Working Indiana - Working for Democracy and Justice

For several years, Mrs. DeWitt worked as a clinical manager at Proctor Hospital in Illinois where she received outstanding reviews from her supervisor.  Doubtless she was grateful both for the job and thankful to be covered under the hospitals partially self-funded group health plan, for Mrs. DeWitt's husband, Anthony, suffered from prostate cancer requiring protracted and expensive treatment.  By 2004, the hospital's plan had spent nearly a quarter million dollars for Anthony's battle against the disease.  One day in September, Mrs. DeWitt's supervisor pulled her aside and asked if she hadn't yet begun to consider less expensive hospice care for Anthony.  The following February she inquired again about Anthony's treatment.  Then, in August, after an earlier meeting in which she encouraged clinical managers  to be "creative" in cutting hospital costs, Mrs. DeWitt's supervisor fired her , labelling her "ineligible to be rehired in the future."  From then on, Mrs. DeWitt was forced to rely solely upon COBRA to keep Anthony's struggle alive.  Under § 510 of ERISA, the hospital was prohibited from firing her "for exercising any right to which (she was) entitled under the provisions of" the hospital's group health insurance plan.  This past February, the Seventh Circuit Court of Appeals ruled that Mrs. DeWitt could bring a claim against Proctor Hospital for terminating her to avoid the possibly protracted expense of Anthony's ongoing health care.  The court noted that the hospital's claim that it didn't "benefit" financially from firing Mrs. DeWitt, (based on the proposition that Mrs. DeWitt would remain a participant in the Plan because of COBRA) overlooked the possibility that Anthony could outlive his18 months of COBRA coverage, imposing mounting financial burdens on Proctor's health plan.  As it happens, Anthony died a year and a week after his wife was fired.

So, it appears that the boss can't fire to avoid paying for health care (although the boss can always completely cancel health care coverage).  But an earlier decision from the 10th Circuit casts doubt on the scope of relief available to employees who lose a job because an employer wants to save a buck on fringe benefits.  A group of production employees at McDonnell Douglas' Tulsa, Okla., aircraft plant learned that management elected to close them down after completing a study indicating the firm would reap $24.7 million in pension and health care savings.  Although the employees were able to settle on a figure to resolve their pension and health care benefit losses, they lost their "back pay" claim because, as the Court of Appeals found, ERISA only provides for "appropriate equitable relief," and "back pay" smacks of "damages."  The "backpay" claim, in excess of $90 million, was declared by the court to be outside the remedies permitted by ERISA.

Thus, under the current state of the law, it appears that workers may not be fired to avoid the expense of ongoing health care but those same workers may be forced out the door without insurance or left to pay for more expensive COBRA coverage while they wait for a court to (hopefully) order reinstatement.  Most 510 litigation proceeds along seesaw lines set down in McDonnell Douglas: the plaintiff presents a "prima facie" case--one that satisfies the minimal legal requirements--while the employer counter punches with a legal reason for termination, literally anything in an at will hiring, and then the task falls back to the employee to demonstrate that the "legal reason" is trumped up, an excuse or "pretext" for violating ERISA's ban on interference with benefits.  So, unlike other ERISA litigation which permits little discovery and begs for resolution on simple submission of documents, 510 litigation tends to be more "fact sensitive," i.e., protracted.  The vice here can best be understood by returning to Mrs. DeWitt's predicament.  Assume that her deceased husband, Anthony, was the employee.  Had this been so, Proctor Hospital would have gotten away with denying benefits scott free.  The dead cannot be reinstated.  Perhaps his estate could recover the difference in cost between his COBRA coverage and group coverage but the point is that Anthony would be dead.  If he could not (as many cannot) afford COBRA coverage and his cancer advanced because of that Proctor would have lawfully "terminated" him in more ways than one.  Thus ERISA, an act designed to protect employee benefits, provides strong incentives for an employer to deny them because of continuing judicial reluctance to provide "make whole" relief.