By James Hlawek and Ian Morrison
Seyfarth Synopsis: An employer, which had paid medical expenses on behalf of an employee’s dependent son, made comments about the company’s rising healthcare costs several months before firing the employee. The Sixth Circuit found this was enough to warrant a trial on the employee’s ERISA interference and retaliation claims.
In Stein v. Atlas Industries, Inc., No. 17-3737, the Sixth Circuit reversed the Northern District of Ohio, which had dismissed the plaintiff’s ERISA interference and retaliation claims. Plaintiff’s son, who suffers from a permanent and debilitating neurological condition, was hospitalized for four months in 2013. As an employee of Atlas Industries, Inc., plaintiff participated in a group medical plan that covered his son’s medical expenses. Atlas’s plan was partially self-insured, and the company paid approximately $250,000 for the son’s care.
Seven months later, plaintiff did not call Atlas or report to work for three consecutive days after he had been released to work following a medical leave. Atlas’s handbook provided that any employee absent for three consecutive days without permission would be automatically fired. After plaintiff’s third no-call/no-show day, his supervisor fired him.
Plaintiff sued, alleging that the company had fired him because of his son’s medical expenses, and thus that the company was liable for both retaliation and interference under ERISA. In support, plaintiff pointed to evidence that (1) Atlas had expressed concerns about “skyrocket[ing]” medical costs in employee notices; (2) an Atlas Vice President had told him in 2013 that he hoped his son would be released soon because the medical costs were getting expensive for the company; and (3) an Atlas human resources director showed another employee the son’s medical expenses and said that large payments were causing the company’s health insurance costs to rise.
While the district court entered summary judgment for Atlas, the Sixth Circuit reversed, finding that there was enough evidence of interference or retaliation to deny summary judgment. Specifically, while the supervisor who fired plaintiff did not know about the son’s medical expenses, the Sixth Circuit found significant that the Vice President and director who commented about medical expenses played a role in the decision. Also, plaintiff contended that Atlas had tried to contact other employees before firing them under the no-call/no-show policy, but did not do the same for him.
The decision is serves as a warning to employers about dealing with employees who incur high medical expenses by themselves or their dependents. Comments about those expenses could considered evidence of interference or retaliation if the employee is later disciplined. Even general comments about rising healthcare costs and how they burden the company could be used against the employer. The decision also reinforces the importance of consistently applying employment policies. Finally, for employers in the Sixth Circuit, this decision is a reminder that that the threshold for a trial on an ERISA interference or retaliation claim can be quite low.