Claim for Disability Benefits Filed 9 1/2 Years After Payments Had Ceased Is Dismissed on Statute of Limitations Grounds

January 31, 2014 | Appeals | Employment & Labor | Insurance Coverage

The plaintiff in this case sued Raytheon Company on June 13, 2013 for breach of contract because it had discontinued paying long term disability benefits to him in November 2000. The plaintiff, who had been terminated by Raytheon in July 2002, sought $3.8 million in damages.

Raytheon moved to dismiss, arguing that the plaintiff’s action was barred by the Texas statute of limitations because it had not been filed within four years of the date it had accrued. In response, the plaintiff contended that the statute of limitations had been tolled by the “discovery rule” (which may delay the accrual of a claim or cause of action in some cases until the time the plaintiff knew or, by exercising reasonable diligence, should have known of facts giving rise to the claim or cause of action) and because Raytheon had fraudulently concealed facts regarding the accrual of his breach of contract claim.

The court granted Raytheon’s motion to dismiss. The court found that the plaintiff was on notice in October 2000 that he needed to send proof of the continuance of his disability to Raytheon or his disability benefits would cease. Nevertheless, the court stated, the plaintiff did not submit that information and, as a result, his disability benefits ceased on November 13, 2000. That was the date, the court ruled, that the plaintiff had become aware of a claim for breach of contract, assuming that one existed.

The court then ruled that the discovery rule did not apply in this case because he knew or should have known that his claim had accrued on November 13, 2000 and there was nothing for him to discover. In addition, the court rejected the plaintiff’s contention that Raytheon had fraudulently concealed the existence of his breach of contract claim, finding that the plaintiff had not set forth any facts or allegations as to how Raytheon might have concealed the existence of his breach of contract claim. “Simply stated, there was no fraudulent concealment by Raytheon and thus no fraud to discover,” the court declared.

Therefore, the court concluded, the plaintiff’s breach of contract claim accrued on November 13, 2000 and he had until November 14, 2004 to file his action for breach of contract. Because he did not file it until June 13, 2013, almost nine and one-half years after the claim had accrued, his breach of contract claim was barred by the applicable four year statute of limitations.  [Glover v. Raytheon Co., 2013 U.S. Dist. Lexis 152054 (N.D. Tex. Oct. 23, 2013).]

Comment:  This case was decided under Texas state law.  Although the decision did not so indicate, the plaintiff likely was suing for long term disability benefits under a plan governed by ERISA.  One must wonder why this decision does not reference ERISA.

New York’s Highest Court Allows Former Employee’s Claim under New York City’s Human Rights Law to Proceed

The plaintiff in this case was a former executive of the financial services firm Intesa Sanpaola S.p.A. who became ill and could not work. After the plaintiff had been absent from work for almost five months, during which time Intesa continued to pay his full salary, Intesa, through its counsel, sent the plaintiff’s counsel a letter explaining when his leave under the Family and Medical Leave Act would expire and stating that, “the bank would appreciate knowing whether he intends to return to work or to abandon his position.”

The plaintiff’s counsel responded by stating, in part, that the plaintiff had “been suffering from severe and disabling illnesses that have prevented him, and continue to prevent him, from working in any capacity, let alone in the capacity in which he had been serving [Intesa]” and that the plaintiff had “not at any time evinced or expressed an intention to ‘abandon his position’ with [Intesa]. Rather, he has been sick and unable to work, with an uncertain prognosis and a return to work date that is indeterminate at this time.”

Intesa subsequently terminated the plaintiff’s employment, and the plaintiff sued, claiming that it had discriminated against him on the basis of his disability. His first cause of action was under the New York State Human Rights Law (the State HRL) and his second cause of action was under the New York City Human Rights Law (the City HRL).

Intesa moved to dismiss. The trial court dismissed the first and second causes of action and an intermediate appellate court affirmed. The case then reached New York’s highest court, the New York Court of Appeals.

In affirming the dismissal of the State HRL claim, the court explained that the term “disability” as defined in the State HRL was “limited to disabilities which, upon the provision of reasonable accommodations, do not prevent the complainant from performing in a reasonable manner the activities involved in the job or occupation sought or held.”  The court continued by noting that “indefinite leave” was not considered a reasonable accommodation under the State HRL. It found that neither the plaintiff’s communications with his employer just prior to his termination nor the lawsuit he filed one year later had offered any indication as to when the plaintiff planned to return to work. Instead, the court said, the plaintiff informed his employer that he had not expressed any intention to “abandon” his job and that his return to work date was “indeterminate”; the plaintiff’s lawsuit merely alleged that the plaintiff sought “a continued leave of absence to allow him to recover and return to work.” 

In the court’s view, the “only conclusion” to be reached from the plaintiff’s own description of the circumstances was that he hoped to keep his job by requesting an indefinite leave of absence. Thus, the court ruled, even construing the complaint liberally and according the plaintiff the benefit of every possible inference, the plaintiff failed to state a claim under the State HRL and the first cause of action had been properly dismissed.

The court then considered the plaintiff’s claim under the City HRL, explaining that it afforded protections that were broader than those provided by the State HRL. The court declared that, unlike the State HRL, the City HRL’s definition of “disability” did not include “reasonable accommodation” or the ability to perform a job in a reasonable manner. Rather, it stated, the City HRL defined “disability” solely in terms of impairments, and required that an employer “make reasonable accommodation to enable a person with a disability to satisfy the essential requisites of a job . . . provided that the disability is known or should have been known by the [employer].” The court also said that, contrary to the State HRL, it was the employer’s burden to prove undue hardship.

The court added that the City HRL provided employers with an affirmative defense if the employee could not, with reasonable accommodation, “satisfy the essential requisites of the job.” Thus, the court said, the employer, not the employee, had the “pleading obligation” to prove that the employee “could not, with reasonable accommodation, satisfy the essential requisites of the job” under the City HRL.

The court then decided that the plaintiff, through his letter from his counsel, had made his disability known to Intesa but that Intesa had not met its obligation under the City HRL to plead and prove that the plaintiff could not perform his essential job functions with an accommodation. Because Intesa had made no such allegation or showing on its motion to dismiss, the court ruled, the City HRL claim should not have been dismissed. [Romanello v. Intesa Sanpaolo, S.p.A., 2013 N.Y. Lexis 2755 (Oct. 10, 2013).]

Plaintiff Need Not Exhaust Administrative Remedies Before Bringing Rehabilitation Act Lawsuit, Circuit Court Decides

In this case, the plaintiff sued her former employer, Milwaukee Health Services, Inc., a private recipient of federal funding. She charged that Milwaukee Health Services had violated the federal Rehabilitation Act of 1973 by requiring her to complete certain duties as a dental assistant that she was incapable of performing because of an unspecified disability that limited her strength and mobility, and then by firing her because of her disability. The trial court dismissed the plaintiff’s lawsuit on the ground that she had failed to exhaust her administrative remedies. The plaintiff appealed.

The U.S. Court of Appeals for the Seventh Circuit reversed. It explained that a plaintiff seeking relief under the Rehabilitation Act against a recipient of federal money was not required to exhaust the administrative remedies that were provided by the Act. Indeed, it concluded, an employee or former employee of a private company, such as the plaintiff in this case, was not even required by the Act to file an administrative charge or complaint before going to court. [Williams v. Milwaukee Health Services, Inc., 732 F.3d 770 (7th Cir. 2013).]

Company’s Appeal of Decision Requiring It To Pay Plaintiff’s Attorney’s Fees Is Dismissed as Untimely

This case began when the plaintiff filed a lawsuit under the Fair Labor Standards Act seeking payment of overtime wages to which he claimed he was entitled. The defendants initially failed to appear and a default judgment was entered. The district court certified the case as a class action and notice was published.

Thereafter, the defendants appeared and the default was vacated. The class was voluntarily de-certified and the parties reached a settlement. On August 13, 2012, the district court approved the settlement and resolved the only outstanding issue by granting the plaintiff’s motion for attorneys’ fees in an order that set the amount of fees and costs to the plaintiff and that also directed the case to be closed.

The defendants, however, failed to pay the attorneys’ fees awarded to the plaintiff, and he moved to reopen the case and to have judgment entered. The district court granted the motion and entered judgment on January 7, 2013. The defendants appealed with a notice of appeal that was filed on February 6, 2013. In their appeal, the defendants challenged only the district court’s decision on the plaintiff’s motion for attorneys’ fees. The plaintiff argued that the defendants’ appeal was untimely under Federal Rule of Appellate Procedure 4. 

The U.S. Court of Appeals for the Second Circuit dismissed the appeal.

In its decision, it explained that an order awarding attorneys’ fees and costs was appealable when the amount of fees and costs was set by the district court. In this case, the circuit court continued, the amount of fees and costs payable to the plaintiff was set by the district court’s order of August 13, 2012. The Second Circuit then noted that, under Federal Rule of Civil Procedure 4(a)(1)(A), a notice of appeal “must be filed . . . within 30 days after entry of the judgment or order appealed from.” Here, the circuit court found, the district court’s order setting the amount of attorneys’ fees was entered for the purposes of Rule 4 when it was “entered in the civil docket,” i.e., on August 13, 2012. The 30 days provided for by Rule 4(a)(1)(A), therefore, had long since run when the defendants filed their notice of appeal on February 6, 2013. Since a new or amended judgment only may renew the 30 day limit if the later judgment “changes matters of substance, or resolves a genuine ambiguity, in a judgment previously rendered,” the January 7, 2013 judgment was virtually identical to the August 13, 2012 order, as the Second Circuit noted. Accordingly, the circuit court concluded that the entry of the January 7, 2013 judgment did not reset the defendants’ time to appeal, and their appeal, therefore, was untimely. [Perez v. AC Roosevelt Food Corp., 2013 U.S. App. Lexis 24484 (2d Cir. Nov. 6, 2013).]

ADA Claims Fail Where Employee Sought Indefinite Leave

The plaintiff, who worked for R & O Construction, Inc., as an “estimator,” sued R & O for failing to accommodate her kidney stone condition, complaining that R & O consistently had assigned more work to her and had refused to give her a flexible schedule or reduce her workload. The plaintiff also alleged that R & O had subjected her to a hostile work environment as a result of her “disability.” In addition, the plaintiff claimed that she had been “constructively discharged” in violation of the Americans with Disabilities Act (ADA) because the discrimination she endured as a result of her “disability” created work conditions so intolerable that she had no option other than to resign. R & O moved for summary judgment on the ADA claims, contending that the plaintiff did not qualify as an individual with a disability.

The court granted R & O’s motion. In its decision, it first assumed, without deciding, that kidney stones were a disability for purposes of the ADA. It then found that the plaintiff had been a “capable employee for R&O” for many years and often had been assigned “a heavy work load,” and decided that she had shown that she was a qualified employee to perform the essential functions of her job as an estimator.

The court next considered the plaintiff’s various ADA claims. First, it rejected the plaintiff’s claim against R & O for failure to accommodate under the ADA. The court said that the plaintiff had asked her managers for a flexible schedule and a reduced work load for an indefinite period of time, and the court acknowledged that a brief leave of absence for medical treatment or recovery could be a reasonable accommodation. However, it continued, for such an accommodation to be reasonable, the plaintiff had to provide an estimated date when she could resume her essential duties and assure R & O that she could perform the essential functions of her position in the “near future.” The plaintiff had not asked for a specific duration of time off and she had not assured R & O that she would be able to perform all the functions of her job in the near future, the court pointed out. It decided that the plaintiff’s request for flexibility “for an indefinite period of time” did not guarantee a regular or reliable level of attendance to complete the essential functions of her job as an estimator.

Accordingly, the court ruled that the plaintiff’s request for a reduced work load had been unreasonable. Under the ADA, it stated, an employer was “not required to accommodate a disabled worker by modifying or eliminating the essential functions of the job,” and the ADA did “not require employers to reallocate essential employee duties.” The court decided that the plaintiff’s request was unreasonable as it would shift her work onto other employees for an indefinite period of time.

Next, the court rejected the plaintiff’s claim that she had been subjected to a hostile work environment in violation of the ADA. It explained that, to succeed on that claim, the plaintiff had to show that a rational jury could find that the workplace had been permeated with “discriminatory intimidation, ridicule, and insult” that was “sufficiently severe or pervasive to alter the conditions of the [plaintiff’s] employment and create an abusive working environment.”

Here, the court said, the plaintiff’s evidence demonstrated that she had endured a heavy workload and had “felt pressured” to discuss her health issues with her coworkers and R & O management. That evidence was “not frequent, severe, or humiliating enough to be both objectively and subjectively abusive to a reasonable person,” the court decided.

Finally, the court rejected the plaintiff’s claim that she had been constructively discharged in violation of the ADA. The court found that the plaintiff had not demonstrated that she had been threatened or discriminated against as a result of her kidney stones, or that her working conditions were so objectively intolerable that a reasonable person would feel forced to resign. An “isolated incident with her managers and coworkers” and an “unpleasant and difficult workload” were not enough to support a constructive discharge claim, the court concluded. [Whitmeyer v. R & O Construction, Inc., 2013 U.S. Dist. Lexis 152930 (D. Utah Oct. 23, 2013).]

Employee Terminated for Breach of “Return to Work Agreement” Loses FMLA and ADA Claims

The plaintiff in this case was employed as a Driver Sales Representative (DSR) with Con-way Freight, Inc. Con-way was subject to federal motor carrier safety regulations issued by the U.S. Department of Transportation (DOT) that required it to maintain strict drug and alcohol screening programs for its DSRs. Pursuant to these polices, Con-way trained the plaintiff on the company’s prohibitions regarding alcohol and drugs and its employee assistance program.

In May 2009, the plaintiff requested a leave of absence pursuant to the Family and Medical Leave Act (FMLA) to enter a rehabilitation program for the treatment of alcoholism. Con-way granted the plaintiff’s request and did not impose any discipline in connection with this leave. When the plaintiff returned to work, he did so without any change to his wages, hours, or working conditions. Con-way, however, required that the plaintiff sign a “Return to Work Agreement” (RWA) in which he agreed to remain “free of drugs and alcohol (on company time as well as off company time) for the duration of [his] employment.”

Within a month of signing the RWA, the plaintiff again admitted himself into a center for the treatment of alcohol abuse after he suffered a relapse and resumed consuming alcohol. Con-way terminated his employment on the ground that he had consumed alcohol in violation of the RWA.

The plaintiff sued Con-way, alleging that his termination had violated the Americans with Disabilities Act (ADA) and the FMLA. Specifically, the plaintiff alleged claims of discrimination, retaliation, and failure to accommodate a disability pursuant to the ADA, and claims of retaliation, interference, and illegal denial of FMLA-protected leave.

The district court granted summary judgment in favor of Con-way on all claims, and the plaintiff appealed to the U.S. Court of Appeals for the Third Circuit.

The circuit court affirmed the district court’s decision. It explained that employers did not violate the ADA merely by entering into return-to-work agreements that imposed employment conditions different from those of other employees. It then ruled that because the RWA was not invalid under the ADA, the plaintiff’s violation of its terms was a legitimate, non-discriminatory reason for Con-way to terminate his employment. Finding that the plaintiff had submitted no evidence that the breach of the RWA was a mere pretext for disability discrimination, the Third Circuit found that the district court had not erred in granting summary judgment on the ADA claims.

The circuit court reached the same conclusion with respect to the plaintiff’s FMLA claims, finding that the plaintiff was terminated for breach of the RWA and not in retaliation for his request for leave. It also rejected the plaintiff’s argument that the very imposition of the no-alcohol requirement in the RWA was a violation of the FMLA because it had the effect of chilling and discouraging the plaintiff from exercising his rights under the FMLA. The circuit court concluded that Con-way had requested the RWA pursuant to its obligations under DOT regulations to maintain strict alcohol policies for covered employees. [Ostrowski v. Con-Way Freight, Inc., 2013 U.S. App. Lexis 22091 (3d Cir. Oct. 30, 2013).]

Failure to Timely File Motion Dooms Plaintiff’s Request for Attorney’s Fees and Costs

After a federal district court in Michigan found that a plan administrator’s decision to deny the plaintiff long term disability (LTD) benefits was arbitrary and capricious, it entered an order remanding the matter to the plan administrator to perform a functional capacity evaluation to determine the plaintiff’s physical capabilities and to provide a “full and fair review” of the plaintiff’s LTD benefits claim.

Seventy-eight days after the court’s order remanding the case to the plan administrator, the plaintiff filed a motion requesting that the court award her attorney’s fees and costs for her successful appeal. The court denied her motion, finding that it was “not timely.”

As the court explained, the Federal Rules of Civil Procedure provide that, unless a statute or court order provides otherwise, a motion for fees and costs must be filed “no later than 14 days after the entry of judgment.” The court then pointed out that the Eastern District of Michigan’s local rules extended the period during which the plaintiff had to file her motion for attorney’s fees and costs to 28 days after the entry of judgment. Therefore, the court found, the plaintiff was required to file her motion 50 days before she actually had filed it. Because the plaintiff had not complied with this deadline, had not requested an extension of this deadline, and had not put forth any evidence indicating that her delay was a result of “excusable neglect,” the court concluded that she could not seek fees and costs. [Magdziak v. Metropolitan Life Ins. Co., 2013 U.S. Dist. Lexis 142384 (E.D.Mich. Oct. 2, 2013).]

Reprinted with permission from the February 2014 issue of the Employee Benefit Plan Review – From the Courts.  All rights reserved.

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