ERISA

On Wednesday, January 12, 2011, a Petition was filed with the US Supreme Court seeking review of an employment decision involving a Philadelphia contractor.  The crux of the case is whether an employer can terminate an employee because the employee complained that the company’s health insurance plans violated Federal law.

 

The case involves A.H. Cornell, a commercial and residential contractor.  The plaintiff is Shirley Edwards who was hired by Cornell to be its Director of Human Resources.  As an employee, Edwards participated in the company’s health plan which is governed by the federal law called the Employee Retirement Income Security Act, commonly known as ERISA.  ERISA contains an anti-retaliation provision, the intent of which is to protect whistle blowers.  The law makes it unlawful to fire an employee who has given information about any welfare or pension plans maintained by the employee’s employer.

 

Edwards discovered that Cornell was allegedly “administering the health plan on a discriminatory basis, misrepresenting to some employees the cost of the group health coverage in an effort to dissuade employees from opting into the benefits plan.  In addition, she alleged that the company was enrolling non-citizens in its ERISA plans by providing false social security numbers and other fraudulent information to insurance carriers.”  Edwards complained to her employer and in response she was fired.

 

The court ruled against Edwards because “unsolicited internal complaints are not protected activities.”  Edwards’ complaints were voiced internally and not in response to an “inquiry.”  Consequently, the Court held that the anti-retaliation provisions of ERISA did not apply to Edwards’ complaints regarding Cornell’s health plans. 

 

This decision was rendered by the Third Circuit of Appeals.  There are eleven Circuit Courts of appeals in the United States.  The Third Circuit covers the states of Pennsylvania, New Jersey and Delaware.  The Third Circuit’s decision is at odds with similar decisions rendered by the First, Fifth, Sixth, Eighth, Ninth, Tenth and Eleventh circuits.  Often, when there are conflicts among the circuits, the Supreme Court is asked to weigh-in and resolve the conflicts.  Thus, the Petition filed on January 12th asks the Supreme Court to review the Third Circuit’s decision.  Whether the Supreme Court will agree to review the decision will not be known for a few months.  In the meantime, for those of you in the Third Circuit, if an employer fires an employee because he or she raises issues regarding health, welfare or pension plans, the employee can’t seek redress under the anti-retaliation provisions of ERISA. 

A SIGN OF THE TIMES

 

In an article on January 13, 2011, Bloomberg reported that despite the recession, compensation for traders on Wall Street have not taken much of a hit.  In particular, mergers and acquisitions bankers with 10 years experience have an estimated average pay of $2 million a year and corporate bond traders with 10 years experience have an estimated annual compensation of $1 million.  This compares to a brain surgeon with similar experience who annually earns on average $571,000 per year.

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Harrisburg Magazine Readers' Choice 2011