Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 7, 1995 TAG: 9503070113
SECTION: VIRGINIA PAGE: C-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The court ruled unanimously Monday in a New Jersey case that the language complies with a federal law governing employee benefit plans.
``The ... clause says in effect that the plan may be amended by the company,'' Justice Sandra Day O'Connor wrote for the court.
The U.S. Chamber of Commerce had said in a friend-of-the-court brief that a ruling against the standard benefit-plan language would cause ``horrendous consequences'' for employers and employees.
Employers would have to reimburse employees millions of dollars for benefits they had eliminated, and many benefit increases would be canceled, the chamber said.
Also Monday, the court cleared the way for a Pennsylvania congressman to be tried on charges of conspiracy, racketeering and taking bribes from defense contractors.
The court turned down Rep. Joseph McDade's argument that the charges should be dismissed because the Constitution shields members of Congress from being prosecuted for legislative acts.
The employee benefits case involved the Curtiss-Wright Corp., which canceled health benefits to retired nonunion employees of a Wood-Ridge, N.J., plant it closed in 1983. The retired employees had challenged the cancellation of their health insurance.
A federal law governing employee benefits requires plan documents to set out a procedure for amending the plan and identifying those who have authority to do so.
The Curtiss-Wright plan stated that the company reserved the right to amend the plan at any time.
A federal judge and the 3rd U.S. Circuit Court of Appeals decided that language did not meet the federal law's requirements and ordered the company to pay $2.7 million in back health care benefits.
Monday, the Supreme Court disagreed and said the standard clause was enough to comply with the federal law. More complicated benefit plans may have more complicated amendment procedures, though, O'Connor added.
``Curtiss-Wright is correct, we think, that this states an amendment procedure,'' O'Connor wrote. ``To the extent that this procedure is the barest of procedures, that is because the Curtiss-Wright plan is the simplest of plans: a voluntarily maintained single-employer health plan.''
O'Connor noted that the federal Employee Retirement Income Security Act does not create any employee right to employer-provided benefits such as health insurance. The law simply sets out procedures a company must follow when choosing to provide such benefits.
The justices sent the case back to a lower court to determine whether Curtiss-Wright properly followed its procedure in canceling the retirees' health insurance.
by CNB