A November 8, 2013 decision out of the district court for the Southern District of Ohio, Gaskins, et al. v. Rock-Tenn Corporation, confirms the importance of employers keeping employment decisions and discussions about benefits completely separate, and avoiding any commentary about the potential costs to a company of an employee’s benefits. This guidance is especially timely now, since the implementation of the Affordable Care Act has increased the cost of employee health coverage for many employers, healthcare reform has become part of the daily conversation, and it seems as though everyone has an opinion to share.
In this case, one of the plaintiffs, James Lang, worked for Rock-Tenn as a “Shipping/Receiving Coordinator,” and was responsible for overseeing hourly employees who unloaded and documented shipments. Lang had two daughters with cystic fibrosis, and by 2010, Lang’s family had been paid the $1.5 million maximum of health insurance benefits under company policy. Following the enactment of the Affordable Care Act, the lifetime maximum was eliminated, entitling Lang’s family to additional benefits. In early 2011, Lang told his management that one of his daughters was eligible for a double lung transplant. Lang estimated, but never told his managers, that the transplant would cost in the neighborhood of $2 million. In September of 2011, Lang was observed standing on the tines of a forklift, rather than putting a pallet on the tines first, as required by company safety policy. Lang was subsequently terminated for the safety violation.
Lang sued Rock-Tenn, alleging among other claims interference and retaliation claims under ERISA § 510, claiming that Rock-Tenn fired him to avoid the estimated $2 million in additional health benefits it would be on the hook for related to the anticipated lung transplant for Lang’s daughter. Lang claimed that the timing of his termination and his managers’ knowledge that he was hopeful his daughter would receive a lung transplant in the near future tended to show that avoiding the cost of those benefits was one of the “real” reasons he was fired.
The court ruled in favor of Rock-Tenn and dismissed Lang’s claims, due to the lack of evidence of any intent to interfere with Lang’s benefits or to retaliate against him for seeking them. Notably, none of his managers made any negative comments about the costs associated with his family’s healthcare (they had in fact thrown fund raisers for Lang’s family) or the cost to the company of providing employees health insurance. There was no evidence that anyone at the facility knew how much his family healthcare was costing the company (benefits were handled through Rock-Tenn’s corporate office), and all this amounted to a lack of proof of the “specific intent” to deny a beneficiary benefits necessary for an ERISA § 510 interference or retaliation claim.
The implementation of the Affordable Care Act is increasing the costs of many employer-provided medical plans, while at the same time media coverage is making employees more aware of the inner workings of these plans, and sensitizing everyone to costs. Given this environment, we anticipate seeing more ERISA § 510 claims over the next few years. This most recent case is a good reminder of the importance of keeping employment decisions separate from benefits issues and minimizing (if not eliminating) workplace commentary by management employees about the costs associated with employee benefits, especially commentary addressing a particular employee. Had a manager or supervisor made an off-handed comment about what the company might have to pay for Lang’s medical benefits, the court might not have been as willing to dismiss on the company’s motion for summary judgment. In this case, it appears that management did it right, and prudent employers would be wise to follow suit. Reminding managers and supervisors to avoid unnecessary commentary about the cost of employee benefits in the current environment is of critical importance.