Compliance May 1, 2004

Appeals Court Upholds Infertility Treatment Exclusions

January 17, 2003 (PLANSPONSOR.com) - An employer whose health plan does not cover infertility treatments isn't guilty of illegal discrimination, a federal appeals court decided.
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The US 2nd Circuit Court of Appeals said that even though the infertility treatments in the specific case were only performed on women, the “exclusion of surgical impregnation procedures disadvantages infertile male and female employees equally,” the National Law Journal reported. So the employer d id not run afoul of the federal Pregnancy Discrimination Act (PDA) by declining coverage for artificial insemination and other treatments, the appeals judges said.

The appeals court upheld a lower court’s decision in favor of the employer.

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Sex Specifics

 

Chief Circuit Judge John Walker said the proper question on review “is whether sex-specific conditions exist, and if so, whether exclusion of benefits for those conditions results in a plan that provides inferior coverage to one sex.”

“Because reproductive capacity is common to both men and women, we do not read the PDA as introducing a completely new classification of prohibited discrimination based solely on reproductive capacity,” Walker wrote. “Rather, the PDA requires that pregnancy, and related conditions, be properly recognized as sex-based characteristics of women.”


“Artificial” Distinctions

Plaintiff Rochelle Saks claimed that the refusal of her self-insured health benefits plan to cover infertility treatments was a violation of her federally protected civil rights. While employees enrolled in her health plan were allowed benefits for some infertility products and procedures, the plan specifically barred coverage for artificial insemination and other surgical impregnation procedures, such as in-vitro fertilization.

After Saks filed a federal suit in the US District Court for the Southern District of New York, US District Judge Colleen McMahon rejected her claims, finding that the exclusions of surgical impregnation procedures affected males and females equally. McMahon also said the PDA was not violated because the plan provides equal coverage for men and women.

The case is Saks v. Franklin Covey Co . , 00-9598.

Compliance April 30, 2004

OMERS to Appeal Pension Payment Ruling

April 30, 2004 (PLANSPONSOR.com) - The Ontario Municipal Employees Retirement System (OMERS) has decided to appeal an Ontario Superior Court of Justice ruling awarding $821,000 in additional pension payments to six of eight former Toronto police officers who claimed they were denied the enhanced pensions given to fellow retirees.
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OMERS, Canada’s third-largest pension fund representing 340,000 members on behalf of 900 Ontario local government employers, decided it was prudent to get a clarification of the Madam Justice Frances Kiteley’s decision from the Ontario Court of Appeal.

The Superior Court of Justice judge made “ far-reaching statements about a plan sponsor’s and plan administrator’s duties to inform plan members about possible benefit improvements and their duty to treat all plan members equitably,” the fund said in a  statement posted to its Web site. The Toronto Star reported that Kiteley ruled that OMERS had committed negligent misrepresentation in its dealings with the plaintiffs and that it had breached its duty to tell the retired police officers about changes that would beef up their pension payments.

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The individual awards ranged from $97,000 to $179,000, the Star reported. Two other retired officers were unsuccessful in their claims, the newspaper said.

The eight former Toronto police officers retired in 1998 and elected to take the value of their pension in cash, rather than collect a pension. They alleged in their suit that OMERS never told them them of ongoing discussions throughout 1998 about possible plan changes to deal with the increasing surplus in the plan at that time.

Recommendations regarding changes to the Plan were made by the OMERS Board in late 1998 and were approved by the Government of Ontario in May 1999. These changes, unspecified in the OMERS’ statement, were made retroactively effective to January 1, 1999.

According to the Star, the plaintiffs had met with an OMERS official in November 1999, but were told about their situation “well, that’s your tough luck” and “that’s the way the cookie crumbles.”

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