Human Resources
SCOTUS Rejects Inferences in Favor of Lifetime Health Care Benefits, Says Intent of the Parties Governs Contract Interpretation

SCOTUS Rejects Inferences in Favor of Lifetime Health Care Benefits, Says Intent of the Parties Governs Contract Interpretation


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In a victory for employers, the United States Supreme Court unanimously ruled that the interpretation of collective bargaining agreements, including those establishing ERISA plans, must be made according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy. The Court’s ruling vacated a decision by the Sixth Circuit Court of Appeals, which had affirmed a district court judgment granting lifetime health care benefits to retirees under a collectively bargained contract governed by ERISA. The Court remanded the case to the Sixth Circuit to review the agreements at issue under the “correct” legal principles—in this case, the ordinary principles of contract law.

This Aon Hewitt bulletin discusses:

  • The facts of the ruling;
  • The legal principles at issue; and
  • What employers should do.

SCOTUS Rejects Inferences in Favor of Lifetime Health Care Benefits, Says Intent of the Parties Governs Contract Interpretation