Sixth Circuit Upholds Health Reform Individual Mandate
On June 29, 2011, the U.S. Court of Appeals for the Sixth Circuit, the first federal court of appeals to rule on the constitutionality of the individual mandate provided under PPACA, affirmed the law’s constitutionality in a 2-1 decision. The panel of judges was comprised of Judge Boyce S. Martin, a Democratic appointee, and two Republican appointees, Judge Jeffrey S. Sutton and Senior Judge James L. Graham. Judge Sutton’s vote to uphold the law marked the first time a Republican-appointed judge has ruled in favor of the constitutionality of the individual mandate. While Judges Martin and Sutton both voted to uphold the law, each provided a separate opinion explaining why, in their view, the law is a valid exercise of Congress’s authority to regulate interstate commerce under the Commerce Clause of the U.S. Constitution. In his opinion, Judge Sutton noted that the Supreme Court “has considerable discretion in resolving this dispute.” Judge Graham dissented and voted to strike down the mandate as exceeding Congress’s authority under the Commerce Clause.
The case could potentially be heard by the entire Sixth Circuit en banc, meaning that the entire panel of Sixth Circuit judges would rule on the case. Ultimately, the issue is expected to be heard by the U.S. Supreme Court, which could occur as early as the upcoming term.
Thomas More Law Center, et.al. v. Obama, et.al.
Ninth Circuit Expands ERISA Liability to Include Carriers
On June 22, 2011, the U.S. Court of Appeals for the Ninth Circuit in San Francisco, in Cyr v. Reliance Standard Life Ins. Co., ruled that ERISA does not specifically limit which parties can be sued to recover benefits due under the terms of an employee benefits plan.
As background, the plaintiff, Laura Cyr, worked for CTI as a vice president. CTI offered long-term disability benefits through Reliance Insurance. Reliance ultimately controlled whether benefits would be awarded, but it was not the “plan administrator” under ERISA. Cyr was on long-term disability at the time and sought an increase to her benefits. Reliance denied the increase in benefits, so Cyr sued CTI as the plan administrator, CTI’s Long-term Disability Plan and Reliance under different sections of ERISA and the common law, resulting in a settlement and a retroactive adjustment to her salary. In the Ninth Circuit, beneficiaries were limited to suing the plan and plan administrator for denial of benefits under ERISA plans. As a result of this case, insurance companies may now be sued where they have a role in denying benefits independent of the plan administrator. The Ninth Circuit ruling overturns four other employee benefits cases: Ford v. MCI Communications Corp. Health and Welfare Plan, Everhart v. Allmerica Financial Life Insurance Co., Spain v. Aetna Life Insurance Co. and Gelardi v. Pertec Computer Corp. The case could also shape the outcomes of similar lawsuits in other jurisdictions.
Cyr v. Reliance Standard Life Ins. Co
IRS Announces Increase in Standard Mileage Rates
In IRS Announcement 2011-40, the IRS announced that it has revised the optional business standard mileage rate, which is used to calculate the deductible costs of operating an automobile for business and other purposes in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage. The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51-cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
The IRS also revised the rate for computing deductible medical or moving expenses, increasing the rate by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. The revised standard mileage rates apply to deductible transportation expenses paid or incurred on or after July 1, 2011.
