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PHILADELPHIA � Employers are free to modify health care benefits for retirees as soon as they become eligible for Medicare now that a federal appeals court has rejected a challenge to a regulation passed by the Equal Employment Opportunity Commission that approved the practice. In AARP v. EEOC, No. 05-4594, the 3d U.S. Circuit Court of Appeals held that the EEOC has broad powers to create “exemptions” for practices that would otherwise violate federal age-bias laws. The ruling upholds a decision by Judge Anita B. Brody of the U.S. District Court for the Eastern District of Pennsylvania, in which she reversed herself and upheld the regulation in light of a recent decision from the U.S. Supreme Court. Initially, Brody ruled in favor of retiree lobbyist AARP, issuing an injunction that barred the EEOC from enforcing the regulation, because it directly conflicted with an existing 3d Circuit precedent, Erie County Retiree Association v. County of Erie. Brody said that, while courts ordinarily owe “deference” to agency decisions under Chevron USA Inc. v. Natural Resources Defense Council, no such deference was owed to an agency decision that conflicts with existing case law.

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