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Supreme Court's ruling on gay marriage could affect group benefit plans

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Legal experts predict that while the U.S. Supreme Court's forthcoming decision on the federal Defense of Marriage Act likely will be limited in scope, its ruling still could affect thousands of employers' group benefit plans.

Attorneys on both sides of a constitutional challenge to Section 3 of DOMA, which restricts the federal definition of marriage to the union of one man and one woman, presented their oral arguments to the Supreme Court late last month.

In light of the justices' comments during the arguments, legal experts said it is probable the court will strike down that provision on the grounds that it overextends the federal government's jurisdiction on marital law.

“I think the court is likely to determine that marriage is reserved for the states to control under the Constitution, and that it's not necessary for the federal government to make some broad proclamation,” said Bennett Pine, a New York-based shareholder at law firm Anderson Kill & Olick P.C.

The court's ruling could have material implications for benefit managers and the group plans they oversee. An overturn of DOMA's Section 3 provisions would provide administrative relief to employers that already offer spousal benefits to legally married same-sex couples by ending their disparate treatment under the federal Tax Code, experts said.

Additionally, self-funded group health plans are governed by the Employee Retirement Income Security Act, which relies on DOMA for its definitions of “marriage” and “spouse.”

But without those federal definitions in place, experts said self-funded employers offering benefits to opposite-sex spouses in states that recognize same-sex marriage could be obligated to extend equal benefits to lawfully wed gay couples, or else stop providing spousal benefits altogether.

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“It's sort of a double-edged sword for employers,” said Jay Kirschbaum, St. Louis-based practice leader of Willis North America Inc.'s national legal and research group. “Many would like to offer same-sex marriage benefits without the added administrative concerns, and others would just as soon not be pressured into that position and like having these laws in place that prevent them from having to extend their benefits beyond traditional marriages.”

Other federal employment laws may be implicated as well. While Title VII of the Civil Rights Act does not prohibit discrimination on the basis of sexual orientation, it outlaws discrimination on the basis of gender. Without a federal definition of marriage, experts said employers that deny benefits to lawfully wed same-sex couples could be held liable for discrimination based on the gender of an employee's spouse.

“There's been some informal guidance from the Equal Employment Opportunity Commission that seems to support that idea, but I don't think we've seen enough cases on the issue to really know the answer to that question,” said Todd Solomon, a Chicago-based partner at McDermott Will & Emery L.L.P.

Additionally, experts said striking down DOMA's Section 3 provision likely would extend protection under the Family and Medical Leave Act — which provides employees with up to 12 weeks of unpaid leave to care for sick family members, including spouses — to legally married same-sex couples, who currently are not covered under the law.

The Supreme Court also heard arguments last month in a separate case seeking nullification of an amendment to California's Constitution banning gay marriage, known as Proposition 8. During the arguments, the justices focused primarily on the procedural elements of the case, particularly whether the parties defending the amendment have the legal right to do so at the federal level.

Based on the justices' comments, experts said it appears likely that the case will be dismissed on those procedural grounds.