King v. Burwell Obergefell - PowerPoint Presentation

King v. BurwellObergefell v. HodgesTibble v. EdisonHow do these decisions impact my Entity? By: Al Holifield Holifield & Associates, PLLC11907 Kingston PikeSuite 201Knoxville, TN 379234aholifield@hapc-law.comsjohnson@hapc-law.com Phone: (865) 566-0115Fax: (865) 566-0119 © Holifield & Associates, PLLC

Background and HistoryThe appeal of a decision by the United States Fourth Circuit Court of Appeals addressing whether a federal tax regulation providing for a federal tax subsidy to individuals purchasing insurance on the federal exchange is inconsistent with the language of the Affordable Care Act (“ACA”). King v. Burwell, 759 F.3d 358 (4th Cir. 2014). The appellants in the Fourth Circuit argued that the regulation conflicts with the plain language of Section 36B of the ACA, which provides for tax credits to subsidize the purchase of insurance on an “exchange established by the State.” The case challenged a key feature of the ACA – tax subsidies from the federal government to individuals purchasing health insurance through the federal exchange. Penalties under both the individual mandate and the employer mandate hinge on the availability of these subsidies. King v. Burwell © Holifield & Associates, PLLC

The Decision6-3 opinionHolding: Today the U.S. Supreme Court held, in a 6-3 opinion, that the tax credits under Section 36B “are available to individuals in States that have a Federal Exchange.” King v. Burwell, 576 U. S. ____ (2015). The Supreme Court reasoned that:the statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very “death spirals” that Congress designed the Act to avoid. See New York State Dept. of Social Servs. v. Dublino, 413 U. S. 405, 419–420 (1973) (“We cannot interpret federal statutes to negate their own stated purposes.”). King v. Burwell, 576 U. S. ____ (2015), p. 15. King v. Burwell © Holifield & Associates, PLLC

The DecisionThe Court pointed to the effect of the petitioner’s argument on the operation of the ACA and the impact on individuals and the insurance market:Under petitioners’ reading, however, the Act would operate quite differently in a State with a Federal Exchange. As they see it, one of the Act’s three major reforms—the tax credits—would not apply. And a second major reform—the coverage requirement—would not apply in a meaningful way . . . So without the tax credits, the coverage requirement would apply to fewer individuals. And it would be a lot fewer . . . In 2014, approximately 87 percent of people who bought insurance on a Federal Exchange did so with tax credits, and virtually all of those people would become exempt . . . If petitioners are right, therefore, only one of the Act’s three major reforms would apply in States with a Federal Exchange.The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral.King v. Burwell, 576 U. S. ____ ( 2015), pp. 16-18. King v. Burwell © Holifield & Associates, PLLC

The DecisionThe Court continued with the following:It is implausible that Congress meant the Act to operate in this manner. See National Federation of Independent Business v. Sebelius, 567 U. S. ___, ___ (2012) (SCALIA, KENNEDY, THOMAS, and ALITO, JJ., dissenting) (slip op., at 60) (“Without the federal subsidies . . . the exchanges would not operate as Congress intended and may not operate at all.”). Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation. But those requirements only work when combined with the coverage requirement and the tax credits. So it stands to reason that Congress meant for those provisions to apply in every State as well.King v. Burwell, 576 U. S. ____ (2015), pp. 16-18. King v. Burwell © Holifield & Associates, PLLC

The DecisionThe majority opinion went on to state that:Petitioners’ arguments about the plain meaning of Section 36B are strong. But while the meaning of the phrase “an Exchange established by the State under [42 U. S. C. §18031]” may seem plain “when viewed in isolation,” such a reading turns out to be “untenable in light of [the statute] as a whole.” Department of Revenue of Ore. v. ACF Industries, Inc., 510 U. S. 332, 343 (1994). In this instance, the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.King v. Burwell, 576 U. S. ____ (2015), pp. 20-21. King v. Burwell © Holifield & Associates, PLLC

The DecisionThe majority opinion continued as follows:Reliance on context and structure in statutory interpretation is a “subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.” Palmer v. Massachusetts, 308 U. S. 79, 83 (1939). For the reasons we have given, however, such reliance is appropriate in this case, and leads us to conclude that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.King v. Burwell, 576 U. S. ____ (2015), pp. 20-21. King v. Burwell © Holifield & Associates, PLLC

The DecisionJustice Scalia, joined by Justices Thomas and Alito, strongly dissented, stating:The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.King v. Burwell, 576 U. S. ____, (2015), p. 1.The dissent went on to criticize the majority opinion as ignoring the usual rules of interpretation to “yield to the overriding principle of the present Court: The Affordable Care Act must be saved.” Id., at pp. 2-3. King v. Burwell © Holifield & Associates, PLLC

The DecisionIn perhaps what will be the most quoted language from the dissent, Justice Scalia offered a suggestion for the new name of the ACA:Having transformed two major parts of the law, the Court today has turned its attention to a third. The Act that Congress passed makes tax credits available only on an “Exchange established by the State.” This Court, however, concludes that this limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare.King v. Burwell, 576 U. S. ____, (2015), p. 21. King v. Burwell © Holifield & Associates, PLLC

How will the decision impact my entity?What actions do I need to take?King v. Burwell © Holifield & Associates, PLLC

Background and historyThe case involved fourteen same-sex couples and two men whose same-sex partners are deceased from Kentucky, Michigan, Ohio and Tennessee, claiming that the denial by a state of the right to marry or to have marriages lawfully performed in another state violates the Fourteenth Amendment. Each District Court ruled in the same-sex couples’ favor, but the Sixth Circuit Court of Appeals consolidated the cases and reversed the District Court opinions. Deboer v. Snyder, 772 F.3d 388 (6th Cir. Mich. 2014). Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionIn a 5-4 decision, the United States Supreme Court held that under the Fourteenth Amendment “same-sex couples may exercise the fundamental right to marry in all States,” and “that there is no lawful basis for a State to refuse to recognize a lawful same-sex marriage performed in another State on the ground of its same-sex character.” Obergefell v. Hodges, 576 U. S. ____ (2015), p. 28. Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionIn the majority opinion, the Court references “four principles and traditions to be discussed demonstrat[ing] . . . the reasons marriage is fundamental under the Constitution [and] apply with equal force to same-sex couples.” In addressing the first principle, the Supreme Court cites Loving v. Virginia, 388 U. S. 1 (1967): “A first premise of the Court’s relevant precedents is that the right to personal choice regarding marriage is inherent in the concept of individual autonomy. This abiding connection between marriage and liberty is why Loving invalidated interracial marriage bans under the Due Process Clause.” Obergefell v. Hodges, 576 U. S. ____ (2015), p. 12. Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionThe majority opinion goes on to state that: “A second principle in this Court’s jurisprudence is that the right to marry is fundamental because it supports a two-person union unlike any other in its importance to the committed individuals.” Obergefell v. Hodges, 576 U. S. ____ (2015), p. 13.The Court refers to the protection of children and families in the third principle: “A third basis for protecting the right to marry is that it safeguards children and families and thus draws meaning from related rights of childrearing, procreation, and education.” Id., p. 14. Obergefell v. Hodges © Holifield & Associates, PLLC

The Decision“Excluding same-sex couples from marriage thus conflicts with a central premise of the right to marry. Without the recognition, stability, and predictability marriage offers, their children suffer the stigma of knowing their families are somehow lesser. They also suffer the significant material costs of being raised by unmarried parents, relegated through no fault of their own to a more difficult and uncertain family life. The marriage laws at issue here thus harm and humiliate the children of same-sex couples.” Obergefell v. Hodges, 576 U. S. ____ (2015), p. 15. Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionLastly, the Court, in the majority opinion, reasons as follows: “Fourth and finally, this Court’s cases and the Nation’s traditions make clear that marriage is a keystone of our social order.” Id., p. 16. Obergefell v. Hodges, 576 U. S. ____ (2015), p. 16. Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionThe Court goes on to discuss the government benefits afforded married couples:Indeed, while the States are in general free to vary the benefits they confer on all married couples, they have throughout our history made marriage the basis for an expanding list of governmental rights, benefits, and responsibilities. These aspects of marital status include: taxation; inheritance and property rights; rules of intestate succession; spousal privilege in the law of evidence; hospital access; medical decision making authority; adoption rights; the rights and benefits of survivors; birth and death certificates; professional ethics rules; campaign finance restrictions; workers’ compensation benefits; health insurance; and child custody, support, and visitation rules. Obergefell v. Hodges, 576 U. S. ____ (2015), p. 16-17. Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionThe majority opinion is summed up in the following statements:No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law. The Constitution grants them that right. Obergefell v. Hodges, 576 U. S. ____ (2015), p. 28. Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionChief Justice Roberts, joined by Justices Thomas and Scalia filed a dissenting opinion. Justice Alito also dissented in a separate dissenting opinion. In his dissent, Chief Justice Roberts declares that the states should make the decision on the definition of marriage:Although the policy arguments for extending marriage to same-sex couples may be compelling, the legal arguments for requiring such an extension are not. The fundamental right to marry does not include a right to make a State change its definition of marriage. And a State’s decision to maintain the meaning of marriage that has persisted in every culture throughout human history can hardly be called irrational. In short, our Constitution does not enact any one theory of marriage. The people of a State are free to expand marriage to include same-sex couples, or to retain the historic definition. Obergefell v. Hodges, 576 U. S. ____ (2015), p. 2 (Roberts, dissenting). Obergefell v. Hodges © Holifield & Associates, PLLC

The DecisionChief Justice Roberts goes on to describe the majority decision as “an act of will, not legal judgment.” Obergefell v. Hodges, 576 U. S. ____ (2015), p. 3 (Roberts, dissenting). In his closing remarks, Chief Justice Roberts says: “If you are among the many Americans—of whatever sexual orientation—who favor expanding same-sex marriage, by all means celebrate today’s decision. Celebrate the achievement of a desired goal. Celebrate the opportunity for a new expression of commitment to a partner. Celebrate the availability of new benefits. But do not celebrate the Constitution. It had nothing to do with it.” Id., p. 29 (Roberts, dissenting). Id., 576 U. S. ____ (2015), p. 29 (Roberts, dissenting). Obergefell v. Hodges © Holifield & Associates, PLLC

What are the impacts to my entity?What do I need to do? Obergefell v. Hodges © Holifield & Associates, PLLC

Tibble v. EdisonBackground and HistoryThe following is an excerpt from the Syllabus of the Supreme Court opinion in Tibble v. Edison International, et al., 575 U.S. _____ (2015):In 2007, petitioners, beneficiaries of the Edison 401(k) Savings Plan (Plan), sued Plan fiduciaries, respondents Edison International and others, to recover damages for alleged losses suffered by the Plan from alleged breaches of respondents’ fiduciary duties. As relevant here, petitioners argued that respondents violated their fiduciary duties with respect to three mutual funds added to the Plan in 1999 and three mutual funds added to the Plan in 2002. Petitioners argued that respondents acted imprudently by offering six higher priced retail-class mutual funds as Plan investments when materially identical lower priced institutional-class mutual funds were available. (c) Holifield & Associates, PLLC

Tibble v. EdisonBackground and History (The following is an excerpt from the Syllabus of the Supreme Court opinion in Tibble v. Edison International, et al., 575 U.S. _____ (2015)):Because ERISA requires a breach of fiduciary duty complaint to be filed no more than six years after “the date of the last action which constitutes a part of the breach or violation” or “in the case of an omission the latest date on which the fiduciary could have cured the breach or violation,” 29 U. S. C. §1113, the District Court held that petitioners’ complaint as to the 1999 funds was untimely because they were included in the Plan more than six years before the complaint was filed, and the circumstances had not changed enough within the 6-year statutory period to place respondents under an obligation to review the mutual funds and to convert them to lower priced institutional-class funds. The Ninth Circuit affirmed, concluding that petitioners had not established a change in circumstances that might trigger an obligation to conduct a full due diligence review of the 1999 funds within the 6-year statutory period. (c) Holifield & Associates, PLLC

Tibble v. EdisonHolding (as set out in the Syllabus of the Supreme Court opinion in Tibble v. Edison International, et al., 575 U.S. _____ (2015)): The Ninth Circuit erred by applying §1113’s statutory bar to a breach of fiduciary duty claim based on the initial selection of the investments without considering the contours of the alleged breach of fiduciary duty. ERISA’s fiduciary duty is “derived from the common law of trusts,” Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U. S. 559, 570, which provides that a trustee has a continuing duty—separate and apart from the duty to exercise prudence in selecting investments at the outset—to monitor, and remove imprudent, trust investments. So long as a plaintiff’s claim alleging breach of the continuing duty of prudence occurred within six years of suit, the claim is timely. (c) Holifield & Associates, PLLC

Tibble v. EdisonHolding (as set out in the Syllabus of the Supreme Court opinion in Tibble v. Edison International, et al., 575 U.S. _____ (2015)):This Court expresses no view on the scope of respondents’ fiduciary duty in this case, e.g., whether a review of the contested mutual funds is required, and, if so, just what kind of review. A fiduciary must discharge his responsibilities “with the care, skill, prudence, and diligence” that a prudent person “acting in a like capacity and familiar with such matters” would use. §1104(a)(1). The case is remanded for the Ninth Circuit to consider petitioners’ claims that respondents breached their duties within the relevant 6-year statutory period under §1113, recognizing the importance of analogous trust law. (c) Holifield & Associates, PLLC

Tibble v. EdisonWhat are the impacts to my entity?What do I need to do?(c) Holifield & Associates, PLLC