Late in the afternoon on Friday, December 14, Federal US District Judge Reed O’Connor struck down the Affordable Care Act (ACA) in its entirety, a feat that was, for the past few years, unsuccessfully attempted by the Republican-led Congress. O’Connor reasoned that if the individual mandate is no longer valid, the entire ACA must also be scrapped, because the rest of the ACA is “inseverable” from the individual mandate. The opinion is likely to be appealed, and the final decision may ultimately lay with the US Supreme Court. Despite the ruling, Centers for Medicare & Medicaid (CMS) has stated that the exchanges remain open and 2018 and 2019 coverage will not be impacted.

On September 20, 2018, the US Supreme Court dismissed—pursuant to settlement—an ERISA lawsuit that could have resolved the circuit split over who holds the burden of proof in ERISA breach of fiduciary duty cases. In Pioneer Centres Hold. v. Alerus Fin., Case No. 17-677 (2018), the Pioneer Centres Holding Company Employee Stock Ownership Plan and Trust (the “Plan” or “ESOP”) and its trustees sued Alerus Financial, N.A. (Alerus) for breach of fiduciary duty in connection with the failure of a proposed employee stock purchase. In affirming summary judgment in Alerus’s favor, the Tenth Circuit determined that the Plan carried the burden to prove causation rather than shifting the burden to Alerus to disprove causation once the Plan established a prima facie case. In so holding, the Tenth Circuit agreed with the Sixth, Ninth and Eleventh circuits that beneficiaries, not fiduciaries, must prove causation between the company’s conduct and the plan’s losses due to a fiduciary breach. The Second, Fourth, Fifth and Eighth circuits disagreed, holding that the burden of proof shifts to the fiduciaries to establish the absence of loss causation once the beneficiaries makes a prima facie case by establishing breach of fiduciary duty and loss. Details of the parties’ settlement were not disclosed.

The settlement and dismissal of this case is disappointing for ERISA litigators because the anticipated resolution regarding burden shifting for loss causation will likely not be resolved in the near future. The outstanding burden shifting inquiry is not limited to the ESOP context. These issues have also been considered in other ERISA cases, such as the 401(k) context. See, e.g., Womack v. Orchids Paper Prod. Co. 401(K) Sav. Plan, 769 F. Supp. 2d 1322, 1334–35 (N.D. Okla. 2011) (acknowledging the burden shifting circuit split in the 401(k) context). Moreover, the lack of resolution will necessarily encourage plaintiffs to continue forum shopping tactics. Thus, the industry may see an increase in ERISA cases filed in the Second, Fourth, Fifth and Eighth circuits, which shift the burden to fiduciaries to establish the absence of loss causation once the plaintiffs make a prima facie case.

Kevin Connelly said unions will face an adjustment period as they seek to implement more creative methods of trying to retain dues-paying members. “I wouldn’t underestimate the unions. If someone wants to say this is the end of the day for public-sector unions—nope, not true,” he said. “There will be consequences, but I think the unions that operate in that sector will be clever enough to make the appropriate adjustments.”

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Originally published by Law360, June 2018.

In a major victory for church-affiliated hospitals, the US Supreme Court overturned three appellate court rulings and decided unanimously that church-affiliated hospitals can maintain their pension plans as “church plans” exempt from the Employee Retirement Income Security Act of 1974, as amended (ERISA), regardless of whether a church actually established the plan. Impacted health systems, and especially their management, should evaluate how best to document and demonstrate their common religious bonds and convictions with the church.

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Late last week, President Donald Trump signed an executive order directing federal agencies to look into exempting religious employers from the Affordable Care Act’s (ACA) contraceptive mandate. Qualifying religious employers (e.g. houses of worship) are already exempt from providing contraceptive coverage under their benefit plans, and an accommodation process is provided for certain non-profit employers and closely held for-profit employers with religious objections to providing contraceptive coverage.

This new executive order is aimed at organizations like universities and charities, including entities such as the plaintiffs in Zubik v. Burwell. Last year, in Zubik, the US Supreme Court failed to decide whether the contraceptive-coverage mandate requirements (Contraception Mandate) and its accommodation violated the Religious Freedom Restoration Act of 1993 (RFRA) by forcing religious non-profits to act in violation of their religious beliefs. Although the ACA regulations included an exemption from contraceptive coverage for the group health plans of religious employers, the exemption did not provide that such services would not be covered. The services are just not covered through a cost-sharing mechanism born by the religious employers. The Contraception Mandate requires these organizations to “facilitate” the provision of insurance coverage for contraceptive services that they oppose on religious grounds.  Many religious organizations were opposed to the requirement to facilitate, since they felt the requirement made them complicit in making contraception available, which violates their RFRA rights.