LEGISLATIVE & POLICY UPDATE—The New U.S. Supreme Court Term Will Produce Important Rulings for Public Sector HR

The first Monday in October saw Supreme Court justices return to the courtroom for in-person hearings. All last term, justices worked remotely due to the pandemic. Now, and until at least the end of December, the Court will operate under rules requiring Rapid PCR COVID-19 testing for all attorneys and justices prior to hearings, conferences and during oral arguments. (The Court will arrange the tests.) Remote arguments will still be allowed for any attorney or justice who tests positive.

Additionally, attorneys will not be able to access the Supreme Court library or cafeteria while on site. All visitors must wear masks while in the building, with limited exceptions to masking for eating, drinking and presenting arguments before the justices.

Among the joys of living in Washington, D.C., have been immersing oneself in these kinds of procedural details and observing oral arguments on a first-come-first-seated basis. Sadly, while the pandemic persists, the Court is closed to the general public. Only select audiences will be allowed to attend hearings.

Major Cases to Watch

Key cases for those in the public sector HR profession that will be heard before the end of 2021 include the following.

Babcock v. Kijakazi

Issue: Is a civil service pension payment based on dual-status military technician service to the National Guard a payment based wholly on service as a member of a uniformed service?

The petition for hearing the case at the U.S. Supreme Court states,

Dual-status military technicians in the National Guard are members of the National Guard. They serve in uniform, observe military protocol, are required to maintain a military grade appropriate for their role, and are available for active deployment with their unit. A provision of the Social Security Act exempts payments from adverse treatment if they are “a payment based wholly on service as a member of a uniformed service.”

The petitioner, David Babcock, served as a civilian employee in the National Guard for more than three decades and was even deployed to Iraq. When he left the Guard, he received monthly retirement benefits from the Civil Service Retirement System (CSRS). He also took a private sector job.

When Babcock retired from private sector employment, he was surprised to find his Social Security retirement benefits were reduced by his CSRS benefits. While the Social Security law has a provision to prevent windfalls, there is an exception for uniformed military pensions.

Babcock sued, arguing his National Guard service qualifies as uniformed military service. The Social Security Administration does not agree. Five federal appeals courts have heard similar cases and issued differing opinions.

Houston Community College System v. Wilson

Issue: Does the First Amendment restrict the authority of an elected body to issue a censure resolution in response to a member’s speech?

The petition for the case states,

Thousands of elected governmental bodies across the nation need to know what constitutional constraints govern their use of the censure power. There are more than 3,000 counties in the United States, each of them with some form of elected government. Below that, there are tens of thousands of cities, school boards, junior college districts, and the like.

Houston Community College System, the petitioner, is governed by a board of elected trustees. David Wilson, the other party to this case, was elected to the board in 2013 and, subsequently, filed multiple lawsuits against the college system, leaked confidential information and, according to the college system, “caused chaos.”

When the board of trustees publicly censured Wilson, he sued on First Amendment grounds. Federal appeals courts have split on this issue.

Hughes v. Northwestern University

Issue: Are allegations that a defined-contribution retirement plan paid or charged its participants fees that substantially exceeded fees for alternative available investment products or services sufficient to state a claim against plan fiduciaries for breaching the duty of prudence under ERISA?

The review of the petition for certiorari states,

Under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1104, a plan fiduciary is required to meet a standard of “prudence” in administering the plan holding the participant’s retirement assets in a defined contribution plan. The Third and Eighth Circuits have held that a plan participant can adequately plead a breach of fiduciary duty by claiming that the retirement plan charged excessive fees when lower-cost alternatives existed. In the decision below, the Seventh Circuit held that virtually identical pleadings are insufficient to state a claim, because it is necessary to credit the defendant’s explanation for not offering lower cost options for the retirement plan before allowing a well-pleaded complaint to proceed.

The petitioners are current and former employees of Northwestern University who participated in one of two (or both) specific retirement plans offered by the university. They allege that the fees charged for recordkeeping were excessive and that the university had a duty of prudence to ensure the fees were not excessive. Four federal courts of appeals have ruled on this issue and disagreed with each other.

Cummings v. Premier Rehab Keller, P.L.L.C.

Issue: Do the compensatory damages available under Title VI of the Civil Rights Act of 1964 and the statutes that incorporate its remedies for victims of discrimination, such as the Rehabilitation Act and the Affordable Care Act, include compensation for emotional distress?

Petitioner Jane Cummings is deaf and legally blind. She uses American Sign Language (ASL) to communicate. Her doctors repeatedly referred her to the respondent, Premier Rehab, which is a physical therapy provider that receives federal funds. Each time Cummings reached out to schedule services, she requested an ASL interpreter. Premier Rehab denied all her requests for an interpreter, and Cummings sued for discrimination under the Rehabilitation Act and the Affordable Care Act.

Title VI prohibits “any program or activity receiving Federal financial assistance” from discriminating “on the ground of race, color, or national origin.” The U.S. Supreme Court has previously recognized a private right of action to enforce Title VI against recipients of federal financial assistance. Federal appeals courts have split on this issue, and one of those cases involved an employee accusing their public sector employer of discrimination. Allowing victims of discrimination to claim compensation for emotional distress as part of compensatory damages under Title VI could have a substantial impact.

CVS Pharmacy Inc. v. Doe

Issue: Does Section 504 of the Rehabilitation Act of 1973—and by extension Section 1557 of the Patient Protection and Affordable Care Act, which incorporates the “enforcement mechanisms” of other federal antidiscrimination statutes—provide a disparate-impact cause of action for plaintiffs alleging disability discrimination?

The petitioners in this case have employer-sponsored health care plans which include a prescription drug plan that provides in-network pricing for specialty medications only when participants use mail order for those medications or pick up their prescriptions at a CVS pharmacy. Arguing this requirement denies them access to specialty pharmacies and specialized consultations, the petitioners sued CVS under the Rehabilitation Act. Specifically, they are arguing that this prescription drug plan rule has disparate impact disability discrimination on them and similar plan participants. Federal courts of appeals have ruled on both sides of this issue. In many of those previous cases, state or local government entities were being sued.

Rulings in all of the cases highlighted in this column could have impacts on state and local government employers, and each bears watching this term. To stay updated on these cases and other important legal developments, be sure to visit the IPMA-HR website and read the weekly HR Bulletin email. —N

Find us on social media!

Subscribe to the HR Bulletin