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Causal Analyses in ERISA § 510 and the Affordable Care Act § 1558

JURIST Guest Columnist Jia Li, Indiana University Maurer School of Law Class of 2014, discusses the Employee Retirement Income Security Act (ERISA) and how it may potentially interact with the Patient Protection and Affordable Care Act.

ERISA §510 is an anti-retaliation provision that prevents employers from interfering with the rights of benefit plan participants and protects whistleblowing related to ERISA violations. Similarly, §1558 of the Affordable Care Act (ACA), through §18C of the Fair Labor Standards Act (FLSA), created an anti-retaliation provision that: (1) Prevents employers from interfering with an employee's right to receive federal tax credit or subsidies for enrollment in ACA exchanges and (2) protects whistleblowing related to ACA violations. Under some circumstances, an employer's conduct related to a self-insured group health plan could trigger both anti-retaliation provisions. For example, reducing an employee's work hours to avoid tax penalty under the ACA "play or pay mandate", which has become a widely discussed business strategy, could, potentially, trigger both ERISA §510 and ACA §1558. Much like other anti-retaliation statutes, to prevail under either provision, a causal link between the illegitimate consideration and the adverse employment decision must be shown. Although the two provisions serve similar purposes and even adopt somewhat similar language, their analytical schemes for causation are different; and in the case of ERISA §510, this issue is currently a moving target.

This commentary piece offers some observations on the causal analyses under ERISA §510 and ACA §1558. Part I discusses the relationship between a but-for analysis and a mixed-motives analysis. Part II observes that the recent US Supreme Court case University of Texas Southwestern Medical Center v. Nassar may change the causal analysis for ERISA §510 claims. Part III introduces the causal analysis applicable to ACA §1558 claims and compares that to the traditional mixed-motives analysis.

I. But-For v. Mixed-Motives

Case law established two general types of causal analysis in the context of various employment statutes—the "but-for" analysis and the "mixed-motives" analysis. Under a but-for analysis, the plaintiff must prove by a preponderance of the evidence that the employer's discriminatory conduct would not have happened absent the illegitimate consideration. Under a mixed-motives analysis, however, the plaintiff merely needs to prove by a preponderance of the evidence that the illegitimate consideration was a "motivating factor" (some cases use similar language such as "contributing factor," "substantial factor" and "significant factor"); and then the burden will shift to the defendant employer to prove by a preponderance of the evidence that it would have reached the same adverse decision even if the illegitimate consideration did not exist.

The two types of causal analysis share the same ultimate goal—to determine whether the illegitimate motive was the but-for cause for the adverse employment action. The difference lies in the burden of persuasion. Under the "but-for" standard, the plaintiff is responsible to prove the but-for causation; whereas in the "mixed-motives" analysis, the defendant must disprove the but-for causation by showing that it would have reached the same decision without the prohibited motive. Consequently, when an adverse employment decision was motivated by a mixture of legitimate and illegitimate considerations, the "but-for" standard would be more defendant-friendly, whereas the "mixed-motives" analysis would be more plaintiff-friendly. For a long period of time, federal courts diverged on the application of these two approaches when interpreting employment statutes, even while dealing with the same provisions.

In 2009, the US Supreme Court, through Gross v. FBL Financial Services, Inc., introduced a new rule to guide the application of the two different approaches. While finding that the mixed-motives approach is not available in an Age Discrimination in Employment Act (ADEA) claim, Gross held that absent a statutory authorization to apply the mixed-motives analysis to a particular provision, the but-for causation should be the default standard, admitting that it would be a standard less favorable for the plaintiff.

In the 2013 case University of Texas Southwestern Medical Center v. Nassar, the court, citing Gross, held that while the mixed-motives analysis is applicable in Title VII status-discrimination claims, the but-for causation must apply to Title VII retaliation claims. This was because in 1991, Congress added a provision to Title VII that endorsed the court's position in Price Waterhouse v. Hopkins applying the mixed-motives approach to Title VII cases. The court held in Nassar that the mixed-motives provision only attached to the status-discrimination provision in Title VII, but not the retaliation provision. This case may cause federal courts to change their causal analysis in interpreting various federal statutes, especially anti-retaliation statutes.

II. The Causal Analysis for ERISA §510

Whether the but-for analysis or the mixed-motives analysis should apply to ERISA §510 claims is an unsettled question. Unlike the Title VII status-discrimination provision, ERISA §510 does not have statutory authorization to adopt the mixed-motives analysis. Before Gross, when dealing with ERISA §510 claims, federal courts seemed to favor the mixed-motives analysis. If Gross and Nassar are extended to ERISA §510 claims, the but-for analysis should apply. Nonetheless, even after Gross, federal circuit courts continued to frequently apply the "motivating factor" language to ERISA §510 claims. Interestingly, the US Court of Appeals for the Seventh Circuit stated in Nauman v. Abbott Laboratories that "on the strength of this case law [the Seventh Circuit followed Gross in interpreting a number of other employment statutes], but-for causation is properly required"; but it refrained from extending Gross to ERISA §510 claims in that case by avoiding ruling on the causation issue.

Since Nassar was decided, the federal courts have only heard a handful of ERISA §510 cases. Among the courts hearing such cases, at least the District of Kansas, the District of Arizona and the Southern District of Ohio continued to use the "motivating factor" language, while the Seventh Circuit's hesitation to rule on this issue continued. Although cases have not been found explicitly extending Gross or Nassar to ERISA §510, this landscape might soon change. In January 2014, the US Supreme Court strengthened the Nassar holding through the criminal case Burrage v. United States, stressing that the but-for analysis can apply to a broad range of causation language in federal statutes. Meanwhile, more new cases extended Nassar to other federal statues, especially employment retaliation statutes—for example, the ADA retaliation provision. Most importantly, while enacting the ACA, Congress did not amend ERISA §510 to address the burden of proof, when it did amend ERISA in many other ways. The US Supreme Court stated in Gross, "When Congress amends one statutory provision but not another, it is presumed to have acted intentionally." Accordingly, courts could very well conclude that Congress intended that but-for causation—the default analysis—should apply to ERISA §510. Future cases dealing with ERISA §510 will likely move toward the but-for analysis, following the Nassar decision.

III. The Causal Analysis for ACA §1558

Unlike ERISA § 510, the causal analysis for ACA §1558 is spelled out in the statute itself. ACA §1558 explicitly adopted the modified mixed-motive scheme set forth in the Consumer Products Safety Improvement Act. Like the traditional mixed-motives analysis, under this framework, the plaintiff first makes a prima facie showing that the prohibited animus was a "contributing factor" in the adverse employment decision; then the burden shifts to the defendant to demonstrate that the same adverse decision would have been reached absent the prohibited animus.

Unlike the traditional mixed-motives analysis, however, the ACA §1558 causal analysis requires that in the second step, the employer must reach the standard of "clear and convincing evidence" to disprove the but-for causation. Given that the traditional mixed-motives analysis is already a plaintiff-friendly scheme, the ACA §1558 causal analysis further elevated the employers' burden of proof.

IV. Conclusion

When both ERISA §510 and ACA §1558 are triggered by the same underlying facts, if the success of a retaliation claim depends completely on the causation analysis, it seems that the causal analysis for ACA §1558 is much more plaintiff-friendly than that for ERISA §510. Moreover, if the causal analysis for ERISA §510 does move toward the but-for direction, the disparity between the causal analyses under these two provisions will become even greater. No case has yet dealt with a retaliation claim involving both ERISA §510 and ACA §1558. As the ACA is gradually coming into full effect, such cases are likely to arise; and it will be interesting to see where the courts will take us in this area.

Jia Li earned her bachelors degree from Southwest University of Political Science and Law. She is the editor-in-chief of the Indiana Journal of Global Legal Studies and president of the Asian Pacific American Law Student Association. She will work as an associate attorney at Ogletree, Deakins, Nash, Smoak & Stewart, P.C. beginning in August 2014.

Suggested citation: Jia Li, Causal Analyses in ERISA and the Affordable Care Act , JURIST - Dateline, Apr. 10, 2014, http://jurist.org/dateline/2014/04/jia-li-erisa-aca.php

This article was prepared for publication by Endia Vereen, an associate editor for JURIST's student commentary service. Please direct any questions or comments to her at studentcommentary@jurist.org

Opinions expressed in JURIST Commentary are the sole responsibility of the author and do not necessarily reflect the views of JURIST's editors, staff, donors or the University of Pittsburgh.

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