|
Mary Anne Q. Wood, Darryl J. Lee, Larry S. Jenkins, Joi Pearson, Kathryn O. Balmforth, Richard J. Armstrong, and Stephen G. Wood, Editors
Wood Crapo LLC
Vol. 14, No. 1
July 2008
DISABILITY DISCRIMINATION
Power company zapped for taking shortcut around high health care costs
With health care costs skyrocketing, employers are increasingly looking for ways to reduce costs. However, a recent decision from the Tenth U.S. Circuit Court of Appeals, which covers Utah, warns that employers that micromanage health care costs to
the detriment of employees whose families have serious medical needs risk liability under the Americans with Disabilities Act (ADA) and the Employee Retirement Income Security Act (ERISA).
Powerless to avoid calamity
William and Debra Trujillo worked for PacifiCorp at the Jim Bridger Power Plant in Sweetwater County, Wyoming, for a combined total of 33 years and participated in the employer-provided health insurance plan. Their son, Charlie, who was also covered
under the plan, developed a malignant brain tumor that eventually spread to his spine. Before he died, he underwent aggressive experimental treatments. The medical bills for those procedures exceeded $62,000.
Insurance claims for Charlie's medical care were paid by PacifiCorp. Like most employers, PacifiCorp was deeply concerned about rising health care costs. In fact, it factored health care costs for each employee into the plant's line item budget for
labor costs and designated claims over $50,000 as "high-dollar."
A PacifiCorp executive commented that 90 percent of all health care costs were incurred by only 10 percent of the employees, and Charlie was only one of two persons with a terminal illness during the relevant time period. Just before Charlie's
relapse and final treatments, PacifiCorp asked the state of Wyoming for a utility rate increase, justified in part by significantly increased health care costs.
Eleven days after Charlie's relapse, PacifiCorp began investigating the Trujillos for suspected time theft. The company alleged that time was falsely reported during a planned outage when plant employees typically work overtime on specialty crews to
expedite turbine maintenance. The Trujillos kept track of their time on time sheets that were verified and approved by their supervisor. Each supervisor had his own method of managing time sheets. Additionally, some supervisors occasionally allowed
employees to leave early but record a full shift.
A supervisor named Larry Cundick began the investigation after he was asked to sign time sheets on behalf of another supervisor. Cundick decided to compare the Trujillos' time sheets with the list of entries and exits on the security gate log, even
though supervisors had never used that method of verification before. Because the Trujillos often carpooled to work, he assumed that the couple would work at the same times and found discrepancies between their time sheets and the gate logs.
When asked to explain the discrepancies, William could explain some of them but generally couldn't recall whether he was working at certain times. He told management that he was under considerable stress because of his son's condition and his own
battle with severe depression. Three days later, he was contacted again. It was at that time that he disclosed that he was taking antidepressants and attempting to get additional help, but his doctor was unavailable for another two weeks. About a
week later, he received a termination letter citing 10 incidents of time theft.
PacifiCorp decided to fire Debra at about the same time. Before making its decision, the company talked to her by telephone while she was attending to her son in the hospital. When asked to explain the discrepancies, she said that she couldn't recall
specifics. She did, however, state that the gate logs didn't necessarily confirm her presence or absence at the plant. That was because she didn't always use her identification card to get through the gates because they were either open or she rode
with a coworker.
During a follow-up call, the company asked Debra to provide the names of coworkers who had given her rides. Although her coworkers confirmed that they had given her rides in and out of the plant during the relevant time period, they were unable to
recall specific dates or times. Nonetheless, PacifiCorp terminated her for intentionally falsifying time records.
District court responds to charges
The Trujillos sued PacifiCorp in federal district court, claiming they were fired because of the health care costs associated with their son's illness in violation of the ADA and ERISA. The association clause of the ADA provides that disability
discrimination includes "excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association." ERISA makes
it illegal to terminate any person "for the purpose of interfering with the attainment of any right to which such [person] may become entitled to under [an employee benefit plan]."
The district court dismissed the Trujillos' claims without a trial. In reaching its decision, it determined that they had failed to establish an initial case for their ADA claim. To succeed on an ADA association discrimination claim, an employee is
required to show that:
- he is qualified for the job;
- he was subjected to an adverse employment action;
- his employer knew he had a relative or associate with a disability; and
- the adverse employment action occurred under circumstances raising a
reasonable inference that the disability of the relative or associate was a determining factor in the employer's decision.
While the district court determined that the Trujillos met the first three elements, it decided that they were
unsuccessful in meeting the fourth prong of the test. In particular, it concluded that they had failed to show that PacifiCorp tracked their son's medical costs and that rate increases and the company's statements about health care costs were
sufficient circumstantial evidence to warrant a trial. Unhappy with that result, they appealed to the Tenth Circuit.
Power reversal by Tenth Circuit
The Tenth Circuit reversed the district court's decision. It determined that careful consideration of the totality of the circumstances raised a reasonable inference that PacifiCorp's motive in firing the Trujillos was to save money on health care.
The court rejected the company's argument that the Trujillos needed to show direct evidence that it was monitoring the individual costs being incurred for their son's medical claims.
Instead, evidence regarding general concerns about rising health care costs, coupled with specific evidence that Charlie's claims were considered "high-dollar," suggested that PacifiCorp's decision to fire the Trujillos may have been motivated by its
desire to save money. The court also noted that the company kept tabs on Charlie's claims and that there was only one other terminal illness during the relevant time period. But according to the court, the strongest evidence of discriminatory motive
was the timing between Charlie's relapse and the investigation that resulted in his parents' termination. William was fired just three weeks after Charlie's relapse, and Debra was fired three weeks after that. The court concluded that the totality of
the evidence supported an inference that PacifiCorp fired the Trujillos for an illegal reason.
The court also determined that the Trujillos had raised a genuine question about whether PacifiCorp's reason for firing them was pretext for discrimination. They offered evidence that other employees under investigation were disciplined
progressively, taking into consideration their past performance and their current situation. Additionally, other employees with timecard discrepancies were punished with unpaid suspensions rather than termination. The court agreed with the Trujillos'
analysis, stating that irregularities in PacifiCorp's investigation of the couple suggested its reasons for firing them were pretext.
The court found that the company's comparison between the time sheets and the gate logs was an unreliable method for proving time theft, given that both managers and employees testified that neither time sheet nor gate-access procedures were
regularly followed. It also noted that PacifiCorp failed to interview one of the Trujillos' supervisors during the outage ― the same supervisor, incidentally, who later testified that he had allowed the couple to leave early without any
adjustment to their time sheet to attend to their son.
Furthermore, PacifiCorp assumed that the Trujillos worked at the same time to establish times that they supposedly exited the plant. However, it failed to give them the benefit of the same assumption that they both were working at other times. In
short, the court found the investigation suspicious because PacifiCorp never gave the Trujillos the benefit of the doubt despite their years of service to the company. Instead, it construed all evidence against them and failed to interview key
witnesses. Trujillo v. PacifiCorp, 2008 US App LEXIS 9807 (10th Cir., May 7, 2008).
Danger: high voltage
In a time of skyrocketing health care costs, employers should consider the Tenth Circuit's decision in this case a warning: Do not micromanage your employees' health care costs to the point that you're tempted to fire certain workers to eliminate
those costs. The court concluded that PacifiCorp's practice of factoring insurance costs into the budget line item for labor costs of each employee "weighs heavily in favor of demonstrating motive to discriminate against an expensive employee."
Also, employers should be careful when investigating an employee for alleged wrongdoing, particularly when they know that someone covered under that employee's benefit plan is experiencing a major medical crisis. Such investigations should be
conducted carefully, and the discipline for confirmed violations should be comparable to measures taken against other employees for similar violations. Employers that don't heed this warning risk being shocked with jury trials for possible violations
of the ADA and ERISA.
Copyright 2008 M. Lee Smith Publishers LLC
The contents of the UTAH EMPLOYMENT LAW LETTER are intended for general information purposes only and should not be construed or relied upon as legal advice or a legal opinion on any specific facts or circumstances. Anyone needing specific legal
advice should consult an attorney. For further information about the content of any article in this newsletter, please contact any of the editors.
|
