9-24-12; Our U.S Court of Appeals for the Seventh Circuit hits the “reset” button on their analysis of...

Case Synopsis: Our U.S Court of Appeals for the Seventh Circuit hits the “reset” button on their analysis of ADA’s requirements for a reasonable accommodation and by doing so, steps in line with the U.S. Supreme Court’s analysis of this crucial issue.

Editor’s Comment: From an employer’s perspective, this ruling imparts a more difficult burden upon companies who must now show a preference to provide a “reasonable accommodation” to a partially disabled employee seeking re-assignment. With this ruling, employers now have an infusion of affirmative-action woven into their ADA obligation for reasonable accommodation of disabled employees.

In EEOC v. United Airlines, Inc., (decided Sept. 7, 2012) our U.S. Court of Appeals for the Seventh Circuit considered whether an employee with medical restrictions must not only be considered for a reasonable accommodation, but whether that employee is entitled to preferential treatment over more qualified candidates for open positions. The case turns on the meaning of the word “reassignment” in the Act.  The ADA includes “reassignment to a vacant position” as a possible “reasonable accommodation” for disabled employees. 42 U.S.C.§ 12111(9). The EEOC contended “reassignment” under the ADA requires employers to appoint employees who are losing their current positions due to disability to a vacant position for which they are qualified. The EEOC argued the Supreme Court’s ruling in Barnett, 535 U.S. at 391 compels such a finding. However, prior Seventh Circuit rulings found that such placement was not mandatory, only that such candidates be equally considered for promotion.

In reversing their own prior Seventh Circuit rulings, the Court agreed with the EEOC, finding the Supreme Court’s analysis now compels a preferential placement of the disabled employee, even where more qualified candidates may be available for promotion. The Seventh Circuit relied heavily on theBarnett Supreme Court decision in reaching this conclusion, noting the Supreme Court found “preferences will sometimes prove necessary to achieve the Act’s basic equal  opportunity goal”.

We would be remiss if we did not point out however, the ruling by the Supreme Court in Barnett actually found for the employer, upholding the validity of their seniority system for promotions (disabled employee loses his position to a more senior employee per the seniority policy). Here, the Supreme Court held an employer is not required to give a disabled employee super-seniority to retain their job when a more senior employee invokes entitlement pursuant the employer’s seniority program.

So, what’s the difference? When is an employer supposed to give preferential treatment to the disabled and when are they permitted to adhere to their promotion policy?

As usual, the devil is in the details. The Seventh Circuit explained a promotion policy based on qualifications alone is for the employer’s benefit. Such a policy does not trump the preference to be afforded the disabled candidate for promotion (as long as the disabled candidate is minimally qualified). However, a seniority system of promotion involves the “property-rights” of the employee, whereby the most senior employee is already entitled to a particular position due to years of service. This was found to override any preference to be afforded the employee in need of accommodation.

In our view, this is a distinction without a difference, for the most part. Perhaps a seniority policy is more easily defined and measured for each employee, so there is no dispute as to who deserves the promotion (you either started before the next guy or you didn’t, regardless if he is disabled). However, it is our impression a superior worker should be recognized for his or her accomplishments and if better qualified, should be given the promotion pursuant good old fashion merit, regardless of whether another employee may or may not have a disability. To the better qualified candidate, their lost promotion is no less painful, simply because they didn’t have a vaguely-defined “property right” to the job through a seniority program.

At any rate, moving forward, U.S. employers must be sensitive to this new layer of consideration and their obligation to place employees with disabilities in available positions, even where a better qualified candidate is available. Not doing so may be perceived as a violation of the ADA.

This article was researched and written by John P. Campbell, Jr., J.D. Please send your thoughts and comments to John at jcampbell@keefe-law.com.

9-24-12; Interesting WC Report from New Jersey

Synopsis: Interesting WC Report from New Jersey—How Many TPA’s have Undisclosed Fee-Sharing Agreements with Vendors? Does Yours?

Editor’s comment: Third-party administrators and some insurers may be quietly generating revenue through undisclosed “side agreements” that drive up public and private employers' workers compensation costs, a report by the New Jersey Office of the State Comptroller cautioned recently. These side agreements, or “undisclosed revenue-share agreements,” involve money paid to TPAs by companies they contract with, such as managed care providers and medical bill repricing services.

The money paid to the TPA is not generally disclosed to employers that contract with the TPA for claims management services. New Jersey's comptroller's office investigated the practice after a public entity reported the workers’ comp TPA it contracts with received undisclosed money back from a managed care and bill repricing vendor.

“Upon reviewing this TPA's contracts with other public entities, the Office of the State Comptroller or OSC found other examples of these undisclosed revenue-share agreements,” the OSC's Aug. 29 report states. “In fact, industry experts claim that this practice is pervasive among TPAs, indicating that numerous other public entities in New Jersey may have incurred these hidden costs.”

Workers’ Comp Claims Programs' cost-effectiveness may be masked or hidden in this fashion

Industry experts have criticized such undisclosed arrangements for compromising the ability of employers to determine whether their workers comp claims program is administered in a cost-effective manner, according to the OSC report. In our view, it is also possible for a TPA to greatly undercut other competitors if they are able to get all their “favored vendors” to kick back thousands of dollars. While the claims cost piece might be low, the unknowing employers later find out lots of WC costs may be wildly high.

“As these experts have pointed out, such arrangements create perverse incentives in that TPAs are in the precarious position of deciding whether to refer a case to a vendor with which the TPA has a revenue share agreement or to another vendor that has not entered into any such agreement but may be better suited to perform the service in question,” the report states. “As a result, there arises a potential conflict between minimizing client costs and maximizing the TPA's revenue.”

The OSC recommends employers should require disclosure any financial arrangements in contracts with their TPAs. They also should periodically review their programs and consider unbundling services received through TPAs.

We are aware some IME providers may charge additional amounts to locate the medical specialist and set the appointment—when such services are provided the company may not always openly disclose all costs when they invoice the exam.

We have also heard many rumors over the years about nurse case management firms and law firms that have fee-sharing agreements with TPA’s. In our view, this sort of arrangement is questionable for NCM companies and specifically unethical for lawyers. The problem is how to “catch” the company or firm that might engage in such a practice. It is hard to imagine either side will openly admit to it.

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9-4-12; Our Appellate Court Outlines the Right Way to Handle the “Full Moon.”

We don’t think you need to add this your personnel manual but that is clearly your call. In Selch v. Columbia Management, 2012 IL App (1st) 111434 (August 29, 2012), the Illinois Appellate Court affirmed the trial court’s dismissal of the claim over retaliatory discharge.

Plaintiff investment analyst was given a formal warning after "mooning" two superiors, but was later terminated upon the opinion of their chief executive officer who felt such behavior was egregious and harmful to the company and leadership. The trial court found Plaintiff violated the employee handbook rule and regulations by behaving in disruptive, unruly, and abusive manner, and thus violated his duties as employee.

The trial court found and the Appellate Court affirmed Plaintiff was justly terminated for cause. We assume claimant may want to avoid “moonlighting” in the future.