Court Dismisses Complaint Seeking Payment for MUA Procedures
June 30, 2013 | |Montvale Surgical Center, LLC, an outpatient ambulatory surgery center, performed three “medically necessary” spinal manipulation under anesthesia (MUA) procedures on New Jersey resident Gerald Tyska at its facility. Tyska subscribed to a fully-funded group health insurance plan maintained by Coventry Health Care, Inc., and assigned his rights under the plan to Montvale.
Montvale submitted requests for reimbursement to the plan, which denied the claims after it found the “MUA treatment administered to Tyska to be experimental and investigational, as well as not the national standard of care for the diagnosis given.” Montvale sued Coventry for violating ERISA, and for breach of contract under state law. Coventry moved to dismiss.
The federal district court granted Coventry’s motion, dismissing the state law claims with prejudice as preempted by ERISA and the ERISA claims without prejudice.
The court first rejected Montvale’s argument that Tyska’s MUA procedures were covered under the terms of the plan because there were American Medical Association (AMA) “Current Procedural Terminology” (CPT) codesthat indicated that MUA was not investigational or experimental, “as well as nationally accepted criteria for practicing MUA on selected patients.” Montvale also asserted that Tyska’s MUA procedures were “medically necessary.”
The court explained that as the CPT codebook stated, inclusion in the codebook did not represent endorsement by the AMA of any particular diagnostic or therapeutic procedure and that inclusion or exclusion of a procedure did “not imply any health insurance coverage or reimbursement policy.”
The court also rejected Montvale’s contention that the MUAs were covered because they were “medically necessary,” finding that its assertion that the MUA procedures were “medically necessary” was conclusory and not supported by any evidence in the pleadings. The court pointed out that, under the plan, Coventry had fiduciary discretion to determine whether an administered treatment was medically necessary and to deny benefits for investigative or experimental procedures.
Finally, the court also rejected Montvale’s argument that the MUAs should be covered because Coventry had “preordained that [it would] deny coverage for” MUA procedures. The court declared that, even accepting as true allegations that Coventry’s denial of coverage for MUA procedures was systemic, Montvale still had not met its threshold showing that Coventry had acted outside the scope of decision making that it was, by the terms of the plan, entitled to, or that its determinations were arbitrary or capricious. [Montvale Surgical Center, LLC v. Coventry Health Care, 2013 U.S. Dist. Lexis 37396 (D.N.J. March 18, 2013).]
Comment: As the ERISA claims were dismissed without prejudice, the plaintiff had the opportunity to serve an amended complaint.
Without Medical Certificate, Plaintiff Was Unable to Perform an Essential Function of His Job, Circuit Court Rules
After the plaintiff in this case began working as a manager for Schwan’s Home Service, Inc., which delivered frozen food to end-user customers at home or work, he suffered an eye injury. His job description stated that he had to “meet the Federal Department of Transportation eligibility requirements, including appropriate driver’s license and corresponding medical certification as a condition of employment for this position” and that he had to be “DOT Qualified” for trucks weighing over 10,000 pounds.
An eye doctor refused to give the plaintiff a Medical Examiner’s Certificate (MEC) or a waiver, and the plaintiff was placed on a 30 day leave of absence to obtain either an MEC or a non-DOT-qualified job at the company. He failed to obtain either within 30 days. Home Service fired him and he sued, arguing that Home Service had terminated him contrary to the Americans with Disabilities Act.
The trial court granted summary judgment to Home Service, and the plaintiff appealed, arguing that he qualified as disabled under the ADA Amendments Act of 2008 (ADAAA).
The U.S. Court of Appeals for the Sixth Circuit affirmed. The circuit court first noted that to establish a prima facie case under the ADA, the plaintiff was required to show that he was disabled within the meaning of the ADA, was qualified to perform the essential functions of his job, and suffered an adverse employment action because of his disability. It explained that it did not have to decide whether the plaintiff was disabled under the ADAAA, because even assuming that he was disabled, he was not qualified to perform an essential function of his job.
The circuit court noted that Home Service supervisors testified that its managers, including the plaintiff, drove delivery trucks to deliver product and train new employees. If managers did not drive trucks, Home Service would deliver less product, affecting sales, and would have to restructure how it trained new drivers, the circuit court added. It also noted that all other Home Service managers were DOT qualified when the plaintiff was terminated.
The circuit court acknowledged that the plaintiff had claimed that he managed his depot successfully without driving a delivery truck, but found that the plaintiff’s “specific personal experience” was of “no consequence in the essential functions equation.” Instead, the circuit court continued, it was the written job description, the employer’s judgment, and the experience and expectations of all managers generally that established the essential functions of the job.
Accordingly, the appellate court concluded, because the plaintiff admitted that he had not obtained an MEC — and therefore that he was not DOT qualified — he was not qualified to perform an essential job function. Adding that eliminating the essential job function of being DOT qualified would be an unreasonable accommodation, it affirmed the district court’s decision in favor of Home Service. [Knutson v. Schwan’s Home Service, Inc., 711 F.3d 911 (8th Cir. 2013).]
Circuit Court Upholds Termination of Employee Who Did Not Truthfully Answer Employment Form Questions about Drug and Alcohol Addiction
After receiving a conditional employment offer from Lehigh Valley Hospital (LVH) to be a part-time security officer, the plaintiff in this case completed and signed a six page employee health information form as part of LVH’s hiring process. The final two questions on the employment form inquired: “Have you ever been recognized as or diagnosed with alcoholism or drug addiction? Have you ever been or are you now being treated for alcoholism or drug addiction? … If so, specify type of treatment[.]” The plaintiff answered “no” to both questions, and left blank the follow up inquiry requesting specification of the type of treatment. A handwritten note underneath the questions read: “denies drug/alcohol addiction.” The plaintiff signed the employment form subject to the condition that “falsifying of this information could result in withdrawal of the employment offer or if subsequently discovered termination of … employment.”
Almost two years after the plaintiff began working for LVH, he completed an overnight shift, left, and later returned to LVH and was admitted to the emergency room to receive treatment for an eye injury he believed he had sustained on the job. The plaintiff disclosed to the treating physician that he had a history of narcotics use and was a recovering drug addict. The treating physician noted this history on the emergency department’s physician clinical report: “History of drug use: narcotics. Is a recovering addict.”
Following the plaintiff’s hospital visit, the emergency room sent the clinical report to the LVH employee health services department. The health services department, in turn, notified the LVH human resources department of the plaintiff’s admission that he was a recovering addict and alerted the department that the plaintiff had not been truthful on the employment form.
LVH fired the plaintiff, and he sued, alleging disability-based employment discrimination in violation of the Americans with Disabilities Act (ADA).
The trial court granted LVH’s summary judgment motion on the plaintiff’s disability discrimination claims under the ADA, and the plaintiff appealed.
The U.S. Court of Appeals for the Third Circuit affirmed.
In its decision, the circuit court first noted that the plaintiff had not asserted an improper medical disclosure claim in his complaint against LVH; therefore, it ruled, he was precluded from arguing on appeal that LVH had violated § 12112(d)(3) of the ADA by sharing his medical records among hospital departments.
The circuit court then rejected the plaintiff’s challenge to the trial court’s grant of summary judgment on his claims for disability discrimination in violation of the ADA. It found that, even assuming that the plaintiff had established a case of disability discrimination, LVH had articulated a legitimate, nondiscriminatory reason for terminating the plaintiff – his dishonesty on the employment form – and the plaintiff had failed to demonstrate that this reason was pretextual. The circuit court found that the only evidence of pretext that the plaintiff pointed to was that he had answered the questions on the employment form truthfully with respect to whether he ever had received treatment for alcoholism or drug abuse, as he believed that the treatment he had received was mandatory following a DUI conviction.
In the circuit court’s opinion, the plaintiff’s belief that he had answered the pertinent inquiries truthfully was “not the determinative factor.” Rather, the circuit court continued, the question was whether the decision makers at LVH could regard the plaintiff’s responses as dishonest, and it said that the answer to that question was “resoundingly, ‘yes.'” As the circuit court noted, the evidence established that the plaintiff had received 40 hours of drug and alcohol addiction treatment following his DUI conviction and that he regularly had attended, and still attended, AA and NA meetings. Furthermore, the circuit court continued, the plaintiff admitted during his deposition testimony that he was a recovering alcoholic and drug addict.
Given what the circuit court characterized as this “undisputed evidence,” the plaintiff’s “bare assertion” that he completed the employment form truthfully because he believed the purpose of the treatment was to resolve his DUI charge, not to treat his addictions, was insufficient to permit a factfinder either to disbelieve LVH’s articulated reasons, or to conclude that discrimination on account of disability was the real reason for the plaintiff’s termination.
Accordingly, the circuit court concluded, the trial court had not erred in granting LVH summary judgment on the plaintiff’s disability discrimination claims under the ADA. [Reilly v. Lehigh Valley Hospital, 2013 U.S. App. Lexis 6364 (3d Cir. March 29, 2013).]
Court Refuses to Dismiss Suit Claiming Plaintiff Was Fired Because of Her Association with a Person with a Disability
In this case, the plaintiff worked for PEC Management II, LLP, a Burger King franchisee, as a general manager of one of its restaurants until she was terminated. According to PEC, she was fired for violating its policy of allowing a non-management employee to drive for company business. The plaintiff sued PEC, alleging that she had been fired because of her association with a person with a disability, namely her son who had cancer, violating the Americans with Disabilities Act (ADA).
The parties agreed that, at the meeting at which she was told she was being fired, the plaintiff was told that, “the rule violation of sending [the non-management employee] to run an errand to get product was the straw that broke the camel’s back, and because of that rule violation, [she had to be let] go.” The plaintiff alleged that there were other statements made to her at the termination meeting, including, “We need someone whose head is there 100 percent,” “We are planning on spending 400 grand to remodel the restaurant,” “Now you can go spend all your time with your son,” and “Please go spend some time with your son.”
PEC moved for summary judgment.
In its decision, the court explained that the ADA provided that an employer may not discriminate against a qualified individual on the basis of disability “because of the known disability of an individual with whom the qualified individual is known to have a relationship or association.” In this case, it added, the question was whether the plaintiff had been dismissed from her duties by PEC based on unproven assumptions and speculation by PEC of sub-standard work performance because of her association with a disabled person (i.e., her son). The court ruled that there were material issues of fact that precluded the entry of summary judgment in favor of PEC on the issue of discrimination by association.
In particular, the court found, it was a disputed issue of material fact whether a reasonable person taking into consideration the evidence presented by both sides would deem the plaintiff’s performance sub-par. The court also found a disputed issue of material fact as to whether a reasonable manager in the plaintiff’s position should have known and enforced PEC’s use of vehicle policy, whereby failure to adhere to the policy indicated poor work performance.
Another disputed issue of material fact, according to the court, was what the plaintiff was told at her termination meeting. The court noted that PEC claimed that it discharged the plaintiff because of her violation of the use of vehicles rule that was in the manager’s handbook, while the plaintiff claimed that she was discharged because of her association with her disabled son. Because the plaintiff presented as evidence that she was fired and told to go spend time with her son, the court ruled that it needed to be determined by a trier of fact whether comments made at the termination meeting rose to the level of suspicious circumstances surrounding her termination that would raise a reasonable inference that her son’s disability was a determinative factor in her dismissal.
Thus, the court concluded, because there were genuine disputes as to material facts, PEC’s motion for summary judgment had to be denied. [Buffington v. PEC Management II, LLP, 2013 U.S. Dist. Lexis 43089 (W.D. Pa. March 27, 2013).]
Circuit Court Finds Company that Purchased Employer’s Assets Liable for Its FLSA Obligations
The plaintiffs in this case sued their employer, JT Packard & Associates, for overtime pay under the Fair Labor Standards Act (FLSA). After Thomas & Betts Corporation purchased Packard’s assets and placed them in a wholly owned subsidiary, the trial court allowed the plaintiffs to substitute Thomas & Betts as a defendant for Packard. As a result of the substitution, Thomas & Betts was the entity against which the plaintiffs obtained damages for Packard’s alleged violations of their rights under the FLSA.
Thomas & Betts appealed to the U.S. Court of Appeals for the Seventh Circuit, asserting that the trial court had erred when it held that, by virtue of the doctrine of successor liability, it was liable for damages owed to the plaintiffs as a result of Packard’s alleged violations.
In its decision affirming the district court’s judgment, the Seventh Circuit explained that, when a company was sold in an asset sale as opposed to a stock sale, the buyer acquired the company’s assets but not necessarily its liabilities; whether or not it acquired them was the issue of successor liability. The circuit court added that most states generally limited successor liability to sales in which a buyer (the successor) expressly or implicitly assumed the seller’s liabilities. Here, the purchase agreement specifically provided that Thomas and Betts would not assume any of the liabilities that Packard might incur in the FLSA litigation.
The circuit court then observed that, notwithstanding the purchase agreement’s provision, when liability was based on a violation of a federal statute relating to labor relations or employment, a federal common law standard of successor liability was applied that was more favorable to plaintiffs than most state law standards. The federal standard, according to the Seventh Circuit, required consideration of the following factors:
(1) Whether the successor had notice of the pending lawsuit – the circuit court decided that Thomas & Betts had notice when it acquired Packard’s assets; therefore, it found, this was a factor favoring successor liability.
(2) Whether the predecessor would have been able to provide the relief sought in the lawsuit before the sale – the circuit court decided that the answer to this question was “no” because Packard was insolvent; therefore, it found, this was a factor that counted against successor liability by making that seem like a windfall to the plaintiffs (although, it added, this depended on how long before the sale one looked).
(3) Whether the predecessor could have provided relief after the sale – the circuit court decided that, again, the answer to this question was “no” because Packard had been sold, with the proceeds of the sale going to a creditor; therefore, it found, this was a factor favoring successor liability, as without it the plaintiffs’ claim was worthless.
(4) Whether the successor can provide the relief sought in the suit – the circuit court decided that Thomas & Betts could do so; therefore, it found, this was a factor favoring successor liability.
(5) Whether there is continuity between the operations and work force of the predecessor and the successor – the circuit court decided that there was continuity in this case; therefore, it found, this was a factor favoring successor liability.
After considering these factors, the Seventh Circuit ruled that successor liability was appropriate in suits to enforce federal labor or employment laws, even when the successor disclaimed liability when it acquired the assets in question, unless there were good reasons to withhold such liability. Lack of notice of potential liability – the first criterion in the federal standard – was an example of such a reason, it stated.
However, the circuit court determined, there was “no good reason to reject successor liability in this case.” It explained that Packard was a profitable company that was sold not because it was insolvent but because it was the guarantor of its parent company’s bank loan and the parent company had defaulted. Had Packard been sold before its parent got into financial difficulties, the circuit court stated, imposition of successor liability “would have been unexceptionable.” It concluded that it had “not been given an adequate reason why its having been sold afterward should change the result.” [Teed v. Thomas & Betts Power Solutions, L.L.C., 711 F.3d 763 (7th Cir. 2013).]
Reprinted with permission from the July 2013 issue of the Employee Benefit Plan Review – From the Courts. All rights reserved.
