Navigating a New ERISA Battleground: Tobacco Surcharge Litigation and Courts’ Divergence on Retroactive Reimbursement
In their article published in Reuters Legal News and Westlaw Today, Baker Botts Partners Matthew G. Sheridan, Tina Q. Nguyen and Christopher J. Rilo examine a recent district court split over retroactive reimbursement of tobacco surcharges for employee health plans and outline steps for employers to limit their ERISA litigation exposure.
In 2021, two decisions laid the groundwork for a new wave of class-action litigation under ERISA.
In Secretary of Labor v. Macy's, Inc., the U.S. District Court for the Southern District of Ohio held that the Department of Labor had plausibly alleged that Macy's tobacco-surcharge wellness program violated ERISA's nondiscrimination requirements for certain plan years.
Contemporaneously, the U.S. District Court for the Western District of Missouri in LipariWilliams v. Missouri Gaming Co. certified a class of plan participants challenging a tobacco surcharge based on uniform plan terms, effectively lowering key procedural barriers to similar claims.
Since these decisions, employers across the nation have faced a growing number of lawsuits challenging the propriety of tobacco surcharges imposed through employer-sponsored health plans.
At their core, these cases ask a deceptively simple question: when an employee subject to a tobacco surcharge completes a tobacco-wellness program after the plan year has commenced, does the employer have to retroactively reimburse all surcharges paid by the employee that year?
Various district courts have arrived at different conclusions, creating a split that has yet to be addressed by any circuit.
For a complete copy of their article (republished with permission from Reuters Legal News and Westlaw Today), please click the title link below.
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