEA) claims. The exemption would have been finalized this year but for the AARP lawsuit

“If the litigation continues, it’s the employees who have the most to lose – employers operate on limited budgets and will have no choice but to cut or eliminate employee benefits, Ugoretz said. “ERIC and other business groups will continue to support the EEOC's exemption authority until the issue is settled and employee health benefits are protected. We believe AARP should recognize that allowing bridge benefits is common sense and the best course for employees and employers.”

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ERIC is a non-profit association committed to and represents exclusively the advancement of the employee retirement, health, and compensation plans of America’s largest employers. ERIC’s members provide benchmark retirement, health care coverage, compensation and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members’ ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

For additional information please contact Edwina Rogers, ERIC’s Vice President for Health Policy at (202) 789-1400 or erogers@eric.org.

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