John M. Husband, Thomas E.J. Hazard, and Emily Hobbs-Wright, Editors
Holland & Hart LLP

Vol. 17, No. 6
June 2008

DISABILITY DISCRIMINATION

Firing employee for high cost of child's treatment violates ADA

Tanya Milligan

A little-known but significant provision of the Americans with Disabilities Act (ADA) protects applicants and employees from discrimination based on their association with a disabled individual, regardless of whether the applicant or employee himself has a disability. For example, you can't fire an employee who assists individuals with HIV/AIDS during her off hours because you worry your image will be tarnished if your employees associate with "those kinds of people."

But what about firing someone whose disabled family member is costing your company a fortune in health care? Can you fire an employee for a dollars-and-cents reason without violating the ADA? The following case answers that question with a resounding "no."

Trujillo family gets bad news

William and Debra Trujillo were employed by PacifiCorp at a power plant in Sweetwater County, Wyoming. PacifiCorp operates its own self-insured health care plan, which means the company pays for employee claims directly rather than submitting them to insurance. The Trujillos participated in PacifiCorp's plan, adding their son Charlie as a covered dependent.

Charlie suffered from a brain tumor that later metastasized to his spine. The Trujillos used PacifiCorp's health plan to cover the cost of his treatment. On May 30, 2003, Charlie suffered a relapse and was determined to be in the final stages of cancer at that point. As a result, his doctors initiated aggressive treatment to reverse the progression of his disease. After just six weeks, his medical bills totaled over $62,000.

Company institutes unique investigation

On June 10, 2003, only 11 days after Charlie began his aggressive treatment, PacifiCorp began investigating the Trujillos for suspected time theft. Because employee time sheets were notoriously inaccurate, the company investigated the Trujillos by comparing their time sheets with the logs kept by the security gate to track who came and went from the plant. The gate logs were used for security purposes, and before this investigation, they had never been used to verify time sheets. Comparing the Trujillos' time sheets and the gate logs, PacifiCorp found discrepancies, which suggested time theft.

When PacifiCorp confronted William about the discrepancies, he was able to explain some of the problems with his time sheet, but he couldn't recall whether he was working during the times for which he was asked to account. At no time during any of the interviews with him did PacifCorp raise the specific issue of time theft. Nevertheless, on June 19, the company sent him a termination letter citing 10 incidents of "time theft" amounting to 21.1 hours of regular time and six hours of overtime.

PacifiCorp also confronted Debra about the discrepancies between her time sheets and the gate logs. When questioned, she explained that the security gate logs weren't representative of her time worked because she often went to her vehicle during the day and piggybacked on other employees' cards to enter the security gate. Although other employees generally substantiated her explanation, PacifiCorp sent her a termination letter on August 25, stating she falsified time records to show that she worked 7.8 hours of regular time and 5.1 hours of overtime. After the Trujillos were terminated, their son died.

Association discrimination under the ADA

The Trujillos filed a lawsuit against PacifiCorp alleging they were fired not for time theft, but because the company didn't want to pay for their son's cancer treatment. They advanced two theories of recovery. First, they claimed that their termination amounted to unlawful association discrimination under the ADA. Under the association provision of the ADA, an employer cannot take adverse action against an employee because of his relationship or association with a qualified individual with a disability.

Second, the Trujillos contended that PacifiCorp terminated them in violation of the Employee Retirement Income Security Act (ERISA). Section 510 of ERISA makes it illegal for an employer to terminate an employee for purposes of interfering with employee benefits protected by the Act. The Trujillos' right to health care benefits for their child was protected under ERISA.

The district court summarily dismissed both theories of recovery. The lower court stated that the Trujillos failed to present proof that PacifiCorp tracked Charlie's health care expenses or some other evidence that would link his illness to an illegal motive to terminate them. On appeal, however, the Tenth U.S. Circuit Court of Appeals (which covers Colorado) disagreed, stating that the Trujillos presented enough evidence pointing to PacifiCorp's concerns about the cost of Charlie's illness that the case shouldn't be dismissed. The Tenth Circuit revived the claims and sent the case back to the district court for a trial on both claims.

Weighing the evidence

What evidence tipped the scale in favor of the employees in this case? The Tenth Circuit cited everything from evidence of PacifiCorp's general concerns about rising health care costs to specific facts that Charlie's claims were considered "high dollar" costs. The court also found PacifiCorp's practice of factoring insurance costs into the budget line item for the labor costs of each employee was evidence weighing heavily in favor of demonstrating a motive to discriminate against "expensive" employees like the Trujillos.

Finally, the court found that the temporal proximity between Charlie's relapse and the initiation of expensive treatment and the company's investigation of the Trujillos for alleged time theft established an inference that PacifiCorp wanted to get rid of them because their son's illness made them too expensive. The court also found that the company's alleged reason for terminating them ― time theft ― was severely undermined by its history of not terminating employees for similar time sheet violations or, for that matter, for more egregious violations of company policy. Trujillo v. PacifiCorp, Case No. 06-8074, May 7, 2008.

A penny wise

In addition to alerting you to the issue of ADA association discrimination, this case illustrates the importance of examining the full record before terminating an employee. Temporal proximity between some protected event ― in this case, the employees' increased use of health benefits ― and an adverse action, an investigation that deviates from normal practices, and firing someone when others have received less severe discipline for similar workplace misconduct are, in combination, enough for a court to find that your stated reason for a termination may be pretext for discrimination. Ensuring fairness and consistency in your investigations and disciplinary actions is the best way to protect your employment decisions from challenge.

For more information on this case, contact Tanya Milligan at (303) 295-8094 or temilligan@hollandhart.com.

Copyright 2008 M. Lee Smith Publishers LLC

COLORADO EMPLOYMENT LAW LETTER is intended only to inform, but not to provide legal advice, and recipients should seek professional advice with regard to specific applications of the information.