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Posts Tagged ‘US Supreme Court’

Supreme Court Knocks Down Curious Obama Labor Dept. Overtime Idea

In Obama Administration, Regulation on June 19, 2012 at 8:05 pm

Why is President Obama seen as so anti-business by many in commerce?  Behind the scenes, myriad government agencies fight against American enterprise everyday, often for the flimsiest of reasons.

One example of Obama Administration overreach was rejected by the US Supreme Court on Monday June 18, 2012. [1]

It is long-standing law that traveling salespeople are not covered by overtime rules.  Paying every hour a salesperson is on the road would be very expensive.  It is alrady factored into the job, which pays well. 

The Obama Administration’s Labor Department took the unique viewpoint that pharmaceutical representatives must be covered by overtime rules because they aren’t really salespeople.  Technically, government regulations already hold drug reps aren’t to “sell” to doctors but rather promote medications to doctors. [2]  That line of reasoning made me smile.  Speak of splitting hairs!

In reality, drug reps are not working differently than other traveling salespeople.  Thus, the Supreme Court upheld drug reps are not covered by federal overtime rules. 

Justice Alito said the Labor Department’s position was “quite unpersuasive.” [1]

Why would the Obama Administration invest time and expense to obtain OT for drug reps?  Sometimes we hear the Administration is concerned about medical costs yet Administration actions like this would increase costs for pharma and other medical companies.  Wouldn’t some of these higher OT costs be passed along to consumers (and the government itself as payer of Medicare and Medicaid)?

Doesn’t the Administration claim to be out for the little guy?  Drug reps earn a median, not average, pay in excess of $90,000 a year.  [2]  I’ve known a few drug reps over the years and they also receive use of a company car in order to call on doctors.

This Administration attempt was fortunately put down by the SOTUS, but is yet another example of why American business trembles about our government.

[1] http://www.nasdaq.com/article/supreme-court-rejects-overtime-pay-for-drug-reps-20120618-00791

[2] http://online.wsj.com/article/SB10001424052702303836404577474421746036722.html

 Pictures from Wikipedia Commons.

Justice Alito Points Out Health Insurance Mandate Would Apply to Burial Insurance

In Government Power, Obama Administration, ObamaCare on March 28, 2012 at 10:43 pm

By President Obama’s reasoning, the US government can force you to buy burial insurance.  Perhaps burial insurance will be a future “reform” that Washington will mandate on us.

Justice Samuel Alito pointed this out in Tuesday’s Supreme Court oral arguments on the Constitutionality of the insurance mandate of ObamaCare/PPACA.  As shown in the transcript below [1], Alito calls out that Solicitor General Donald Verrilli is incorrect in saying burial services are different.  The exact same logic applies. 

In fact, as shown in numerous articles [2] [3], many states have been inundated with indigent burials.  Illinois actually stopped paying for them for a time.  If the government can force you to buy health insurance lest you later receive services you cannot pay for, it can also force you to buy burial insurance.  Everyone dies and those who lack burial insurance and lack the means to pay for a burial are paid for by everyone else through indigent burials.

JUSTICE ALITO: Do you think there is a, a market for burial services? 

VERRILLI: For burial services? 

JUSTICE ALITO: Yes. 

VERRILLI: Yes, Justice Alito, I think there is. 

JUSTICE ALITO: All right, suppose that you and I walked around downtown Washington at lunch hour and we found a couple of healthy young people and we stopped them and we said, “You know what you’re doing? You are financing your burial services right now because eventually you’re going to die, and somebody is going to have to pay for it, and if you don’t have burial insurance and you haven’t saved money for it, you’re going to shift the cost to somebody else.” 

Isn’t that a very artificial way of talking about what somebody is doing? 

VERRILLI: No, that – 

JUSTICE ALITO: And if that’s true, why isn’t it equally artificial to say that somebody who is doing absolutely nothing about health care is financing health care services? 

VERRILLI: It’s, I think it’s completely different. The — and the reason is that the, the burial example is not — the difference is here we are regulating the method by which you are paying for something else — health care — and the insurance requirement — I think the key thing here is my friends on the other side acknowledge that it is within the authority of Congress under Article I under the commerce power to impose guaranteed-issue and community rating forms, to end — to impose a minimum coverage provision. Their argument is just that it has to occur at the point of sale, and – 

JUSTICE ALITO: I don’t see the difference. You can get burial insurance. You can get health insurance. Most people are going to need health care. Almost everybody. Everybody is going to be buried or cremated at some point. What’s the difference? 

VERRILLI: Well, one big difference, one big difference, Justice Alito, is the — you don’t have the cost shifting to other market participants. Here – 

JUSTICE ALITO: Sure you do, because if you don’t have money then the State is going to pay for it. [1]

 

[1] http://www.kaiserhealthnews.org/Stories/2012/March/27/transcript-highlights-Supreme-Court-day-2.aspx

[2] http://www.nytimes.com/2009/10/11/us/11burial.html

[3] http://www.sj-r.com/news/x135715760/State-stops-paying-for-indigent-burials

Do You Have A Legal Right to Social Security?

In Social Security, US Supreme Court on August 17, 2011 at 9:45 pm

Do you have a legal right to Social Security?

No.

This is not a matter of opinion.  It is not a recent change.  No nefarious politician stole your Social Security in the middle of the night.

It is old news but not widely known that in 1960, the United States Supreme Court ruled you have no legal claim to Social Security.

But doesn’t Social Security mail you an annual statement of projected Social Security benefits?

Yes, but the annual statement shows “potential benefits”.  It is not legally binding.

Under current law, any American worker who pays into the system will receive benefits upon retirement.  Nevertheless, the benefits may be changed or taken away at any time.  

The Social Security Administration itself explains:

‘The fact that workers contribute to the Social Security program’s funding through a dedicated payroll tax … can be said to establish “rights” to certain government services. This is often expressed in the idea that Social Security benefits are “an earned right.”  ….  But like all federal entitlement programs, Congress can change the rules regarding eligibility–and it has done so many times over the years.  The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.” [1] [emphasis added]

There has been a temptation throughout the program’s history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit…. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled “RESERVATION OF POWER,” specifically said: “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” [1] [emphasis added]

In Flemming v. Nestor (1960), the US Supreme Court considered the case of Ephram Nestor, whose Social Security payments were denied.  Nestor sued, holding that he had a Social Security contract after he had paid Social Security Withholding Taxes into the system during his career.  The Court ruled it was valid to deny Nestor because a 1954 law forbade deported Communists from receiving Social Security.  Nestor had been deported as a member of the Communist Party.   

Justice John Marshall Harlan’s ruling was explicit, saying “We must conclude that a person covered by the [Social Security] Act has not such a right in benefit payments …. It is apparent that the noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity” [1] [emphasis added]

The Court similarly held there is no legal right to Social Security in Helvering v. Davis (1937).  Then, the Supreme Court ruled “The [Social Security] proceeds of both the employee and employer taxes are to be paid into the Treasury like any other internal revenue generally, and are not earmarked in any way.” [2] [emphasis added]

In other words, Social Security is not a retirement program nor is it an annuity.  You pay FICA “contributions”, which are properly called taxes.  Social Security currently pays retiree benefits in loose relation to amounts paid and in the same manner as an annuity: the benefit lasts until death, is not owned and cannot be bequeathed.

[1] http://www.ssa.gov/history/nestor.html
[2] http://www.cato.org/pub_display.php?pub_id=5776

Pictures from Wikipedia Commons.