6-23-14; No-Fault Attendance Policies Will Put You In The "Danger Zone", analysis by Bradley Smith, JD; HIPAA Fines To Soar, analysis by Ellen Keefe-Garner, JD; June is PTSD Awareness Month and more

Synopsis: No-Fault Attendance Policies May Put Your Company in the “Danger Zone.” Analysis by Bradley J. Smith, JD.

Editor’s Comments: Taking aim at No-Fault Attendance Policies, the EEOC takes action against auto parts retailer AutoZone for Its alleged failure to accommodate in their policy pursuant to the ADA. To fix the problem, we feel you need to consider implementing a “some-fault” policy because a blind or “no-fault” policy sounds good and easy to implement but is sure to get you into unwanted litigation.

Generally, when it comes to employer attendance policies, application of the policies should be applied the same across a broad range of employees. This allows the employer’s attendance policy to be applied without the impression of discrimination. In other words, you are applying the attendance policy fairly to all employees regardless of religion, color, race, gender, or any other protected category under applicable Federal and State law. Nonetheless, the opposite may be true when considering the Americans with Disability Act’s (“ADA”) failure to accommodate provision. Consequently, in EEOC v. AutoZone, Inc., the Equal Employment Opportunity Commission (“EEOC”) is taking aim at AutoZone Inc. regarding its no-fault attendance policy for allegedly failing to accommodate certain disability-related absences and further for retaliation for engaging in protected activities. EEOC v. AutoZone, Inc., No. 1:14-cv-03385 (filed May 9, 2014). Initially, the EEOC unsuccessfully attempted to reach a pre-litigation settlement with AutoZone through its conciliation process. Subsequently, the EEOC brought the suit under the ADA, which prohibits disability discrimination in employment and retaliation for reporting such discrimination. The EEOC claims for a period of approximately two (2) years, AutoZone assessed its employees and distributed points for absences. The EEOC further alleges AutoZone created no general exceptions for disability-related absences. Thus, any employee who violated AutoZone’s twelve (12) point attendance policy regardless of the reason for the absence was terminated. The EEOC alleges qualified employees with disabilities with minimal disability-related absences were fired. In further opposition to the no-fault policy, the EEOC argues reasonable accommodations should have been made for these employees. In essence this claim is a disparate impact claim as it relates to the no-fault policy, along with a disparate treatment claim as it relates to the individual instances of failure to accommodate and retaliation.

As an example, the EEOC asserts an Ottawa, IL employee with Type 2 diabetes was fired because he/she had to leave work early occasionally because of insulin reactions. The Complaint also alleges an employee was discharged in retaliation for objecting to the attendance policy and filing a charge with the EEOC.

Can Your Company Provide Light Work But Only for Work-Related Injuries?

This action by the EEOC also brings up the continuing question in the workers’ comp arena whether U.S. employers can offer temporary light work for work-related injuries but not offer similar accommodations for non-work-related problems and issues. If your company only offers medically modified work for work-related injuries, you may want to contact the author to discuss that delicate issues.

A reasonable accommodation under the ADA is one that would enable an employee with a disability to enjoy an equal opportunity for benefits and privileges of employment as are enjoyed by employees without disabilities. However, employers do not have to provide an accommodation if doing so would cause undue hardship to the employer. Undue hardship means the accommodation would be too difficult or too expensive to provide, in light of the employer’s size, financial resources, and the needs of the business. Generally, whether the accommodation creates an undue hardship relates to the job duties and descriptions of the position. However, employers cannot deny an accommodation because it will incur some costs.

Consider an Absence Committee

One way to avoid the uncertainty and litigation in this situation is to have your employees get points for absences but, in lieu of termination, have their chart moved to a management committee for review and final decision. In this fashion, you aren’t providing a “no-fault” approach and could make careful accommodation to avoid rancor. The committee can keep records of their decisions and all of this would be the sort of evidence needed to defend any EEOC or state discrimination charge.

Burden of Proof is on the Government But The Costs are on U.S. Employers

The author notes the EEOC may have a difficult time in proving AutoZone failed to reasonably accommodate the alleged disabled employees, but may likely reach a jury trial on the issues. The EEOC will initially need to demonstrate the individuals allegedly discriminated against suffered from a disability under the ADA. Although the EEOC would likely not bring the case if there was no evidence that the individuals suffered from disabilities, this element will need to be proven. Second, the EEOC will need to establish AutoZone was actually aware of the employees’ disabilities, as required to sustain a failure to accommodate claim under the ADA. Although this element is a prime area for summary judgment, in the event there is no dispute AutoZone was unaware of the disabilities, it is highly likely this area will be factually disputed by the EEOC and the individuals. In other words, at a minimum, if the EEOC can establish there is a factual dispute as to whether AutoZone had actual knowledge the disabilities, then the case will proceed to a trial. Nonetheless, to finally prevail on the ADA failure to accommodate claim, the EEOC will need to prove the employer failed to reasonably accommodate the employee’s disability. Of course, if the EEOC fails to demonstrate AutoZone’s actual awareness of the alleged disabilities, then consideration of whether AutoZone failed to reasonably accommodate the individuals will be unnecessary. Despite the EEOC’s difficulties, the case will likely proceed to trial without any early disposition.

As for the ADA retaliation claims, the EEOC will need to prove AutoZone retaliated against certain individuals for asserting their ADA rights and/or engaging in protected activities. Thus, the EEOC must evidence that AutoZone discharged its employees for filing their claims with the EEOC, an action all employees should have the right to engage in without fearing termination.

Notably, this is not the first time that the EEOC set its sights on AutoZone. In 2009, a consent decree resolved an EEOC claim that AutoZone allegedly failed to promote a visually impaired employee and further denied his/her use of a service animal. (EEOC v. AutoZone, Inc., No. CV-06-1767 (D. Ariz)). That decree awarded the employee $140,000.00 and required the company to conduct ADA training in all of its Arizona stores. In yet another case in 2001, a central Illinois jury found that AutoZone refused to accommodate a sales manager’s disability by requiring the employee to mop of floors, which led to additional injuries. (EEOC v. AutoZone, Inc., No. 07-cv-1154 (C.D.Ill.)). The case resulted in a $424,000.00 judgment against AutoZone. Moreover, in 2012, the EEOC claimed that AutoZone fired an employee rather than accommodating her lifting restriction. (EEOC v. AutoZone, Inc., No. 12-cv-303 (E.D. Wis.)). This case is currently proceeding to trial.


Essentially, the EEOC is attempting to force AutoZone to alter its nationwide no-fault attendance policy—and in doing so, to set an example—to account for individuals with disabilities needing “reasonable accommodations” related to their attendance at work. Although this is not a novel concept, employers and their insurers need to be aware no-fault attendance policies must leave room to accommodate for known disabilities, as long as those accommodations will not create an undue hardship on the employer. In other words, having clearly mandated policies and detailed written job descriptions, and further application of the same, can alleviate the stress of future litigation and expensive attorneys’ fees and costs. Thus, if employers provide a strong legal foundation for their policies and procedures, employers can avoid becoming the EEOC’s target.

It is not our intention to comment on the merits of the claim reported above—our goal is to inform our readers of these important developments. This article was researched and written by Bradley J. Smithwho is our employment law defense team leader. Fully ready to service your legal defense needs, Mr. Smith also manages the firm’s general liability department. Feel free to contact Bradley about this article at bsmith@keefe-law.com.


Synopsis: News from Washington D.C., HIPAA Fines are Skyrocketing. Analysis by Ellen Keefe-Garner, RN, BSN, JD.

Editor’s comment: It has long been known failure to comply with HIPAA can result in civil and criminal penalties (42 USC § 1320d-5). Our recommendation to all our readers in the WC industry is to get an HIPAA-GINA compliant release signed by the claimant whenever/wherever possible. If the release is later withdrawn, you can then rely on the WC “exception” to HIPAA-GINA but you are much better protected to have a signed release in your files. If you need our draft HIPAA-GINA compliant release for your use, send a reply and we will email it to you, no charge. Either way, when you come to the end of handling a workers’ comp file, it has to be appropriately and securely stored and then shredded.

Civil Penalties

 The “American Recovery and Reinvestment Act of 2009”(ARRA) that was signed into law on February 17, 2009, established a tiered civil penalty structure for HIPAA violations (see below).  The Secretary of the Department of Health and Human Services (HHS) still has discretion in determining the amount of the penalty based on the nature and extent of the violation and the nature and extent of the harm resulting from the violation.  The Secretary is still prohibited from imposing civil penalties (except in cases of willful neglect) if the violation is corrected within 30 days (this time period may be extended).

HIPAA Violation

Minimum Penalty

Maximum Penalty

Individual did not know (and by exercising reasonable diligence would not have known) that he/she violated HIPAA

$100 per violation, with an annual maximum of $25,000 for repeat violations (Note: maximum that can be imposed by State Attorneys General regardless of the type of violation)

$50,000 per violation, with an annual maximum of $1.5 million

HIPAA violation due to reasonable cause and not due to willful neglect

$1,000 per violation, with an annual maximum of $100,000 for repeat violations

$50,000 per violation, with an annual maximum of $1.5 million

HIPAA violation due to willful neglect but violation is corrected within the required time period

$10,000 per violation, with an annual maximum of $250,000 for repeat violations

$50,000 per violation, with an annual maximum of $1.5 million

HIPAA violation is due to willful neglect and is not corrected

$50,000 per violation, with an annual maximum of $1.5 million

$50,000 per violation, with an annual maximum of $1.5 million

Criminal Penalties

In June 2005, the U.S. Department of Justice (DOJ) clarified who can be held criminally liable under HIPAA. Covered entities and specified individuals, as explained below, whom "knowingly" obtain or disclose individually identifiable health information in violation of the Administrative Simplification Regulations face a fine of up to $50,000, as well as imprisonment up to one year.

Covered Entity and Specified Individuals

The DOJ concluded that the criminal penalties for a violation of HIPAA are directly applicable to covered entities—including health plans, health care clearinghouses, health care providers who transmit claims in electronic form, and Medicare prescription drug card sponsors. Individuals such as directors, employees, or officers of the covered entity, where the covered entity is not an individual, may also be directly criminally liable under HIPAA in accordance with principles of "corporate criminal liability." Where an individual of a covered entity is not directly liable under HIPAA, they can still be charged with conspiracy or aiding and abetting.

Enforcing Agencies

The DHHS Office of Civil Rights (OCR) enforces the privacy standards, while the Centers for Medicare & Medicaid (CMS) enforces both the transaction and code set standards and the security standards (65 FR 18895). Enforcement of the civil monetary provisions has not yet been tasked to an agency.

No Private Cause of Action

While HIPAA protects the health information of individuals, it does not create a private cause of action for those aggrieved (65 FR 82566). State law, however, may provide other theories of liability.

The Office of Civil Rights (OCR), a division of the U.S. Department of Labor, investigates potential HIPAA violations. Since 2013, the Department of Health and Human Services (HHS) has recovered more than $10 million from health care entities and business associates for alleged violations of HIPAA. During a American Bar Association conference, in mid-2013, Jerome Meites, Chief Civil Rights Counsel for the HHS predicted future awards for HIPAA violations will be increasingly larger than in the past. Mr. Meites supported his prediction with the premise that HHS’s Office of Civil Rights is attempting to send a strong message that entities should comply with HIPAA or face steep penalties.

In addition to the potential onus of huge financial penalties for a HIPAA violation, Mr. Meites informed many more investigations of possible violations were already planned. He explained portable media devices used for storing health care information have caused a huge number of complaints about breaches of protected health care information. In addition, Mr. Meites indicated the failure of an entity to perform the required HIPAA investigation—called a comprehensive risk assessment—has been a factor in most of the data breach cases with which HHS has been confronted.

The warnings given by Mr. Meites about the proposed upswing in the number of investigations was intended to cause health care entities and their business associates (including attorneys, law firms and insurance claims managers) to take a closer look at their policies and procedures related to HIPAA protection. The warnings were intended to force entities to analyze how and when they will investigate a potential HIPAA violation. Needless to say, a strong message was sent to indicate that all entities should carefully scrutinize their policies for protecting data in relation to portable media devices, devices which are or could be used to store private health care information of patients.

This article was researched and written by Ellen Keefe-Garner, RN, BSN, JD who is our health law defense expert, along with handling numerous defense roles. Feel free to contact Ellen about this article at emkeefe@keefe-law.com.




Synopsis: PTSD Continues to Vex Workers’ Comp Managers.


Editor’s comment: In order to bring greater awareness to the issue of posttraumatic stress disorder (PTSD), the United States Senate designated June 27th as National PTSD Awareness Day. In addition, June has been designated as PTSD Awareness Month by the National Center for PTSD.

PTSD is an anxiety disorder resulting from exposure to a single traumatic event or multiple traumatic events, such as assault, natural or man-made disaster, and work- or war-related combat stress. Symptoms of PTSD include persistent intrusive thoughts and distressing dreams about the traumatic event, triggered emotional responses to reminders of the trauma, efforts to avoid thinking or talking about the trauma, and persistent hypervigilance for cues that  indicate additional danger or trauma re-occurring. Indeed, according to estimates published by The National Center for Post-Traumatic Stress Disorder, some 7.8 percent of Americans will experience post-traumatic stress disorder (PTSD) at some point in their lives. Statistics indicate women are twice as likely to suffer from the condition than men.


Because the employer supposedly takes the “egg-shell” employee as it finds them, employers, claims administrators, and insurers view PTSD as an ongoing and difficult challenge to claims management and administration. Some industry experts are taking action to assist employers to identify if and confirm when a worker might be at risk of PTSD. Prevention and early identification of PTSD as an important part of their overall risk management.


One caveat we always tell our readers, clients and friends, always remember if someone is seriously injured or killed in the workplace, you have to handle the injury/death but also have to consider potential PTSD claims from everyone around the event. Be sure to offer counseling or medical care to your entire workforce, as needed. If you want assistance in finding such counselors, send a reply.


The “Double Whammy” of Dealing with PTSD Claims


·         PTSD usually lurks in the shadows, only to become present when the employee is confronted with a slow-developing or sudden physical or psychic trauma.


·         PTSD doesn’t have open scars or surgical sites--like other mental injury conditions, this condition has a significantly subjective component. The problem with all “soft-tissue” WC claims is when to give the worker the benefit of the doubt and when to shut the claim down.


Current Status Illinois and Indiana WC Mental Claims, Including PTSD


Mental conditions resulting from physical injuries are almost always compensable. The extent of care required is going to be an issue for litigation, like all other IL and IN claims.


Mental stimulus-mental reaction cases are compensable, but only if the stimulus is “unusual.” Our research indicates Colorado, Illinois, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Carolina and Vermont fall within this group. In most of the decisions “unusual” means unusual for a typical person holding the claimant’s job. Thus, a police officer or firefighter is expected to handle some levels of stress within his or her ordinary duties that would be deemed “unusual” for someone else in the general public. However, please compare the recent City of Montgomery ruling where a police officer faced with an orange-tipped toy pistol was provided line-of-duty disability benefits for a confrontation that didn’t result in injury. We feel the Illinois Workers’ Compensation Commission is more conservative in handling PTSD claims than our much more liberal reviewing courts.


Similarly, where the level of stress faced by the employee is objectively quite ordinary, although subjectively quite the opposite, the bulk of the jurisdictions, , either through court decision or actual statute, deny compensability for mental injury claims, including those related to PTSD. We have always felt attorneys on both sides don’t like to deal with psych claims and we hope that trend continues.


If you need experts or consultation on best practices in handling/defending PTSD claims, send a reply.


SynopsisGene Keefe, JD and Joseph D’Amato, JD to Speak about the future of workers’ compensation at American Insurance Ass’n in Washington DC tomorrow.


Editor’s comment: As you read today’s KCB&A Update, we are leaving for O’Hare to participate in a panel discussion on where the IL WC system has been and where we hope it is going under future administrations. If you have thoughts or comments you would like us to make to this important national association, please send them along.