The United States Supreme Court ruling moments ago upholding key provisions of federal health care reform means that the rest of the country will continue to move down a path that Massachusetts employers have already walked under the commonwealth’s own health reform law for six years.
That’s good news because the oft-maligned 2006 Bay State reform established a foundation for the market and political changes that now promise to control the soaring cost of health insurance for Massachusetts employers.
The high court ruled in a 5-4 decision that the portion of federal reform that requires everyone to purchase health insurance – the so-called individual mandate - is constitutional. The ruling leaves intact other portions of the law, including tax credits for small business to help them cover the cost of insurance for employees; no-copay preventive care; the ability of children to remain on their parent’s health insurance until age 26; and a prohibition against insurance companies denying coverage to people with pre-existing medical conditions.
The court ruled that the mandate violates the commerce clause of the Constution, but is permissable under the taxing power of Congress.
“Our precedent demonstrates that Congress had the power to impose the exaction in Section 5000A under the taxing power, and that Section 5000A need not be read to do more than impose a tax. This is sufficient to sustain it,” Chief Justice John Roberts wrote in his majority opinion.
Massachusetts now faces the task of reconciling the details of the 2006 state reform with the federal law. Some elements of that reconciliation will require legislative action.
The Supreme Court decision also upheld the federal reform law’s Medicaid expansion, though it noted it would be unconstitutional for the federal government to withhold Medicaid funds for non-compliance with the expansion provisions. Massachusetts expects the Medicaid expansion to provide hundreds of millions of dollars in federal dollars to extend coverage to people.
"Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding," Roberts writes.
The 2006 law is far from perfect. Providing health insurance to people did not, as experts predicted, significantly reduce usage of expensive hospital emergency rooms. Heavy government intervention was required to control small-group premiums. And even now, AIM is asking the legislature to change the fair-share formula so employees are not penalized for workers who obtain insurance on a spouse’s plan.
But the effort - forged from a sense of shared responsibility among employers, lawmakers, doctors, hospitals, consumers and insurance companies – clearly succeeded in reducing the share of Massachusetts residents without health insurance from 6 percent to 2 percent. It ultimately addressed one piece of the health puzzle – providing people access to care – so the commonwealth could begin to solve the more important piece – reducing the cost of health care and health insurance.
The Massachusetts health care market is moving aggressively to restructure itself in ways that will benefit engaged employers. Health providers, insurance companies and employers are working together to change the way consumers pay for medical care, introducing innovative products such as tiered and limited health plans that reward consumers for receiving high-quality care in reasonably priced settings, and implementing “global payments” that reward doctors for good outcomes instead of the number of procedures they order.
The results so far are encouraging. The average health insurance premium increase approved the state’s Division of Insurance in the small group market for July 2012 is 0.7 percent, down from 16.3 percent just two years ago. Two insurers, Fallon and Tufts, actually plan to lower rates. Overall, contracts negotiated by health insurers with providers in 2011 gave hospitals and doctors groups average fee increases of 2 to 3 percent, roughly half those given in 2010 and less than in any year since 2005.
The United States Supreme Court affirmed today that unions may not force non members to fund political activities without permission.
The high court ruled 7-2 in Knox vs. SEIU that the Service Employees International Union violated the First Amendment rights of government employees in California by assessing them for the cost of two political campaigns without seeking their affirmative consent. The employees were part of an “agency shop” where all workers are represented by a union, but where employees could decline to join the union as long as they pay the union a fee to cover non-political expenses.
Unions are required to provide a so-called Hudson notice to non-members allowing them to opt-out of contributions to be used for political activities with which they disagree.
“There is no justification for the SEIU’s failure to provide a fresh Hudson notice. Hudson rests on the principle that nonmembers should not be required to fund a union’s political and ideological projects unless they choose to do so after having ‘a fair opportunity’ to assess the impact of paying for nonchargeable union activities,” Associated Justice Samuel Alito wrote for the majority.
“The SEIU’s procedure cannot be considered to have met Hudson’s requirement that fee-collection procedures be carefully tailored to minimize impingement on First Amendment rights."
The Court did not accept the SEIU’s broad definition of non-political activities that could be charged back to employees who elected not to join the union.
“First, the SEIU’s understanding of the breadth of chargeable expenses is so expansive that it is hard to place much reliance on its statistics. ‘Lobbying the electorate,’ which the SEIU claims is chargeable, is nothing more than another term for supporting political causes and candidates,” the decision states.
Alito was joined in the majority by Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, Sonya Sotomayor and Ruth Bader Ginsburg.
The Knox decision echoes a ruling in the private sector from the 1980s - Beck vs. Communication Workers of America - in which the Court ruled that objecting nonmembers may not be required to pay union dues. Rather, the Court found that objecting employees may only be compelled to pay an agency fee, an amount that encompasses only costs associated with collective bargaining, contract administration, or grievance adjustment.
Separate rulings this week from the United States Supreme Court and the Massachusetts Supreme Judicial Court will significantly limit the actions that employers may take when addressing conflicts with employees.
The U.S. Supreme Court ruled unanimously on Monday that an employee who was terminated shortly after his fiancée filed a discrimination charge against their mutual employer may sue under Title VII of the Civil Rights Act of 1964 for third-party retaliation.
In Massachusetts, the Supreme Judicial Court ruled on Tuesday that a company may not dock a worker’s pay after unilaterally determining that the worker was responsible for damaging property.
The decision about third-party retaliation came in Thompson vs. North American Stainless LP. Eric Thompson and his fiancée, Miriam Regalado, were employees of North American Stainless, LP (NAS). Three weeks after Regalado filed a sex discrimination charge against NAS with the Equal Employment Opportunity Commission (EEOC), the company fired Thompson. Thompson filed suit against NAS under Title VII claiming that the company fired him to retaliate against Regalado for filing her EEOC charge.
The Supreme Court ruled that “injuring [Thompson] was the employer's intended means of harming Regalado…In those circumstances, we think Thompson well within the zone of interests sought to be protected by Title VII.”
According to the Court, Title VII’s anti-retaliation provision covers conduct that “might have dissuaded a reasonable worker from making or supporting a charge of discrimination.” The Court unanimously concluded that it is “obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.”
Bu the Court refused to identify a class of relationships for which third-party retaliation would be unlawful. So while this decision will likely result in more lawsuits being filed by spouses and significant others, the Court’s reluctance to define “zone of interests,” makes the practical implications of the decision somewhat difficult to predict.
For now, employers should tread carefully before terminating a spouse or close relative of an employee who filed a discrimination charge or lawsuit. Employers should also re-examine policies and procedures for dealing with internal complaints in an effort to minimize the risk of a retaliation complaint.
According to EEOC statistics, retaliation became the most frequently cited form of on-the-job discrimination in 2009 (33,613 charges), overtaking race discrimination (33,579 charges) by a slim margin. Given this decision, those numbers are likely to increase further.
The Massachusetts ruling came in the case of ABC Disposal Service Inc., a New Bedford-based trash and recycling pickup company that wanted to cut down on damage by their workers to the company trucks and other people’s property.
The company instituted a policy saying that if it determined that an employee was at fault, the workers could either agree to pay for the damage through a deduction from their wages or be disciplined. The company said that the program led to a substantial reduction in damage. But the SJC said that under the Massachusetts Wage Act, employers are prohibited from making such deductions.
“The statutory language and the interplay of §§148 and 150 of the Wage Act reflect that employee deduction agreements of the type at issue in this case constitute special contracts that §148 prohibits unless the deductions are valid setoffs for clear and established debts within the meaning of §150,” Judge Margot Botsford wrote for the SJC.
Stay tuned to the HR Edge and the AIM Business Insider blog for additional detailed information and updates.
(Martha J. Zackin, Esq., is Of Counsel to the law firm Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.)
On June 17, the United States Supreme Court ruled, in New Process Steel v. National Labor Relations Board, No. 08-1457, that the National Labor Relations Board ("NLRB" or the "Board") acted without statutory authority when it issued approximately 600 decisions during the period when vacancies left the Board with only two members.
The impact of the decision will likely be narrow, affecting only the New Process Steel parties and the parties to the other 74 case currently pending before the Supreme Court and the Courts of Appeals that challenged the authority of the Board to act with only two members.
By way of background, under the National Labor Relations Act ("NLRA"), the NLRB has the authority to resolve labor disputes. The Board is comprised of five members, each of whom must be appointed by the president and confirmed by Congress. By statute, the Board may delegate its powers to any group of three or more members. The statute also provides that three members of the Board constitute a quorum, except that when the Board's powers have been delegated to a group of three or more members, two members may constitute a quorum.
In late 2007, the Board had only four members, two of whose terms were about to expire. Concerned that there might be vacancies for an extended period, the Board delegated its authority to three members. The action, the Board believed, would permit the remaining two members to exercise the full powers of the Board because those two members would constitute a quorum of the three-member group.
The vacancies remained unfilled for 27 months and from January 2008 until March 2010, the group of two issued decisions in almost 600 cases. In two of these cases the NLRB sustained two unfair labor practice complaints against New Process Steel ("NPS"). NPS appealed both orders, challenging the authority of the two-member Board to issue the orders. The Court of Appeals sustained the authority of the Board.
The Supreme Court ruled that the NLRA required at least a three-member Board, and, therefore, the two-member Board's rulings against NPS were invalid. The Supreme Court's decision will not only impact the New Process Steel parties, but also the parties to the seventy-four cases now on appeal that have challenged the authority of the two-member Board. The NLRB issued a press release saying it expects those cases to be returned to the NLRB to be adjudicated by a proper quorum of the Board, which now has four members as two of the vacancies have been filled.
But what of the more than 500 other cases, which were improperly adjudicated but not appealed? Typically, final judgments are just that- final. However, it may be argued that principles of finality do not apply where the judgment was issued by a body that lacked statutory authority to decide the case in the first instance.
In any event, the NLRB will be quite busy now and for some time to come - perhaps even too busy to work towards implementing the Employee Free Choice Act by NLRB fiat, as has been advocated by new Board member Craig Becker.