Kentucky Employment Law Blog

ERISA Plans May Have Two Types of Administrators

The nine-year odyssey to get a health insurance claim paid – "as we enter the ninth year of the insurance company's failure to provide coverage to its insured" – in Butler v. United Healthcare, No 13-6466 (6th Cir., August 22, 2014), includes a helpful discussion, among other things, of the two different types of administrators that ERISA plans may have unfortunately, this distinction required the court to vacate a $99,000 statutory penalty against United Healthcare.

At the heart of the case is the effort of a husband to get United Healthcare to pay for his wife's inpatient rehabilitation for alcohol addiction. United resisted mightily including twice disregarding the district court's orders to undertake a "full and fair review" of the claim. Along the way, the insured had requested United to provide him a copy of its residential rehab guideline, a disclosure a plan administrator would be required to make.

But ERISA plans can have two types of administrators, and a convoluted way of determining whether there is one or two, and, if there are two, which is which, as the court explained. First, if the plan does not specify who its administrator is, the administrator by default is the plan sponsor, which is usually the employer. Second, ERISA plans can and often do have two types of administrators, a claims administrator and a plan administrator. A claims administrator is the entity that "administers claims for employee welfare benefit plans and has authority to grant or deny claims." The plan administrator is usually the "employer who adopted the benefit plan in question." And, as the court observed, "quite often, indeed, the claims administrator and the plan administrator are not the same."

The ERISA plan in question here did not specify who was the plan administrator, so by default the employer-purchaser of the plan became its "plan administrator." And since United was not the plan administrator, there was no requirement for it to disclose the requested guidelines at an earlier time and so the statutory penalties for the failure were vacated.

ERISA, specifically 29 U.S.C. 1022(b), requires that a summary plan description (SPD) be distributed to each participant in the plan and further that it identify "the name and address of the [plan] administrator[.]" But it is not at all unusual for an SPD to fail in this regard. Which can lead to confusion and to nine year odysseys to get a claim paid.

Robert L. Abell
www.RobertAbellLaw.com

 

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Health Insurance Case Managers File Class Action for Unpaid Overtime

Health insurance case managers, who are involved in the pre-approval, pre-certification or pre-authorization of health care procedures, have filed an interesting class action for unpaid overtime against Centene Management Company in federal district court in Seattle. The case is Randolph v Centene Management Company, No. 14-5730 (WD Wash). 

Centene provides administrative and claims management services to managed care companies that operate government-sponsored health insurance plans.  The key issue in the case is whether the case managers are or are not exempt from overtime pay requirements.  The case managers describe their job duties as follows:

As Case Managers, Plaintiff’s and the putative class members’ primary job duty was non-exempt work consisting of reviewing medical authorization requests submitted by healthcare providers against pre-determined guidelines and criteria for insurance coverage and payment purposes.

The degree to which, if any, the case managers truly exercise discretion and independent judgment will likely determine whether or not they are or are not exempt from overtime pay requirements.  Centene draws significant competive and economic advantage by overloading the case managers and refusing to pay any overtime. 

Robert L. Abell
www.RobertAbellLaw.com

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How Flexible Is the Similarly-Situated Employee Doctrine?

One way for an employee to prove unlawful intent is evidence that other, similarly-situated employees received better treatment. The similarly-situated employees must be similarly-situated in all relevant aspects, which is not the same as all aspects and certainly does not require, as the Sixth Circuit in other courts have advised time and again that the other, similarly-situated employees share the same supervisor.

• "Similarly Situated" Employees Need Not Have the Same Supervisor; 
  
  
• Is It A Prerequisite In Discrimination Cases That A Comparator Have the Same Supervisor As The Plaintiff?; 
  
  
• How Important Is Whether A Comparator Was Working For the Same Supervisor?; 
  
  
• Once Again, The Sixth Circuit Rules That A Similarly-Situated Comparator Need Not Have Worked For The Same Supervisor.

The Sixth Circuit again elaborated on the similarly-situated doctrine in its recent decision, Benison v. Ross, No 13-2554 (September 3, 2014), where it reversed a summary judgment granted by the district court.

Kathleen Benison was a tenured faculty member at Central Michigan University (CMU). She applied for and was granted a paid sabbatical, which carried a condition that she work at CMU for at least one year following her return or repay what she was paid while on sabbatical. But while Kathleen was on sabbatical her husband, an undergraduate student at CMU, had a material role in sponsoring a no-confidence vote regarding the CMU President. So bad blood arose upon her return and forced Kathleen to resign. CMU, in an ill-advised fit of pique, sued Kathleen for repayment of the money paid her while she was on sabbatical. She filed suit subsequently claiming retaliation against her based on the First Amendment protected-activity of her husband with regard to the university president.

Kathleen cited the suit filed against her by CMU as proof of its retaliatory intent. She offered evidence regarding four other CMU faculty members, who "in the past ten to fifteen years" had similarly resigned their positions before working for the university for one year following their sabbaticals.  For these four "CMU waived the obligation to repay compensation for three and chose not to file a lawsuit to enforce the contract against the fourth." This evidence was sufficient to raise an inference of causation given the disparate treatment and the Sixth Circuit explained further as follows:

A plaintiff who chooses to prove retaliatory intent by using comparative ors must show that he "and the employee with whom [he] seeks to compare himself ... [are] similar in all of the relevant aspects." Ercegovich v Goodyear Tire & Rubber Co, 154 F3d 344, 352 (6th Cir. 1998). However, when the sample size of possible comparable employees is small, a court should not apply the "similarly-situated" requirement so stringently that it "deprive[s a plaintiff] of any remedy to which he may be entitled under the law." Jackson v. FedEx Corp Servs, Inc, 518 F3d 344, 352 (6th Cir. 2008).

This is a common-sense formulation, recognizing simply that this evidence is enough for a jury to ponder fairly and draw from it (or not) inferences either way. The similarly-situated doctrine, like any evidentiary doctrine, must be flexible and adaptive to context. The Seventh Circuit stated this best in Elkhatib v Dunkin Donuts, Inc, 493 F3d 827 (7^th Cir 2007):

The similarly-situated requirement should not be applied mechanically or inflexibly, but rather is a common-sense flexible inquiry that seeks to determine whether there are enough common features between the individuals to allow a meaningful comparison.  Substantial similarity, not complete identity, is required.

Robert L. Abell
www.RobertAbellLaw.com

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"They Just Want Somebody Younger" = Direct Evidence of Age Discrimination

Robert Scheick claimed that his employment as a school principal was terminated on account of age discrimination. As evidence, Scheick cited to two statements made to him by the school board superintendent: "they just want somebody younger" and "they wanted someone younger."

These statements, the Sixth Circuit explained, were direct evidence of age discrimination, as they "represent direct references to age" and the "they" could "not have been referring to anyone other than the [school] Board." After a muddled discussion of the "but for" causation standard applicable to federal age discrimination cases (but not the same "but for" causation standard applicable to age discrimination cases under Kentucky law) and what appears to be an assurance to district judges that summary judgment may be granted even where direct evidence of age discrimination is presented, the Sixth Circuit concluded without further explanation that Scheick had presented a fact issue and reversed the summary judgment granted the school board by the district court.

The case is Scheick v. Tecumseh Public Schools, No 13-1558 (September 2, 2014). 

Robert L. Abell
www.RobertAbellLaw.com

 

 

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