Sixth Circuit Affirms Employee’s ERISA Summary Judgment for Promissory Estoppel, Breach of Fiduciary Duty and Anti-Cutback Violation

[Editor's Note: The Sixth Circuit in October subsequently upgraded its Deschamps opinion  to Recommended for Full-Text publication].

This morning, the Sixth Circuit Court of Appeals affirmed summary judgment for an employee on three ERISA claims after the defendant pension plan reduced his pension credits for the 10 years that he worked for the defendant employer in Canada.  Deschamps v. Bridgestone of Americas, Inc. Salaried Employees Pension Plan, No. 15-6112 (6^th Cir. 9-12-16).  The plaintiff had refused to accept the transfer to the U.S. in 1993 unless he was given pension credit for his prior 10 years in Canada.   The HR and plant managers confirmed with corporate HQ that he would receive that pension credit, which was also included on all of his pension written and online pension summaries until 2010, when the employer reinterpreted the terms of the plan and reduced the pension credits previously awarded to him and other expatriate transfers.  He appealed internally with the Plan, but his appeals were denied and the lawsuit followed.  The Court of Appeals agreed that the undisputed issues of fact in the record confirmed that the employer had been grossly negligent, breached its fiduciary duty and violated the anti-cutback rules in leading him to believe that he would receive the pension credit and then revoking those credits more than 17 years after his transfer and after he rejected two job offers from a competitor (which subsequently went bankrupt).   The employer’s convoluted interpretation of the definition of “supervisor” (which was not otherwise defined in the plan) to exclude the plaintiff (who was an hourly maintenance manager) contributed to the Court’s decision.

According to the Court’s opinion, the plaintiff sought and received assurances from the U.S. plant and human resources managers that they had checked with their corporate office and he would receive pension credit for his 10 years working in Canada if he were to transfer to the U.S. facility in 1993 as the plant maintenance manager. (The retired corporate actuary, however, denied ever approving this information).  For his first 16 years of employment, his online and written pension summaries also listed his 1983 seniority date.  Granted, most (if not all) of these documents stated that they were only estimates and that the actual Plan document governed his eligibility for benefits.  In 2010, the company sought to correct the misapplication of the seniority dates for employees who transferred from outside the U.S. and deducted those 10 years from the plaintiff’s pension accrual.  He appealed internally, but the Plan denied his appeal on the grounds that he was not eligible because he had not been salaried or a “supervisor.”  “Supervisor” was not defined in the Plan or SPD, but the Plan defined it to exclude non-exempt managers like him.  The plaintiff brought suit against the Plan, his employer and its parent company alleging promissory estoppel under 29 U.S.C. § 1132(a)(3), breach of fiduciary duty pursuant to 29 U.S.C. § 1104, and an anti-cutback violation pursuant to 29 U.S.C. §1054(g). The trial court granted him summary judgment on all three claims.  The employer, parent and Plan appealed.

Plaintiffs have a long burden of proof when it comes to promissory estopped claims.  They must show:

(1) conduct or language amounting to a representation of material fact; (2) awareness of the true facts by the party to be estopped; (3) an intention on the part of the party to be estopped that the representation be acted on, or conduct toward the party asserting the estoppel such that the latter has a right to believe that the former’s conduct is so intended; (4) unawareness of the true facts by the party asserting the estoppel; and (5) detrimental and justifiable reliance by the party asserting estoppel on the representation. . . . In the case  of an unambiguous pension plan, the plaintiff must also prove three additional elements: “[(6)] a  written representation; [(7)] plan provisions which, although unambiguous, did not allow for  individual calculation of benefits; and [(8)] extraordinary circumstances in which the balance of equities strongly favors the application of estoppel.”

The Court found that the terms of the Plan were ambiguous because of how it interpreted “foremen” and “supervisors” to exclude non-salaried managers like the Plaintiff when those terms were not defined within the Plan itself.   Further, the defendants conceded that the plaintiff could prove elements (1), (3) and (4).

The defendants attempted to dispute that the Plaintiff could prove that the defendants were aware of the “true facts” because he did not inquire of the corporate HQ pension officials himself, but instead, relied on the plant managers to contact corporate HQ for him.  The Court described this element to require the plaintiff to show “either intended deception or such gross negligence as to amount to constructive fraud.”  The Court construed prior precedent and found that the employer was grossly negligent in assuring the plaintiff for 16 years that he would receive the pension credit and not attempting to correct that mistake (if it was a mistake) shortly after making it in response to his specific inquiries.  Further, the plaintiff could not be held responsible for earlier realizing the mistake in light of the convoluted interpretation of “supervisor” which the Plan adopted (to exclude managers).  Thus, the Court found that the employer could be found liable for “constructive fraud.”

The employer also disputed whether the plaintiff could prove that he detrimentally relied upon the employer’s assurances.  In particular, the plaintiff had rejected attractive job offers from a competitor which subsequently went bankrupt and laid off thousands of employees.   The Court rejected the employer’s argument because there was no evidence that the plaintiff would definitely have been laid off by the competitor.   In addition, there was no legal requirement that the competing job offer be economically better, as long as it was an opportunity which the plaintiff rejected in reliance on his employer’s representations about his pension status.   Further, the plaintiff’s reliance for 16 years on the employer’s written and oral (mis)representation were reasonable when he rejected the competitor’s offer of a higher salary.

As for the breach of fiduciary duty claims, the plaintiff was required to show

(1) Bridgestone acted in a fiduciary capacity in making misrepresentations to Deschamps, (2) those misrepresentations were material, and (3) Deschamps detrimentally relied on the misrepresentations. . . . The second element [was] not disputed. 

The disputed issue was whether the employer was a fiduciary:

A fiduciary is defined by ERISA to include a corporation10 who “exercises any discretionary authority or discretionary control respecting management of [a] plan” or “has any discretionary authority or discretionary responsibility in the administration of such plan.” 29 U.S.C. § 1002(21)(A).  In determining whether a corporation is a fiduciary, rather than looking to the formal title, we use a functional approach, looking to whether it acts in a fiduciary capacity with respect to the conduct at issue.

 While making business decisions which have a collateral effect on employee benefits (such as terminating a plan), processing claims, applying eligibility rules or calculating benefits are not fiduciary  functions, explaining the terms of the plan, and conveying information about likely future plan benefits are fiduciary functions.  Accordingly, in this case, conveying information to the Plaintiff about receiving pension credits and the likely benefits he would receive in the future were fiduciary functions.  The Court also found that the plant and HR managers had apparent authority to bind the employer: “Bridgestone acted as a fiduciary when it, through its agents with apparent authority, misrepresented to Deschamps the status of his pension benefits.”

The employer disputed that it had ever construed the Plan to cover the plaintiff, and, therefore, could not have violated the anti-cutback provisions when in 2010 it retracted his credit for the 10 years he worked in Canada between 1983 and 1993.  It construed the contrary assurances to the plaintiff as a “clerical error.”

ERISA prohibits plan amendments that decrease a participant’s accrued benefits, with two exceptions that do not apply here.  29 U.S.C. § 1054(g).  At issue is whether we look to the text of the Plan or the administrator’s interpretation of the Plan in determining if Deschamps accrued a benefit prior to 1993.  

In essence, an employer can illegally cut-back benefits if it changes or reinterprets the terms of the plan to reduce benefits that a plaintiff reasonably believed provided higher benefits based on a different and plausible interpretation of the plan.

As discussed above, the text of the Plan is at worst ambiguous, but at best, favors Deschamps’s argument that he was a covered employee in 1983 under the classification of  “supervisor.”  It is not untenable that Deschamps, in his capacity as a maintenance manager, was a supervisor under the language of the Plan.  Further, it is undisputed that as a result of the [2010] change in the interpretation of this provision that excluded foreign employees from being classified as covered employees, Deschamps’s benefits were decreased. Therefore, Deschamps has established an anti-cutback violation . . .

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Franklin County Appeals Court: Nothing is Reasonably Reliable In a RIF or Public Litigation.

Last month, the Franklin County Court of Appeals affirmed the dismissal of a defamation and wrongful discharge suit brought by the former head of security for Capital University whose job was eliminated in 2006 during a budget crisis. Woods v. Capital Univ., No. 2009-Ohio-5672. Although the 54-year old plaintiff had been told in writing during his exit interview that his performance played no role in the elimination of his position (and he had received nothing but promotions prior to his termination), the university’s attorney was quoted in two local newspapers as attributing part of the termination decision to “job performance issues.” His responsibilities were divided and his public safety management responsibilities were given to a 28-year old safety officer. Nonetheless, the Court affirmed dismissal because the allegedly defamatory statements related to a matter of public concern, which required proof of actual damages or actual malice, and the redistribution of duties to existing employees cannot support an inference of age discrimination. Finally, his promissory estoppel claims were dismissed because the three verbal promises of continued employment were contracted by the terms of his written contract with the university.

According to the Court’s opinion, the plaintiff was eight years away from retiring from another college when he was hired by Capital to reorganize its public safety department. When he expressed reluctance to leave a secure position so close to his retirement age – particularly with friction that was likely to develop during the planned reorganization, he was assured by the VP/Treasurer that he would be employed at least eight years to retire at Capital. However, his offer letter only promised one year of employment. He was promoted the following year and given two more one-year appointments. When rumors surfaced about a possible budget deficit, he again sought reassurance about his job security and was again assured by the VP/Treasurer that his job was safe. When the VP/Treasurer was then fired, he sought and obtained similar assurance from the President, who then shortly thereafter left.

When an impending $12.5M deficit was revealed, a committee examined all positions and recommended the elimination of 72 positions, including that of the plaintiff. His termination letter informed him that his job was eliminated because of the budget difficulties and not because of his job performance. His public safety duties were reassigned to a 28-year old officer and his auxiliary duties to other employees. He then filed a lawsuit for $4.6M against Capital for age discrimination and promissory estoppel. The lawsuit received publicity in the local media and Capital’s attorney was quoted in two newspapers as stating that the plaintiff had been let go because of the budget difficulties and “job performance issues.” The plaintiff amended his claims to include the allegedly defamatory statements by the attorney. The trial court granted summary judgment to the defendants and the plaintiff appealed.

Defamation Claim

The Court of Appeals addressed the defamation claim first and found the attorney’s statement about the plaintiff being fired in part because of his job performance to be defamatory on its face (or defamation per se) since it had the tendency to hurt plaintiff’s career and ability to find another job. The Court rejected the defense attempt to

characterize this statement as vague and contend that if it is defamatory at all, it is only defamatory per quod. We disagree. No employer fires an employee for good job performance. The only reasonable reading of [the attorney’s] statement is that Capital terminated [the plaintiff’s] employment for two reasons, and one of those reasons was [the plaintiff’s] poor job performance. Thus, the statement in and of itself tends to injure [the plaintiff] in his occupation as any employer would hesitate before hiring a potential employee who underperformed in his previous job. Such a statement is defamatory per se.

Typically, damages in such situations are presumed without proof or pleading. However, in this case, the Court found the statement to also have limited protection from the First Amendment. Because the plaintiff worked for a private college, he was not a general public figure. Moreover, the fact that he filed a lawsuit – by itself – did not render him a limited purpose public figure. However, the fact that he sought $4.6M in damages from a significant private institution which was having very public budget difficulties rendered the issue of the reduction in force and his lawsuit a matter of public concern – as evidenced by the significant media coverage. Therefore, the claim was governed by the United States Supreme Court’s decision in Gertz v. Robert Welch, Inc. (1974), 418 U.S. 323, 345-46, which concluded that:

in such cases, the states could define for themselves an appropriate standard of liability, so long as they did not impose liability without fault. Gertz, 418 U.S. at 347. Subsequently, Ohio adopted the ordinary negligence standard as the standard of liability for actions involving a private individual defamed in a statement about a matter of public concern. Landsdowne v. Beacon Journal Publishing Co. (1987), 32 Ohio.St.3d 176, 180. In addition to requiring an element of fault, the Gertz court also limited the type of damages recoverable in defamation cases involving private individuals and statements regarding a matter of public concern. Given the constitutional command of the First Amendment, . . . the states could no longer permit recovery of presumed or punitive damages, at least when liability was not based upon a showing of actual malice. Gertz, 418 U.S. at 349, . . . Thus, in Ohio, a plaintiff must prove either: (1) ordinary negligence and actual injury, in which case he can receive damages for the actual harm inflicted; or (2) actual malice, in which case he is entitled to presumed damages.

Thus, the plaintiff was required to show actual malice or actual injury (i.e., “out-of-pocket loss, impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering”). However, the plaintiff’s testimony that he felt that his job hunt was impaired by “google searches” of the attorney’s statement was too speculative to support proof of actual injury. Moreover, he failed to introduce any evidence that the attorney knew that his statement was false at the time it was made. Therefore, summary judgment on his defamation claim was upheld.

Retaliation

The plaintiff also claimed that the attorney’s defamatory statement was made in retaliation for the plaintiff’s consultation with an attorney following his termination. However, the Court refused to infer causation (i.e., the defamatory statement from the consultation with counsel) based on the passage of two months between the demand letter from the plaintiff’s attorney and the newspaper accounts repeating the defamatory statement. Because there was no other evidence of causation or proving a link between the two events, the Court affirmed summary judgment.

Age Discrimination

Typically, a discrimination claim requires that the plaintiff show that he was replaced by someone outside the protected class. The Court noted that this is extremely difficult, if not impossible, to show when the plaintiff was fired in a reduction in force:

When a discharge results from a work force reduction, an employee is not replaced, instead his position is eliminated. Barnes v. GenCorp Inc. (C.A.6, 1990), 896 F.2d 1457, 1465. Logically, then, a plaintiff discharged as part of a work force reduction cannot offer evidence that he was replaced by a substantially younger person to satisfy the fourth element of the prima facie case. Moreover, even if such a plaintiff demonstrates that his discharge permitted the retention of substantially younger persons, no inference of discriminatory intent can be drawn. Id. In the context of a work force reduction, the discharge of the plaintiff and retention of a substantially younger employee is not "inherently suspicious" because a work force reduction invariably entails the discharge of some older employees and the retention of some younger employees. Brocklehurst v. PPG Industries, Inc. (C.A.6, 1997), 123 F.3d 890, 896. Permitting an inference of intentional discrimination to arise from the retention of younger employees "would allow every person age 40-and-over to establish a prima facie case of age discrimination if he or she was discharged as part of a work force reduction." Barnes at 1465.

{¶57} Consequently, when a plaintiff's position is eliminated as part of a work force reduction, courts modify the fourth element of the prima facie case to require the plaintiff to " 'com[e] forward with additional evidence, be it direct, circumstantial, or statistical, to establish that age was a factor in the termination.' " Kundtz v. AT & T Solutions, Inc., 10th Dist. No. 05AP-1045, 2007-Ohio-1462, ¶21 . . . The purpose of this modified requirement is to ensure that, in work force reduction cases, the plaintiff has presented evidence to show that there is a chance that the work force reduction is not the reason for the termination. Asmo v. Keane, Inc. (C.A.6, 2006), 471 F.3d 588, 593 . . .

Nonetheless, the plaintiff can also show discrimination if he was in fact replaced instead his duties being eliminated, consolidated or distributed among a number of different people:

An employee is not eliminated as part of a work force reduction when he or she is replaced after his or her discharge. However, a person is not replaced when another employee is assigned to perform the plaintiff's duties in addition to other duties, or when the work is redistributed among other existing employees already performing related work. A person is replaced only when another employee is hired or reassigned to perform the plaintiff's duties.

In this case, the plaintiff’s 2004 promotion involved him assuming certain duties outside the public safety department. When his position was eliminated in 2006, those duties were reassigned and only his public safety duties were given to the 28-year old officer. The reassignment of his auxiliary duties were more than cosmetic or superficial duties. Thus, there was sufficient evidence to show that his position was eliminated and his duties distributed in a genuine reduction in force. Therefore, without additional evidence or direct evidence of age discrimination, summary judgment on this claim was affirmed.

Promissory Estoppel.

Plaintiff brought this claim based on the three separate promises of job security which he received both before and after he was hired by Capital. As explained by the Court:

Promissory estoppel provides an equitable remedy for a breach of an oral promise, absent a signed agreement. Olympic Holding Co. v. ACE Ltd., 122 Ohio.St.3d 89, 2009-Ohio-2057, ¶40. In order to succeed on a claim for promissory estoppel: "The party claiming the estoppel must have relied on conduct of an adversary in such a manner as to change his position for the worse and that reliance must have been reasonable in that the party claiming estoppel did not know and could not have known that its adversary's conduct was misleading." . . . The elements necessary to prove a claim for promissory estoppel are: (1) a clear, unambiguous promise, (2) the person to whom the promise is made relies on the promise, (3) reliance on the promise is reasonable and foreseeable, and (4) the person claiming reliance is injured as a result of reliance on the promise.

The fatal flaw in his argument, however, is that he signed written contracts which promised him only employment for a year at a time. Therefore, his reliance on the oral promises was not reasonable under the circumstances:

[C]ourts cannot enforce an oral promise in preference to a signed writing that pertains to exactly the same subject matter, but has different terms. Ed Schory & Sons at 440. Thus, "[p]romissory estoppel does not apply to oral statements made prior to the written contract, where the contract covers the same subject matter.

The Court rejected the plaintiff’s argument that his employment letters were not binding contracts, but only acknowledgment of certain terms. The Court also rejected the argument that the plaintiff’s reliance on promises made during the budget crises were reasonable under the circumstances. In any event, the plaintiff did not provide any evidence that he relied on the promises to his detriment since there was not evidence that he rejected a job offer in reliance on the promises. On the contrary, despite the promises being made to him during the budget crises, he promptly began searching for another job and submitting his resume to other employers.

Insomniacs can read the full opinion at http://www.sconet.state.oh.us/rod/docs/pdf/10/2009/2009-ohio-5672.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Just When You Thought It Was Safe To Get Back in the Water, EEOC Revises COVID/ADA Guidance

 Yesterday, the EEOC posted updated COVID guidance concerning employment issues involving the pandemic and the Americans With Disabilities Act.  The updated guidance – which is substantial and affects a wide number of issues -- is posted below.  In its announcement, the EEOC update only mentioned one of the changes, involving whether an employer can always require COVID testing at work:

 EEOC’s assessment at the outset of the pandemic was that the ADA standard for conducting medical examinations was, at that time, always met for employers to conduct worksite COVID-19 viral screening testing. With the revision of A.6, below, on July 12, 2022, EEOC makes clear that going forward employers will need to assess whether current pandemic circumstances and individual workplace circumstances justify viral screening testing of employees to prevent workplace transmission of COVID-19. A.6. offers employers possible factors to consider in making this assessment, including community transmission levels and types of contacts between employees and others in the workplace. This change is not meant to suggest that such testing is or is not warranted; rather, the revised Q&A acknowledges that evolving pandemic circumstances will require an individualized assessment by employers to determine whether such testing is warranted consistent with the requirements of the ADA.

These are the updated Q&As from the EEOC:

A.5. When an employee returns to the workplace after being out with COVID-19, does the ADA allow employers to require a note from a qualified medical professional explaining that it is safe for the employee to return (i.e., no risk of transmission) and that the employee is able to perform the job duties? (Updated 7/12/22)

Yes. Alternatively, employers may follow CDC guidance to determine whether it is safe to allow an employee to return to the workplace without confirmation from a medical professional.

When an employee returns to the workplace after being out with COVID-19, the ADA allows an employer to require confirmation from a qualified medical professional explaining that the individual is able to safely return. Such a request is permitted under the ADA. First, because COVID-19 is not always a disability, a request for confirmation may not be a disability-related inquiry. Alternatively, if the request is considered a disability-related inquiry, it would be justified under the ADA standard requiring that such employee inquiries be job-related and consistent with business necessity. Here, the request meets the “business necessity” standard because it is related to the possibility of transmission and/or related to an employer’s objective concern about the employee’s ability to resume working. For example, an employer may require confirmation from a medical professional addressing whether an employee may resume specific job duties requiring physical exertion.

As a practical matter, employers may wish to consider other ways to determine the safety of allowing an employee to return to work if doctors and other healthcare professionals are unable to provide such documentation either in a timely manner or at all. This might include reliance on local clinics to provide a form, a stamp, or an e-mail to confirm that an individual is no longer infectious and is able to resume working.

A.6. Under the ADA, may an employer, as a mandatory screening measure, administer a COVID-19 viral test (a test to detect the presence of the COVID-19 virus) when evaluating an employee’s initial or continued presence in the workplace? (Updated 7/12/22)

Yes, if the employer can show it is job-related and consistent with business necessity.

A COVID-19 viral test is a medical examination within the meaning of the ADA. Therefore, if an employer implements screening protocols that include COVID-19 viral testing, the ADA requires that any mandatory medical test of employees be “job-related and consistent with business necessity.” Employer use of a COVID-19 viral test to screen employees who are or will be in the workplace will meet the “business necessity” standard when it is consistent with guidance from Centers for Disease Control and Prevention (CDC), Food and Drug Administration (FDA), and/or state/local public health authorities that is current at the time of testing. Be aware that CDC and other public health authorities periodically update and revise their recommendations about COVID-19 testing, and FDA may revise its guidance or emergency use authorizations, based on new information and changing conditions.

A positive viral test result means that the test detected SARS-CoV-2, the virus that causes COVID-19, at the time of testing, and that the individual most likely has a current infection and may be able to transmit the virus to others. A negative test result means the test did not detect SARS-CoV-2 at the time of testing. However, a negative test does not mean the employee does not have any virus, or will not later get the virus. It means only that the virus causing SARS-CoV-2 was not detected by the test.

If an employer seeks to implement screening testing for employees such testing must meet the “business necessity” standard based on relevant facts. Possible considerations in making the “business necessity” assessment may include the level of community transmission, the vaccination status of employees, the accuracy and speed of processing for different types of COVID-19 viral tests, the degree to which breakthrough infections are possible for employees who are “up to date” on vaccinations, the ease of transmissibility of the current variant(s), the possible severity of illness from the current variant, what types of contacts employees may have with others in the workplace or elsewhere that they are required to work (e.g., working with medically vulnerable individuals), and the potential impact on operations if an employee enters the workplace with COVID-19. In making these assessments, employers should check the latest CDC guidance (and any other relevant sources) to determine whether screening testing is appropriate for these employees.

Note: Question A.6. and A.8. address screening of employees generally. See Question A.9. regarding decisions to test only individual employees.

A.7. Under the ADA, may an employer require antibody testing before permitting employees to re-enter the workplace? (Updated 7/12/22)

No. An antibody test, as a medical examination under the ADA, must be job-related and consistent with business necessity. As of July 2022, CDC guidance explains that antibody testing may not show whether an employee has a current infection, nor establish that an employee is immune to infection; as a result, it should not be used to determine whether an employee may enter the workplace. Based on this CDC guidance, at this time such testing does not meet the ADA’s “business necessity” standard for medical examinations or inquiries for employees. Therefore, requiring antibody testing before allowing employees to re-enter the workplace is not allowed under the ADA. An antibody test is different from a test to determine if someone has evidence of infection with SARS-CoV-2 or has COVID-19 (i.e., a viral test). The EEOC addresses COVID-19 viral screening tests in A.6.

C.1. If an employer is hiring, may it screen applicants for symptoms of COVID-19? (Updated 7/12/22)

Yes. An employer may screen job applicants for symptoms of COVID-19 after making a conditional job offer, as long as it does so for all entering employees in the same type of job. This ADA rule applies whether or not the applicant has a disability.

In addition, if an employer screens everyone (i.e., applicants, employees, contractors, visitors) for COVID-19 before permitting entry to the worksite, then an applicant in the pre-offer stage who needs to be in the workplace as part of the application process (e.g., for a job interview) may likewise be screened for COVID-19. The screening is limited to the same screening that everyone else undergoes; an employer that goes beyond that screening will have engaged in an illegal pre-offer disability-related inquiry and/or medical examination. For information on the ADA rules governing such inquiries and examination, see Section A.

C.4. May an employer withdraw a job offer when it needs an applicant to start working immediately, whether at the worksite or in the physical presence of others outside of the worksite, because the individual has tested positive for the virus that causes COVID-19, has symptoms of COVID-19, or has been exposed recently to someone with COVID-19? (Updated 7/12/22)

An employer should consult and follow current CDC guidance that explains when and how it would be safe for an individual who currently has COVID-19, symptoms of COVID-19, or has been exposed recently to someone with COVID-19, to end isolation or quarantine and thus safely enter a workplace or otherwise work in the physical presence of others. An employer who follows current CDC guidance addressing the individual’s situation may withdraw the job offer if (1) the job requires an immediate start date, (2) CDC guidance recommends the person not be in proximity to others, and (3) the job requires such proximity to others, whether at the workplace or elsewhere. Given that for some individuals there may only be a short period of time required for isolation or quarantine, employers may be able to adjust a start date or permit telework (if job duties can be performed remotely).

C.5. May an employer postpone the start date or withdraw a job offer because of the employer’s concern that the individual is older, pregnant, or has an underlying medical condition that puts the individual at increased risk from COVID-19? (Updated 7/12/22)

No. An employer’s concern for an applicant’s well-being -- an intent to protect them from what it perceives as a risk of illness from COVID-19 -- does not excuse an action that is otherwise unlawful discrimination. The fact that CDC has noted that older adults, people with certain medical conditions, or pregnant and recently pregnant people may be at greater risk of severe illness from COVID-19 does not justify unilaterally postponing the start date or withdrawing a job offer. Therefore, an employer may not discriminate based on age (40 or older) or pregnancy and related conditions. If an underlying medical condition is a disability, an employer must determine whether the individual’s disability poses a “direct threat” by starting work immediately and, if so, whether reasonable accommodation can be provided to sufficiently lessen or eliminate any risks without causing an undue hardship. For more information on assessing direct threat and reasonable accommodation in this situation, see G.4. and G.5. For more information on potential issues regarding discrimination based on age or pregnancy, see Sections H and J.

D.17. Might the pandemic result in excusable delays during the interactive process? (Updated 7/12/22)

Yes. Some of the issues initially created by the pandemic that delayed engaging in an interactive process and/or providing reasonable accommodation may no longer exist. But, as the pandemic continues to evolve and new issues arise, it is possible that an employer may face new challenges that interfere with responding expeditiously to a request for accommodation. Similarly, reopening a workplace may bring a higher number of requests for reasonable accommodation. In all these situations, an employer must show specific pandemic-related circumstances justified the delay in providing a reasonable accommodation to which the employee was legally entitled. To the extent that evolving circumstances created by the pandemic cause a justifiable delay in the interactive process–thereby delaying a decision on a request–employers and employees are encouraged to use interim solutions to enable employees to keep working as much as possible.

D.18. Federal agencies are required to have timelines in their written reasonable accommodation procedures governing how quickly they will process requests and provide reasonable accommodations. What happens if circumstances created by the pandemic prevent an agency from meeting this timeline? (Updated 7/12/22)

Situations created by the current COVID-19 pandemic may constitute an “extenuating circumstance”—something beyond a federal agency’s control—that may justify exceeding the normal timeline that an agency has adopted in its internal reasonable accommodation procedures.

Some of the issues initially created by the pandemic that delayed engaging in an interactive process and/or providing reasonable accommodation may no longer exist. But, as the pandemic continues to evolve and new issues arise, it is possible that an agency may face new challenges that interfere with responding to a request for accommodation within an agency’s timeline. Similarly, reopening a workplace may bring a higher number of requests for reasonable accommodation. In all these situations, an agency must show specific pandemic-related circumstances that constitute an “extenuating circumstance.” To the extent that there is an extenuating circumstance, agencies and employees are encouraged to use interim solutions to enable employees to keep working as much as possible.

G.1. As government restrictions are lifted or modified , how will employers know what steps they can take consistent with the ADA to screen employees for the virus that causes COVID-19 when entering the workplace? (Updated 7/12/22)

The ADA permits employers to make disability-related inquiries and conduct medical exams to screen employees for COVID-19 when entering the workplace if such screening is “job-related and consistent with business necessity.” For more information on disability-related inquiries and medical examinations, see Section A. For information on reasonable accommodation requests related to screening protocols, see G.7.

Employers should make sure not to engage in unlawful disparate treatment based on protected characteristics in decisions related to screening and exclusion.

G.2. An employer requires workers to wear personal protective equipment and engage in other infection control practices. Some employees ask for accommodations due to a disability or a sincerely held religious belief, practice, or observance that affects the ability to wear personal protective equipment and/or engage in other infection control practices. How should an employer respond? (Updated 7/12/22)

In most instances, federal EEO laws permit an employer to require employees to wear personal protective equipment (PPE) (for example, masks and/or gloves) and observe other infection control practices (for example, regular hand washing or physical distancing protocols). Some employers may need to comply with regulations issued by the Occupational Safety and Health Administration (OSHA) that require the use of PPE. OSHA regulations do not prohibit the use of reasonable accommodations under the EEO laws as long as those accommodations do not violate OSHA requirements. Employers also may follow current CDC guidance about who should wear masks.

Regardless of the reason an employer requires PPE (or other infection control measures), when an employee with a disability needs a reasonable accommodation under the ADA to comply with an employer’s requirement to wear PPE (e.g., non-latex gloves, modified face masks for interpreters or others who communicate with an employee who uses lip reading, or gowns designed for individuals who use wheelchairs), or when an employee requires a religious accommodation under Title VII (such as modified or alternative equipment due to religious attire or grooming practices), the employer should discuss the request and provide accommodation (either what is requested by the employee or an alternative that is effective in meeting the employee’s needs) if it does not cause an undue hardship on the operation of the employer's business under the ADA or Title VII. For general information on reasonable accommodation under the ADA, see Section D.

G.3. What does an employee need to do in order to request reasonable accommodation from an employer because the employee has one of the medical conditions that CDC says may put a person at higher risk for severe illness from COVID-19? (Updated 7/12/22)

An employee—or a third party, such as an employee’s doctor—must let the employer know that the employee needs a change for a reason related to a medical condition . Individuals may request accommodation orally or in writing. While the employee (or third party) does not need to use the term “reasonable accommodation” or reference the ADA, the employee may do so.

The employee or the employee’s representative should communicate that the employee has a medical condition necessitating a change to meet a medical need. After receiving a request, the employer may ask questions or seek medical documentation to help decide if the individual has a disability—not all medical conditions meet the ADA’s definition of “disability”—and if there is a reasonable accommodation, barring undue hardship, that can be provided. For additional information on reasonable accommodation under the ADA, see Section D. For information on pregnancy-related disabilities covered under the ADA, see J.2. For general information on reasonable accommodation requests related to a sincerely held religious belief, practice, or observance, see K.12.

G.4. CDC identifies a number of medical conditions that are more likely to cause people to get severely ill if they get COVID-19. An employer knows that an employee has one of these conditions and is concerned that the employee’s health will be jeopardized upon returning to the workplace, but the employee has not requested accommodation. How does the ADA apply to this situation? (Updated 7/12/22)

The ADA does not mandate that the employer take action in this situation if the employee has not requested reasonable accommodation. Also, an employer’s duty to provide reasonable accommodation applies only if an employee has an actual disability or a record of a disability, as defined in the ADA; this means not every individual with one of the medical conditions that might place them at higher risk of COVID-19 complications will automatically satisfy these ADA definitions of disability.

Assuming the employee has a “disability” as discussed above, if the employer is concerned that the health of an employee with a disability may be jeopardized upon returning to the workplace, the ADA generally does not allow the employer to exclude the employee—or take any other adverse action—because the employee has a disability that CDC identifies as potentially placing the employee at higher risk for severe illness if the employee gets COVID-19. Under the ADA, such an adverse action is not allowed unless the employee’s disability poses a “direct threat” to the employee’s health or safety that cannot be eliminated or reduced by reasonable accommodation.

The ADA direct threat requirement is a high standard. As an affirmative defense for the employer, direct threat requires an employer to show that the individual has a disability that poses a “significant risk of substantial harm” to the employee’s own health or safety, or that of others in the workplace under 29 C.F.R. section 1630.2(r) (regulation addressing direct threat to health or safety of self or others). A direct threat assessment cannot be based solely on the disability being identified in CDC’s guidance; the determination must be an individualized assessment based on a reasonable medical judgment about this employee’s disability—not the disability in general—using the most current medical knowledge and/or on the best available objective evidence. Thus, an employer analyzing a potential direct threat must consider the duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur, and the imminence of the potential harm. Analysis of these factors will likely include considerations based on the severity of the pandemic in a particular area and the employee’s own health (for example, is the employee’s disability well-controlled), and the employee’s particular job duties. A determination of direct threat also would include whether the employee is up to date on vaccinations and the likelihood that an individual may be exposed to the virus at the worksite. Measures that an employer may be taking in general to protect all workers, such as mandatory physical distancing, also would be relevant.

Even if an employer determines that an employee’s disability poses a “significant risk of substantial harm” to the employee’s own health or safety, the employer still cannot exclude the employee from the workplace—or take any other adverse action—unless there is no way to provide a reasonable accommodation (absent undue hardship). The ADA regulations require an employer to consider whether there are reasonable accommodations that would eliminate or sufficiently reduce the risk so that it would be safe for the employee to return to the workplace, while still permitting the employee to perform the essential functions of the job.

An employer’s consideration of a possible reasonable accommodation should involve an interactive process with the employee. If there are no accommodations in an employee’s current position that sufficiently reduce or eliminate direct threat in the workplace, then an employer must consider accommodations such as telework, leave, or—as a last resort—reassignment (perhaps to a different job in a place where it may be safer for the employee to work or that permits telework).

An employer may only bar an employee from working based on the direct threat analysis if, after going through all these steps, the facts support the conclusion that the employee poses a significant risk of substantial harm to the employee’s own health or safety that cannot be reduced or eliminated by reasonable accommodation. For general information on reasonable accommodation under the ADA (i.e., where an individual’s request for reasonable accommodation has nothing to do with potential direct threat concerns), see Section D.

G.5. What are examples of reasonable accommodation that, absent undue hardship, may eliminate (or reduce to an acceptable level) a direct threat to self or others? (Updated 7/12/22)

Reasonable accommodations that may eliminate (or reduce to an acceptable level) a direct threat to self or others may include additional or enhanced protective gowns, masks, gloves, or other gear beyond what the employer may generally provide to, or require from, employees returning to its workplace. Reasonable accommodations also may include additional or enhanced protective measures, such as High Efficiency Particulate Air (HEPA) filtration systems/units or other enhanced air filtration measures, erecting a barrier that provides separation between an employee with a disability and coworkers/the public, or increasing the space between an employee with a disability and others. Another possible reasonable accommodation may be elimination or substitution of particular “marginal” functions (less critical or incidental job duties as distinguished from the “essential” functions of a particular position). In addition, accommodations may include telework, modification of work schedules (if that decreases contact with coworkers and/or the public when on duty or commuting), or moving the location of where one performs work (for example, moving a person to the end of a production line rather than in the middle of it if that provides more physical distancing).

These are only a few ideas. Identifying an effective accommodation depends, among other things, on an employee’s job duties and the design of the workspace. An employer and employee should discuss possible ideas; the Job Accommodation Network (www.askjan.org) also may be able to assist in helping identify possible accommodations. As with all discussions of reasonable accommodation during this pandemic, employers and employees are encouraged to be creative and flexible. For general information on reasonable accommodation under the ADA, see Section D.

G.6. As a best practice, and in advance of having some or all employees return to the workplace, are there ways for an employer to invite employees to request flexibility in work arrangements? (Updated 7/12/22)

Yes. The ADA, the Rehabilitation Act, and Title VII of the Civil Rights Act do not prohibit employers from making information available in advance to all employees about whom to contact—if they wish—to request reasonable accommodation that they may need for a disability or a sincerely held religious belief, practice or observance upon return to the workplace. Once requests are received, the employer may begin the interactive process. An employer may choose to include in such a notice all medical conditions identified in CDC guidance that may place people at higher risk of serious illness if they contract COVID-19, provide instructions about whom to contact, and explain that the employer is willing to consider on a case-by-case basis any requests from employees who have these or other medical conditions which may qualify as disabilities.

Alternatively, an employer may send a general notice explaining that the employer is willing to consider employee requests for reasonable accommodation for employees with a disability or a sincerely held religious belief, practice, or observance, or to consider flexibility on an individualized basis for employees not eligible for reasonable accommodation (e.g., employees who request flexibility due to age). The employer should specify if the point of contact is different depending on whether the request is based on disability, sincerely held religious beliefs, pregnancy, age, or child-care responsibilities.

Either approach is consistent with the Age Discrimination in Employment Act (ADEA), the ADA, the Rehabilitation Act, and Title VII.

Regardless of the approach, employers should ensure that those employees who receive, review, or process these requests are sufficiently trained in how to handle them in accordance with the federal employment nondiscrimination laws that may apply, for instance, with respect to accommodations due to a disability or a sincerely held religious belief, observance, or practice; or a request related to pregnancy. For additional information on reasonable accommodation under the ADA/Rehabilitation Act, see Section D.

H.1. CDC has explained that the risk for severe illness with COVID-19 increases with age, with older adults at the highest risk. Do older adults have protections under the federal employment discrimination laws? (Updated 7/12/22)

Yes. The Age Discrimination in Employment Act (ADEA) prohibits employment discrimination against individuals age 40 and older. The ADEA would prohibit a covered employer from excluding an individual involuntarily from the workplace based on being older, even if the employer acted for benevolent reasons such as protecting the employee due to higher risk of severe illness from COVID-19. For more information on postponing a start date or withdrawing a job offer due to older age, see C.5.

Unlike the ADA, the ADEA does not include a right to reasonable accommodation for workers due to age. However, employers are free to provide flexibility to older workers; the ADEA does not prohibit this, even if it results in younger workers being treated less favorably based on age in comparison.

Older workers also may have medical conditions that bring them under the protection of the ADA as individuals with disabilities. As such, they may request reasonable accommodation for their disability.

K.1. Under the ADA, Title VII, and other federal employment nondiscrimination laws, may an employer require all employees to be vaccinated against COVID-19? (Updated 7/12/22)

The federal EEO laws do not prevent an employer from requiring all employees to be vaccinated against COVID-19, subject to the reasonable accommodation provisions of Title VII and the ADA and other EEO considerations discussed below. (See also Section L, Vaccinations – Title VII Religious Objections to COVID-19 Vaccine Requirements). If there is such an employer requirement, the EEO laws do not prevent employers from requiring documentation or other confirmation that employees are up to date on their vaccinations (see K.9.), but the EEO laws may require employers to make exceptions to a vaccination requirement for some employees.

The ADA and Title VII require an employer to provide reasonable accommodations for employees who, because of a disability or a sincerely held religious belief, practice, or observance, do not get vaccinated against COVID-19, unless providing an accommodation would pose an undue hardship on the operation of the employer’s business. The analysis for undue hardship depends on whether the accommodation is for a disability (including pregnancy-related conditions that constitute a disability) (see K.6.) or for religion (see K.12.).

As with any employment policy, employers that have a vaccination requirement may need to respond to allegations that the requirement has a disparate impact on—or disproportionately excludes—employees based on their race, color, religion, sex, or national origin under Title VII (or age under the Age Discrimination in Employment Act [40+]). Employers should keep in mind that because some individuals or demographic groups may face barriers to receiving a COVID-19 vaccination, some employees may be more likely to be negatively impacted by a vaccination requirement.

It would also be unlawful to apply a vaccination requirement to employees in a way that treats employees differently based on disability, race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), national origin, age, or genetic information, unless there is a legitimate non-discriminatory reason.

K.4. Is information about an employee’s COVID-19 vaccination confidential medical information under the ADA? (Updated 7/12/22)

Yes. The ADA requires an employer to maintain the confidentiality of employee medical information. Although the EEO laws do not prevent employers from requiring employees to provide documentation or other confirmation of vaccination, this information, like all medical information, must be kept confidential and stored separately from the employee’s personnel files under the ADA.

An employer may share confidential medical information, such as confirmation of employee vaccinations (or COVID-19 test results), with employees who need it to perform their job duties. However, such employees also must keep the information confidential. Some possible scenarios include:

· An administrative employee assigned to perform recordkeeping of employees’ documentation of vaccination may receive needed access to the information for this purpose but must keep this information confidential.

· An employee assigned to permit building entry only by employees who are in compliance with a work restriction, such as COVID-19 vaccinations, testing, and/or masking, should only receive a list of the individuals who may (or may not) enter, but not any confidential medical information about why they are on (or not on) the list.

· An employee tasked to ensure compliance with a testing requirement for employees would need to review testing documentation submitted by those employees but must keep that testing information confidential.

Mandatory Employer Vaccination Programs

K.5. May an employer require an employee to comply with a COVID-19 vaccination requirement applicable to all employees entering the workplace if that employee has sought an exemption based on disability? (Updated 7/12/22)

Under the ADA, an employer may require an individual with a disability to meet a qualification standard applied to all employees, such as a safety-related standard requiring COVID-19 vaccination, if the standard is job-related and consistent with business necessity as applied to that employee. An employer does not have to show that a qualification standard in general (i.e., as applied to all employees) meets the “business necessity” standard. Under the ADA it must satisfy this standard only as applied to an employee who informs the employer that a disability prevents compliance. If a particular employee cannot meet such a safety-related qualification standard because of a disability, the employer may not require compliance for that employee unless it can demonstrate that the individual would pose a “direct threat” to the health or safety of the employee or others while performing their job. A “direct threat” is a “significant risk of substantial harm” that cannot be eliminated or reduced by reasonable accommodation. 29 C.F.R. 1630.2(r). This determination can be broken down into two steps: determining if there is a “significant risk of substantial harm” and, if there is, assessing whether a reasonable accommodation would reduce or eliminate the threat.

To determine if an employee who is not vaccinated due to a disability poses a “direct threat” in the workplace, an employer first must make an individualized assessment of the employee’s present ability to safely perform the essential functions of the job. The factors that make up this assessment are: (1) the duration of the risk; (2) the nature and severity of the potential harm; (3) the likelihood that the potential harm will occur; and (4) the imminence of the potential harm. The determination that a particular employee poses a direct threat should be based on a reasonable medical judgment that relies on the most current medical knowledge about COVID-19. Such medical knowledge may include, for example, the level of community spread at the time of the assessment. Statements from the CDC provide an important source of current medical knowledge about COVID-19, and the employee’s health care provider, with the employee’s consent, also may provide useful information about the employee. Additionally, the assessment of direct threat should take account of the type of work environment, such as: whether the employee works alone or with others or works inside or outside; the available ventilation; the frequency and duration of direct interaction the employee typically will have with other employees and/or non-employees; the number of partially or fully vaccinated individuals already in the workplace; whether other employees are wearing masks or undergoing routine screening testing; and the space available for social distancing.

If the assessment demonstrates that an employee with a disability who is not vaccinated would pose a direct threat to self or others, the employer must consider whether providing a reasonable accommodation, absent undue hardship, would reduce or eliminate that threat. Potential reasonable accommodations could include requiring the employee to wear a mask, work a staggered shift, making changes in the work environment (such as improving ventilation systems or limiting contact with other employees and non-employees), permitting telework if feasible, or reassigning the employee to a vacant position in a different workspace.

As a best practice, an employer introducing a COVID-19 vaccination policy and requiring documentation or other confirmation of vaccination should notify all employees that the employer will consider requests for reasonable accommodation based on disability on an individualized basis. (See also K.12 recommending the same best practice for religious accommodations.)

K.16. Does the ADA limit the value of the incentive employers may offer to employees for voluntarily receiving a COVID-19 vaccination from a health care provider that is not affiliated with their employer (such as the employee’s personal physician or other health care provider, a pharmacy, or a public health department)? (Updated 7/12/22)

No. The ADA does not limit the incentives (which includes both rewards and penalties) an employer may offer to encourage employees to voluntarily receive a COVID-19 vaccination, or to provide confirmation of vaccination, if the health care provider administering a COVID-19 vaccine is not the employer or its agent. By contrast, if an employer offers an incentive to employees to voluntarily receive a vaccination administered by the employer or its agent, the ADA’s rules on disability-related inquiries apply and the value of the incentive may not be so substantial as to be coercive. See K.17.

As noted in K 4., the employer is required to keep vaccination information confidential under the ADA.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Employee Whose Reputation Was Damaged By Publicizing Investigation Report Gets Chance To Clear Name Through a Public Hearing.

Last Thursday, the Sixth Circuit reversed the dismissal of a complaint brought in a Columbus federal court by an state engineering college department chair whose reputation had been damaged after the university, among other things, held a press conference publicizing certain investigations into plagiarism allegations in his department, blaming him and others for some of the lapses and then suspending him from advising graduate faculty students for three years. Gunasekera v. Irwin , No. 07-4303 (6th Cir. 1/8/09). The Court held that the Plaintiff had been deprived of constitutional due process when his graduate student advising status was suspended without a pre- or post deprivation hearing (which need not be public). However, the novel holding of the case is that the Plaintiff was entitled to a public name-clearing hearing in that his reputation had been damaged through a press conference publicizing a report which never contained his denials of the allegations.

According to the Court’s opinion, “[i]n 2004, [the Plaintiff] was the Moss Professor of Mechanical Engineering at the Russ College of Engineering and Technology of Ohio University (“Russ College”) and had been Chair of the Department of Mechanical Engineering for fifteen years. He had worked at Ohio University (“the University”) for more than two decades and had Graduate Faculty status at Russ College which enabled him to supervise graduate students’ thesis work. That year, a student alleged widespread plagiarism in mechanical engineering graduate-student theses. Two internal investigations uncovered plagiarism in collateral areas rather than in the analysis or conclusions. Following these probes, . . . the Provost of Ohio University, instructed . . the Dean of Russ College, to take further action. In response, [the Dean] asked an administrator and a retired faculty member to investigate the alleged plagiarism. These men prepared a report known as the Meyer/Bloemer Report and submitted it to [the Dean] and [the Provost] on May 30, 2006.”

“On May 31, 2006, [the Provost] held a press conference to publicize the Meyer/Bloemer Report. As the district court explained, the report found “rampant and flagrant plagiarism in theses” and “singled out three faculty members, including [the Plaintiff], for ignoring their ethical responsibilities and contributing to an atmosphere of negligence toward issues of academic misconduct.” Gunasekera v. Irwin, 517 F. Supp. 2d 999, 1002 (S.D. Ohio 2007). In response to this report, the University suspended [the Plaintiff’s] Graduate Faculty status for three years and prohibited him from advising graduate students.” Plaintiff filed suit a few months later alleging deprivations of his property interests in his employment and liberty interests in his reputation without due process.

Constitutional Liberty Interests and Name Clearing Hearings.

The Supreme Court has previously explained that the fourteenth amendment to the constitution protects the property and liberty interests of citizens:

While this Court has not attempted to define with exactness the liberty . . . guaranteed [by the Fourteenth Amendment], . . . [w]ithout doubt, it denotes not merely freedom from bodily restraint, but also the right of the individual to contract, to engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up children, to worship God according to the dictates of his own conscience, and generally to enjoy those privileges long recognized . . . as essential to the orderly pursuit of happiness by free men.

Meyer v. Nebraska, 262 U.S. 390, 399.

In a 1972 case where the one-year employment contract of a non-tenured state college instructor was not renewed without any reason being given, the Supreme Court held that the instructor’s liberty interest in his reputation was not implicated. “The State, in declining to rehire the [instructor], did not make any charge against him that might seriously damage his standing and associations in his community. It did not base the nonrenewal of his contract on a charge, for example, that he had been guilty of dishonesty, or immorality. Had it done so, this would be a different case. For “[w]here a person's good name, reputation, honor, or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential.” Board of Regents of State Colleges v. Roth, 408 U.S. 564, 573-74 (1972) (citing Wisconsin v. Constantineau, 400 U.S. 433, 437). “The State, for example, did not invoke any regulations to bar the [instructor] from all other public employment in state universities. Had it done so, this, again, would be a different case. For "[t]o be deprived not only of present government employment but of future opportunity for it certainly is no small injury.” Indeed, “[i]n such a case, due process would accord an opportunity to refute the charge before University officials.” Roth, supra. “The purpose of such notice and hearing is to provide the person an opportunity to clear his name. Once a person has cleared his name at a hearing, his employer, of course, may remain free to deny him future employment for other reasons.” Id. at n. 12.

In Gunasekera, the Defendants conceded that the Plaintiff possessed a liberty interest. “Given this concession, [the Court did] not need to apply [its] five-factor test used to decide whether someone is entitled to a name clearing hearing due to a deprivation of his or her liberty interest” Nonetheless, the Court indicated that it would likely have done so because “[t]he accusations regarding plagiarism were connected to his suspension (and as discussed above, [the Plaintiff’s] suspension deprived him of benefits and pay); the University alleged more than simple incompetence; the allegations were public; [the Plaintiff] claims that the statements were false; and the University called a press conference to publicize its charges.” Notably, there is no indication in the Court’s opinion that the Plaintiff had ever been interviewed as part of the investigation process or that his denials or version of events was included in the publicized reports. Thus, there seems to have been no public airing or publicization of his version of events or denials when the allegations against him were publicized.

The Court found that the parties’ dispute “boils down to what process is due and whether such a hearing must be public.” Procedurally, the Court was compelled to accept the Plaintiff’s allegations as true at this stage of the litigation. This is important because there was “some dispute as to whether the hearing offered by the University was public or not. . . The University asserted, and the district court agreed, that the proposed hearing was public because [the Plaintiff] would have been allowed to bring anyone, including members of the press, to his hearing. Gunasekera, 517 F. Supp. 2d at 1014 & n.9. [The Plaintiff] counters that the hearing offered was not public because the University specifically denied his request for a hearing publicized in the same way the Meyer/Bloemer report had been. Id. However, this dispute is contained in documents outside the pleadings which we cannot properly consider on a Rule 12(b)(6) motion. Taking the allegations in the complaint in the light most favorable to [the Plaintiff] , [the Court] assume[d] that he was not offered a public opportunity to clear his name.”

In the past, the Court had held that “a name-clearing hearing need only provide an opportunity to clear one’s name and need not comply with formal procedures to be valid.” Chilingirian v. Boris, 882 F.2d 200, 206 (6th Cir. 1989).” Nonetheless, the Court had not addressed “whether a name-clearing hearing must include a public opportunity clear one’s name.” For instance, “a university disciplinary hearing need not be public.” Flaim v. Med. Coll. of Ohio, 418 F.3d 629, 635 (6th Cir. 2005). However, “a disciplinary hearing is very different from a name-clearing hearing. A name-clearing hearing is not a venue for an employer to determine the proper punishment, but rather an opportunity for an individual to confront a public stigma that has already been imposed by an employer.”

Entitlement to a name clearing hearing depends on “(1) the nature of the private interest affected—that is, the seriousness of the charge and potential sanctions, (2) the danger of error and the benefit of additional or alternate procedures, and (3) the public or governmental burden were additional procedures mandated. Flaim, 418 F.3d at 635 (describing test instituted by Supreme Court in Mathews).” In considering the first prong of this test, the Court found it to be “clear that where, as here, the employer has inflicted a public stigma on an employee, the only way that an employee can clear his name of the public stigma is through publicity. The injury of which [the Plaintiff] complains is the fact that he was publicly associated with and perhaps partially blamed for a plagiarism scandal. As to the second prong of Mathews, publicity adds a significant benefit to the hearing, and without publicity the hearing cannot perform its name-clearing function. A name-clearing hearing with no public component would not address this harm because it would not alert members of the public who read the first report that [the Plaintiff] challenged the allegations. Similarly, if [the Plaintiff’s] name was cleared at an unpublicized hearing, members of the public who had seen only the stories accusing him would not know that this stigma was undeserved. . . . Following this conclusion [in a similar case], the Second Circuit held that: ‘Requiring the [employer] to address such risk by offering plaintiff the opportunity to publicly refute the charges made against him or publicising his refutations itself, does not place an undue burden upon the government’s interest in terminating [employees] who either are not performing to expected standards or are behaving in an unacceptable fashion.’ Id. [The Court] agreed with the Second Circuit that requiring that name-clearing hearings involve some form of publicity would not necessarily put an undue burden on the government.” (emphasis added).

“In order to determine what the name-clearing hearing should entail and what its limits might be in each case, courts should again turn to the Mathews balancing test. . . By applying this test to the facts of the case before it, a court can tailor a name-clearing hearing which allows the employee to challenge directly any public stigma while also accounting for any legitimate concerns of the employer. . . . Requiring that a name clearing hearing include a public component may be the only way to make such a hearing effective. If a name-clearing hearing has no public component, it may not be able to serve its function of curing the public stigma that necessitated the hearing. With respect to the third prong, government interests will shape the nature of the publicity required. For example, privacy concerns within the university setting might dictate the form of the publicity. Cf. Flaim, 418 F.3d at 637 n.2 (noting that the publicity attending a “full-dress judicial hearing” “might be detrimental to the college’s educational atmosphere”). Though [the Court had] few facts before [it] on this Rule 12(b)(6) motion, . . . it is possible that concerns for the privacy of students [under FERPA, etc.] implicated in plagiarism would impact the precise nature of the publicity required.”

The Court held that the university would be ”required to offer [the Plaintiff] a name-clearing hearing that is adequately publicized to address the stigma the university inflicted on him. The exact nature of that publicity depends on a fact-intensive review of the circumstances attending his case,” which was left “to the district court . . . regarding the exact parameters of the name-clearing hearing.” Considering that the defendants had prematurely presented some evidence that a public hearing had already been offered to the Plaintiff, it remains to be seen whether the district court will find the prior offer to be sufficient on summary judgment or at trial. Because this was a new issue for the Court and the right to a public hearing was not established law in this Circuit, it found that the defendants were entitled to qualified immunity on this allegation.

Property Interest in Advising Graduate Students.

The Plaintiff also alleged that he had been denied property interests without due process of law in that his graduate student advising status had been suspended for three years without a pre or post deprivation hearing.

The Supreme Court has previously explained in Roth that “the Fourteenth Amendment's procedural protection of property is a safeguard of the security of interests that a person has already acquired in specific benefits. These interests -- property interests -- may take many forms.” Among other things, these property interests extend to “a person receiving welfare benefits under statutory and administrative standards defining eligibility for them, ” to “a public college professor dismissed from an office held under tenure provisions, to “college professors and staff members dismissed during the terms of their contracts,” and “to a teacher recently hired without tenure or a formal contract, but nonetheless with a clearly implied promise of continued employment.” Roth, supra. “To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. It is a purpose of the ancient institution of property to protect those claims upon which people rely in their daily lives, reliance that must not be arbitrarily undermined. It is a purpose of the constitutional right to a hearing to provide an opportunity for a person to vindicate those claims.”

In Gunasekera, the Sixth Circuit noted that “[t]o prevail on the claim that he was unconstitutionally deprived of his property when his Graduate Faculty status was suspended, [the Plaintiff] must “‘establish three elements; (1) that [he] ha[s] a life, liberty, or property interest protected by the Due Process Clause of the Fourteenth Amendment . . . , (2) that [he] w[as] deprived of this protected interest within the meaning of the Due Process Clause, and (3) that the state did not afford [him] adequate procedural rights prior to depriving [him] of [his] protected interest.’” The Defendants denied that the Plaintiff had any property interest in his graduate student advising status because they retained the discretion to suspend him under the circumstances and he suffered no decrease in his salary or benefits.

Plaintiff “alleges that Graduate Faculty status is ‘a right intrinsic’ that a professor maintains so long as he or she satisfies the four criteria the University requires of its Graduate Faculty. Id. He argues that because these criteria limit the University’s discretion to name Graduate Faculty and because ‘[i]n actual practice . . . professors retain their appointment so long as they satisfy those criteria,” he has a property interest in his Graduate Faculty status.’” The Plaintiff’s “argument does not turn on the language of the [university] regulations, but rather on his ability to show that a common practice and understanding had developed which gave him a legitimate claim to Graduate Faculty status so long as he met the stated [four] conditions. At oral argument, the University admitted that there is no precedent regarding when Graduate Faculty status is retained, because it has never been revoked or suspended [before Plaintiff’s status was revoked]. Viewing the allegations in the complaint in the light most favorable to” the Plaintiff, the Court found that “he has alleged that University custom gives him a property interest in his Graduate Faculty status.”

Moreover, because Plaintiff lost some income “(including “a summer salary research stipend that complements annual salary” for Graduate Faculty) and benefits (such as a reduced teaching load), his suspension “alter[ed] his employment enough to make Graduate Faculty status a property interest.” See also “Newman v. Commonwealth, 884 F.2d 19, 25 n.6 (1st Cir. 1989) (“In this case, plaintiff was barred from voting on degrees and from serving on important university committees or as chair of her department. A letter of censure for an act of ‘objective plagiarism’ and ‘seriously negligent scholarship’ was placed in her permanent file, an action that undoubtedly affects her ability to secure other employment in the future. We think it obvious that this severe sanction substantially damaged plaintiff’s property interest in her position.” (emphasis added)).”

Having shown that he suffered a property loss when his graduate student advising status was suspended, the Plaintiff was then required to show that he was deprived of his property interest without due process (i.e., a pre- or post- termination hearing). In this case, the Plaintiff alleged that “he was not given notice or an opportunity to be heard regarding “his satisfaction of the criteria for appointment to Graduate Faculty status” before or after his suspension. Moreover, “[a]t oral argument, [Defendants’] lawyer conceded that [the Plaintiff] had not been offered either a pre- or a post-deprivation hearing.” The Sixth Circuit has already “held that prior to termination of a public employee who has a property interest in his employment, the due process clause requires that the employee be given ‘oral or written notice of the charges against him or her, an explanation of the employer’s evidence, and an opportunity to present his or her side of the story to the employer.’” . . . Because [the Plaintiff] asserts that he was never given any opportunity to be heard either before or after he was deprived of his property interest in his Graduate Faculty status, the district court’s dismissal of [the Plaintiff’s] property-interest claim must be reversed.”

Insomniacs can read the full court decision at http://www.ca6.usc.ourtsgov/opinions.pdf/09a0005p-06.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Reverses Employer’s Summary Judgment on Retaliation Claim Based on Cat’s Paw Theory and Decisionmaker’s Absentmindedness

Yesterday, a divided Sixth Circuit Court of Appeals reversed an employer's summary judgment in a retaliation case where the pure-hearted decisionmaker relied primarily upon the performance evaluations completed by the allegedly retaliating supervisor in deciding to terminate the plaintiffs' employment. Bishop v. Ohio Dep't of Rehab. & Corrections, No. 10-3399 (6^th Cir. 7-9-13). The plaintiffs successfully argued on appeal the cat's paw theory that the prison warden terminated the plaintiffs in "rubber stamp" reliance on the supervisor's performance evaluations, which were the product of unlawful retaliation. In particular, the plaintiffs had nothing but positive evaluations until they complained about their supervisor's sexual harassment. Shortly thereafter, the supervisor gave them negative performance evaluations which subtly referred to their complaints and not to any other misconduct or issues of poor performance. The warden testified that in terminating their employment she relied on the performance evaluations and could not recall who the plaintiffs were or any other independent events which were not mentioned in their performance evaluations. Moreover, the warden made the termination decision prior to the conclusion of the investigation into the plaintiffs' complaints about their supervisor and apparently without conducting any independent investigation about their performance. While the warden had a general practice of generally consulting with her other executive officers, she could not specifically recall having done so in this case or consulting with anyone who was not similarly influenced by the allegedly retaliatory supervisor. More interestingly, the warden had instigated and signed off on disciplinary action against the plaintiffs in the months preceding their termination, but admitted that she could not remember them (or those incidents) by the time she authorized their termination.

According to the Court's opinion, the plaintiffs and several other female correctional employees complained to the prison warden that their supervisor was discriminating against women in assignments and treatment. Prior to making this complaint, the plaintiffs had only received positive performance evaluations. The Court found there was sufficient evidence that the supervisor knew of the plaintiffs were part of the group making the complaint because there were so few female correctional officers on that shift, because there was evidence that the existence of the complaint was general knowledge and because the supervisor warned one of the plaintiffs just six days after the complaint was lodged (and before the subsequent investigation began) to not to get involved in the "stuff" going on because she was still on probation. Moreover, about a month before the plaintiffs received their first negative performance evaluation from their supervisor, the warden had forwarded to their supervisor similar complaints they made about her.

The Court found that they plaintiffs produced enough evidence of causation to survive summary judgment based on the temporal proximity and the evidence of the grudge which their supervisor held against them:

Here, 34 days elapsed between the date on which the Warden received the complaint (October 17, 2005) and the date on which [the supervisor] signed the negative evaluations of [the plaintiffs] (November 20, 2005), which led to their terminations 22 days thereafter on December 12, 2005. Thus, to satisfy their burden on causation, [the plaintiffs] must offer evidence, in addition to temporal proximity, of retaliatory motive.

. . . First, six days after the Warden received the complaint, [the supervisor] allegedly warned [a plaintiff]: "There is a lot of stuff going on around here, don't get involved in it, remember you are on probation." Second, [another plaintiff] testified that, after the complaint was submitted, [the supervisor] reminded her "a couple of times" that she "was on probation." Third, [she] further testified that "[t]he atmosphere got worse" after the complaint was submitted in that the hostile looks from [the supervisor] were "[m]ore frequent" and "even more hateful." Fourth, some two weeks after the Warden received the complaint, [a plaintiff's] probationary period was extended by the Warden under arguably suspicious circumstances in that no reason was given for the extension other than "due to your performance" and, at the time of her deposition, the Warden had no memory of taking such action against [her].

In fact, the final performance evaluation itself did not reference any other disciplinary issues, but contained the following discussion in one and similar discussion in the other:

 

Officer Henry has not effectively communicated with her supervisors this reporting period. I expect Officer Henry to listen to her supervisors and to use good judgment on every situation and not blindly follow a suggestion of others. Institutional procedures need to be adhere [sic] to and realize that constructive criticism is a tool that is used to make her a better correctional officer.

To show pretext, the plaintiffs produced evidence that the stated rationale for their termination was not the actual rationale based on the "cat's paw" or "rubber stamp" theory. Under this theory, "although the Warden herself did not harbor any discriminatory animus toward them, the Warden was influenced by [their supervisor], who did harbor a grudge against [the plaintiffs] as a result of their protected activity."

 

"When an adverse . . . decision is made by a supervisor who lacks impermissible bias, but that supervisor was influenced by another individual who was motivated by such bias, this Court has held that the employer may be held liable under a 'rubber-stamp' or 'cat's paw' theory of liability." Arendale v. City of Memphis, 519 F.3d 587, 604 n.13 (6th Cir. 2008). See also Cobbins v. Tenn. Dep't of Transp., 566 F.3d 582, 586 n.5 (6th Cir. 2009) ("The 'cat's paw' theory refers to a situation in which a biased subordinate, who lacks decisionmaking power, influences the unbiased decisionmaker to make an adverse . . . decision, thereby hiding the subordinate's discriminatory intent.") . . .

To succeed on a cat's-paw theory, the employee "must offer evidence of a 'causal nexus' between the ultimate decisionmaker's decision to terminate the [employee] and the supervisor's discriminatory animus." Madden v. Chattanooga City Wide Serv. Dep't, 549 F.3d 666, 677 (6th Cir. 2008). In other words, the employee must show that, "[b]y relying on this discriminatory information flow, the ultimate decisionmakers acted as the conduit of the supervisor's prejudice – his cat's paw." Id. at 678 (internal quotation marks omitted). However, a causal nexus is lacking if the ultimate decision "was based on an independent investigation" and the employee "presented no evidence that the supervisor's discriminatory animus had influenced the decision." Id.

In this case, the termination letter stated that the decision was based upon their performance evaluations and the warden admitted as much in the following administrative investigation. There was no evidence that the warden had conducted or relied on any other independent investigation of the plaintiffs' performance beyond what their supervisor put in the allegedly retaliatory and negative performance evaluations. While the warden had a general practice of consulting with her other executive officers and personnel files, there was no evidence that she had specifically done so in this case. "And even if the Warden did inquire further, she might have consulted Lt. Richardson, the very person alleged to have poisoned the Warden's decisionmaking process, or someone else who was influenced by Lt. Richardson." Therefore, construing the evidence most favorably to the plaintiffs – as must be done on a defendant's summary judgment motion, the Court ruled there were sufficient factual disputes for a jury to resolve.

 

Our conclusion is not altered by the fact that the Warden, at one time, had personal knowledge of the incidents purportedly underlying the negative performance evaluations, as illustrated by the fact that she ordered investigations into some of those incidents and approved disciplinary actions following those investigations. Any personal knowledge that the Warden may have had does not break the casual nexus between the Warden's termination decisions and [the supervisor's] retaliatory animus because there is no evidence that the Warden remembered the incidents and connected them to [the plaintiffs] at the time she made her ultimate decision to terminate [them]. The Warden testified during her deposition that, as she sat there on that day, she did not remember [the plaintiffs]. At the very least, the Warden's complete unfamiliarity with [the plaintiffs] would justify a jury in doubting whether she was independently familiar with the incidents purportedly underlying the negative performance evaluations at the time the termination decision was made and, ultimately, whether the Warden conducted any meaningful review, beyond reviewing the performance evaluations, before authorizing the terminations.

The dissent would have resolved some factual inferences in favor of the employer based on the warden's general past practices and without any specific evidence that she followed her past practices in this case.

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit ERISA Decisions from August

The Sixth Circuit issued three interesting ERISA decisions last month. In the first case, the Court affirmed dismissal of the LTD claim as untimely where the plan provided a limitations period of three years from when the initial proof of claim was required and the plaintiff filed suit within 8 months after the conclusion of her internal appeal following a contractual change in the eligibility standard.  In the second decision, the Court affirmed denial of LTD benefits on the basis of physical disability, but reversed on the mental disability LTD claim.  In the third case, the decision of the claims administrator (aka insurance company) on medical coverage was repeatedly reversed in three court appeals for refusing to consider and/or explain why it was not accepting the medical recommendations of the treating physicians for inpatient alcohol rehabilitation after several failed attempts at outpatient rehabilitation as provided in the insurance company’s internal guidelines. Ultimately, the court decided that the decision was arbitrary and capricious and ruled in favor of the claimant.

In Russell v. Catholic Partners Employee LTD Plan, No. 13-4804 (6^th Cir. 8-14-14), the nurse claimant submitted a claim for LTD benefits based on a knee and mental impairment which prevented her on May 12, 2007 from continuing the RN job she had held for 30 years.   Her LTD benefits were granted on November 15, 2007 since she was unable to continue her regular occupation.  However, she was also informed at that time that the standard of eligibility changed after two years and she would then be required to show that she was unable to work in any gainful occupation in order to continue receiving LTD benefits.   After the two years passed, her claim for LTD was denied since the insurance carrier determined that she could perform work as a case manager or triage nurse despite her physical and mental impairments.  The claimant appealed internally and the final denial was issued on July 20, 2010.  When the claimant initiated a federal court lawsuit on March 20, 2011, the carrier moved to dismiss on the grounds that the statute of limitations had run. 

The LTD Plan required written proof of a claim to be submitted within 90 days of the 180-day elimination period.   It also provided that a federal lawsuit could be initiated 60 days after proof of the claim had been submitted and within 3 years after the proof of claim was required.   The Court determined that the proof of claim was required to be submitted by February 8, 2008 and, therefore, the limitations period expired on February 8, 2011 – fifty days before the claimant initiated the lawsuit.   The Court rejected the claimant’s argument that the limitations period was re-set by the application of a different eligibility standard on November 12, 2009. “The Supreme Court recently held “a participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the cause of action accrues, as long as the period is reasonable.”  In this case, the claimant had six months after the final denial of her LTD claim on July 20, 2010 to file suit before the three-year limitations period expired. “The plan’s use of the “any gainful occupation” standard did not reset the contractual limitations period.”  The Court also refused to re-set the limitations period each time the carrier requested new evidence supporting proof of continuing disability. 

In Hayden v. Martin Marietta Materials Inc. Flexible Benefits Program, No. 13-6319 (6^th Cir. 8-18-14), the claimant left work in January 2010 because of a variety of physical ailments and mental impairments (depression and anxiety).  She sought and was awarded SSI benefits.   However, she was denied LTD by her employer’s claims administrator on the grounds that her physical ailments were objectively insufficient to render her unable to work in her profession (as an office manager) and her mental impairments were not sufficiently severe to prevent her from working.  The Court agreed that the claimant failed to show that she was physically unable to work during the entire 180-day elimination period. For instance, her physician’s notes did not mention her arthritic hands until eleven months after she stopped working and similarly did not discover other conditions until after the elimination period. Her “minor” heart condition from 2008 similarly did not prevent her from working.   Therefore, the plan’s decision to deny benefits on this basis was not arbitrary or capricious.

The Court reversed the claims administrator, however, on the mental disability claim because the reviewer imposed a higher standard than the criteria outlined in the plan documents.  The reviewer denied benefits on the grounds that the claimant could perform some work, instead of evaluating whether she was mentally capable of continuing to perform her own profession.  Indeed, the reviewer’s decision “suggests that Hayden would have had to be suffering from “severe psychiatric symptoms, suicidal ideation, homicidal ideation, hallucinations” to be considered disabled.” This decision would effectively preclude any claimant from showing that depression or anxiety as a “disability— [and] is inconsistent with the terms of the Plan, which focus on whether a claimant can perform the material and substantial duties of her own occupation.”  The reviewer also denied benefits in part because he was influenced by the fact that the claimant’s employer was going through bankruptcy.  The treating physicians and psychiatrist had explained that her anxiety was related to her own health problems and those of her husband.  

It is true, as a general matter, that when a plan administrator relies on the opinion of one doctor over that of another, “the plan administrator’s decision cannot be said to have been arbitrary and capricious because it would be possible to offer a reasoned explanation, based upon the evidence, for the plan administrator’s decision.”  . . . . But ERISA does not grant to a plan administrator carte blanche to adopt the opinions of its reviewing physicians. When a reviewing physician’s report is “inadequate,” a plan administrator cannot be said to engage in a deliberate, principled reasoning process when it adopts the position of that report.  . . .  In particular, where a reviewing physician’s opinion applies standards that conflict with the terms of the plan, that opinion is not evidence supporting a conclusion that the claimant is not disabled within the meaning of the plan.

Instead of remanding the case for another review, the Court awarded benefits to the Claimant based on her mental disability in light of the uncontroverted evidence.

In Butler v. United Healthcare of Tennessee, Inc,  No. 14-6446 (6^th Cir. 8-22-14), the claimant was a long-time alcoholic, who attempted a variety of outpatient treatment programs before finally admitting herself into an inpatient facility in 2005.  Her husband’s insurance company denied coverage, although she seemed to meet the insurance carrier’s internal criteria (as they belatedly discovered only after initiating the litigation), of having a “[h]istory of continued and severe substance abuse despite appropriate motivation and recent treatment in an intensive outpatient or partial hospitalization program.”  Her husband paid for her inpatient treatment and pursued two internal appeals of the denial of coverage.   The external reviewer hired for the third internal appeal was given an incorrect standard by the insurance company and failed to explain why he disagreed with the recommendations of the claimant’s two treating physicians or mention the claimant’s history of failed outpatient rehabilitation.   After litigation commenced in 2008, the carrier realized it had given the wrong standard to the external reviewer and attempted to correct that mistake, but the reviewer affirmed his prior decision and still failed to explain why he disagreed with the recommendations of the claimant’s two treating physicians or mention the claimant’s history of failed outpatient rehabilitation.   

The Court agreed that the insurance carrier had not completed a complete or fair review of the case and remanded it for the carrier to explain why it disagreed with the recommendations of the claimant’s two treating physicians and why the claimant’s history of failed outpatient rehabilitation was irrelevant.  Instead, the carrier obtained another letter from the same external physician claiming that he believed he had previously reviewed the letters from the treating physicians and, in any event, after reviewing the file again he still believed coverage should be denied, but still did not explain why he disagreed with the treating physicians.  The Court remanded the case again for the insurance carrier to retain a different external reviewer, explain why it disagreed with the treating physicians and permit the submission of new medical information.  The claimant submitted new medical information that specifically addressed the carrier’s internal criteria for inpatient treatment (which was not disclosed until after litigation commenced).  While the carrier retained a new external reviewer, it suggested that the reviewer should not give much weight to the new medical information.  The reviewer, in turn, made the same mistakes as the first reviewer:  He denied coverage without explaining why he disagreed with the treating physicians or why the claimant’s unsuccessful outpatient treatment did not qualify under the carrier’s own criteria.  Accordingly, the Court granted judgment for the claimant and the Sixth Circuit affirmed.  

United’s refusal to give Janie’s benefits claim a fair review not once, not twice, but three times—in spite of clear instructions from the district court—casts a pall over United’s handling of the claim from the start. Through it all, through three chances to get it right (indeed through three chances just to engage in a nonarbitrary decision-making process), United failed the Butlers in multiple ways. United never explained its disagreement with the opinions of Janie’s treating physicians, which all contained detailed accounts of her prior attempts to get sober using increasingly intensive outpatient programs and which unequivocally deemed residential treatment necessary.  . . .United ignored key pieces of evidence and the key guideline applicable to Janie’s claim, making factually incorrect assertions (e.g., Janie had no history of trying unsuccessfully to treat her addiction with outpatient treatment),  . . ., or remaining silent about the matter,  . . . or (worst of all) mentioning the prior failures but nonetheless concluding without explanation that she did not meet the guideline requirements,  . . .. And United stacked the deck against the claim, instructing reviewers to “disregard” the evidence that John submitted in favor of the “contemporaneous physician-authored documents” that it had entered in the record.

                . . .

United adds that the decision to deny benefits cannot be arbitrary and capricious because five reviewing physicians agreed with it. That reviewing physicians paid by or contracted with the insurer agree with its decision, though, does not prove that the insurer reached a reasoned decision supported by substantial evidence. The physicians’ opinions carry weight only to the extent they provide a fair opinion applying the standard for granting benefits to the facts of the case. Elliott, 473 F.3d at 619. The reviewing physicians did not do that. They misstated or omitted the key fact of Janie’s prior failed outpatient treatment and ignored United’s guideline that allowed residential rehabilitation where outpatient treatment had not worked in the past. This argument, too, proves too much. If a decision to deny benefits could never be arbitrary and capricious when backed by the insurer’s reviewing physicians, court review would be for naught. The insurer would invariably prevail so long as the insurer had physicians on its staff willing to confirm its coverage rulings. That also does not make sense.

The District Court had also penalized the carrier for failing to earlier provide a copy of its internal criteria.  However, the statute only imposes liability on the Plan Administrator (the employer), not the claims administrator (i.e., the insurance company).

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.