TOV.WrongfulTermination&Discrimination

Court overturns lower court decision upholding ERISA benefit denial where employer's decision was "arbitrary and capricious."

Former employees of a subsidiary of Anheuser-Busch filed suit against the company after they were allegedly wrongfully denied pension benefits after a hostile takeover by the a Belgian Corporation.  The employees argued that under the plan language, since there was a "change in control" of their employer when it was sold from one company to another, a plan provision entitled them to re-computation of their benefits because their employment with the Anheuser-Busch controlled companies ended within three years of the change in control.

The District Court had ruled that the retirement agreement language at issue was ambiguous, and agreed with the employer that the employees' acceptance of employment with the successor corporation relieved Anheuser-Busch of any promise to enhance their surviving pension interest.  The Court of Appeals rejected this analysis, which it deemed "flawed."  The higher court held that the only reasonable interpretation of the plan language favored the employees claims:  since their employment with Anheuser-Busch controlled companies was "involuntarily terminated" within the three-year time limit, they were entitled to the promised ERISA benefit re-determination.

Court rejects time-limit bar on ERISA appeal where MetLife failed to include notice of time limits in its notice of denial of benefits

The Sixth Circuit overturned a lower court decision upholding MetLife's rejection, as late, of the ERISA claim of a disabled worker in Moyer v. Metropolitan Life.  The appeals court pointed out that under the ERISA statutory scheme, the insurer that decides disability issues must inform the claimant of appellate deadlines in order to enforce them.

Since MetLife's denial letter didn't meet the express terms of section 1133 of the statute, it did not trigger the time limits for judicial review.

Workers win argument over granting retirement healthcare to spouses after post-retirement wedding

Shelby Township attempted to deny health insurance coverage to the wives of several retirees, by re-defining its obligation to provide coverage.  The Township relied upon a Michigan statute defining "spouse" in another context to unilaterally change its interpretation of the definition of a covered "spouse" in the Collective Bargaining Agreement.  The Township deemed the term "spouse" to include only spouses who were married to the retiree at the time the employee retired.

The Court of Appeals rejected this re-definition of "spouse" and deemed the Township's attempt to re-write its obligation illegal.  The Court ruled that the local judge who had ruled in favor of the Township had mis-applied the language of the statute: rather than defining eligibility, the phrase "at the time of retirement" referred to the date of payment.  The panel sent the case back to the trial judge with instruction to enter summary judgment in favor of the workers.

Judges deny Village retirees' request for an injunction related to health benefits

Three employees of the Village of Chesaning filed suit seeking an injunction to prevent the Village of Chesaning from unilaterally changing the retiree health benefits it provides.  The Village notified the workers of its plan to reduce expense by revising its health coverage from Blue Cross Flex Blue 2 to Flex Blue 3.  The workers argued that the two plans were not "substantially equivalent" and therefore the Village lacked the authority to make a unilateral change.

It was undisputed that the retirees will be required to pay higher copayments and deductibles under the new plan. Since these amounts would be payable to the employees down-the-road if they win their lawsuit, the Court held that they would not suffer "irreparable harm" and on that basis their injunction request was denied.  The Court essentially concluded that it was irrelevant to the injunction request that the employees might be more likely to prevail or that the new charges might be more burdensome to them than complying with the contract would be to the Village.

The judges also deemed it to be irrelevant that the retirees might not be able to afford some medical care as a result of the increase in co-pays and deductibles.

Court concludes family did not "employ" disabled mother's attendant

Nancy Clement was hurt when the car she was driving was struck by another motorist.   Clement was driving Nancy Denman to an appointment in Denman's automobile.  Clement was a caregiver for Denman, hired by Denman's daughter.  Clement sought PIP benefits, but had to sue the Auto Club and Cincinnati Insurance Company after the two companies fought over which owed first priority to pay Clement's PIP benefits (medical and up to three years of wages and services). 

The two companies fought over the definition of "employment" as used in the no fault act and under Michigan law.  If Clement was "employed" by Denman, under the no fault act Denman's insurer, the Auto Club, would assume from Cincinnati (Clement's personal no fault insurer) the duty to pay PIP.   Section 500.3114 does not define "employment" for no fault purposes, so the court looked to the "economic reality test" which controls in other situations. 

The Court held that Denman's daughter controlled Clement's daily routine, not Denman; it suggested that Denman's daughter--not Denman-- had hired Clement and was the only person who could fire or discipline her.  While Clement was paid ten dollars per hour,  Denman's family made no "employee" deduction of taxes or benefits.  Finally, while Clement's activities were "integral to Denman's well-being," Denman was not "in the business of being well," and therefore, Clement did not meet Michigan's definition of "employment."

While some of this decision makes sense, the opinion is faulty in part because it is based on the flawed suggestion that Denman's daughter was not acting as Denman's agent in supervising Clement's hiring, discipline, firing and "employment."  Simply because the family did not properly pay employment taxes on Clement's wages should not have controlled the outcome where the family did, in fact, hire Clement, control her daily activity, and retain the right to discipline or fire her.

Court holds Blue Cross subscribers cannot pursue class action for illegal other-than-group (OTG) charge

This month, the Sixth Circuit Court of Appeals applied the U.S. Supreme Court activist conservative majority's more restrictive interpretation of class actions to prevent Blue Cross subscribers from combining to sue over an illegal service charge.  Since the service charge is relatively small as to any one individual at any one time, this means the service charge is likely to go unchallenged.  The case is Pipefitters Local 636 v. Blue Cross Blue Shield of Mich.

Court resolves dispute involving complicated agency relationship and "unclean hands."

Tooling Manufacturing & Technologies Association and TMTA Insurance Agency sued Mark Tyler and Team Marketing Group, operating under two additional dbas, for breach of contract.  The plaintiff attempted to set up a subsidiary to market insurance to its members and then capture the commissions to support its other programs.  To that end, it hired an existing insurance agent, Tyler, to fill that role.

Tyler's employment arrangement called for an $8500.00 per month base salary plus a commission on new sales and renewals.   From 2002 through 2006, the plaintiff paid Tyler more than $250,000.00 per year.   In the interim, Tyler made his alter ego, Team Marketing, rather than himself or the Plaintiff, the agent for Assurant Insurance and pocketed an additional $568,000.00 in premiums from 2002 through 2007.  A sales manager at Assurant disputed Tyler's characterization of his relationship with Assurant and confirmed that these commissions should have been paid to the plaintiff.

Developments in FedEx litigation over mis-classification of employees

There were two developments in the past week involving FedEx's controversial practice of calling it's drivers "independent contractors" and forcing them to pay their own unemployment insurance, Social Security, and other legal obligations of the employer.  In Montana, FedEx paid $2.3 million dollars to settle the State's claims that FedEx Ground owed unemployment insurance for drivers.  Only $100,000.00 of the settlement will go to drivers who paid their own unemployment insurance taxes, however, and FedEx is not required to classify the drivers and pay unemployment for them.   The State Attorney General acknowledged that perhaps the only long-term achievement of the lawsuit was the loosening of control exercised by FedEx over the day-to-day activities of the drivers.

Meanwhile, New York's Attorney General filed suit this week to challenge the same "elaborately structured scheme."  In Orwellian terms, FedEx Corp. described the attack on its abuse of employees as a "real assault on the American working class," as though its abusive practices of forcing employees to pay their own unemployment and work comp expenses, and denying them state labor law protections, were somehow in the employees' interest.

There are more than 30 class-action suits pending involving FedEx's mis-classification of "owner-drivers," and its denial of workers compensation, unemployment and other labor law obligations of the employer.  UPS treats the same drivers honestly and meets its obligations to pay taxes and insurance as required under various state laws.

Insurance agents held accountable for arranging illusory health coverage for employees

This week the Court of Appeals upheld a $1.2 million dollar verdict against Joseph Saigh and Lawrence Wells.  The jury had concluded that Saigh and Wells had allowed their employee to sell illusory coverage, provided by an unlicensed insurer, through negligent or intentional misrepresentations.  The Court rejected the defendants claims that they were not responsible for the representations made by their employee and also  rejected arguments that they owed no duty to the employer, even though they were retained expressly  because they claimed to be "specialists in health insurance coverage."

Post-Taylor court rejects third-party "fault" without duty

Part of the history of tort "reform" legislation was a movement to eliminate joint and several [or "deep-pocket"] liability.  The Michigan Legislature adopted a statute that achieved that end by allowing victims to recover from a particular defendant only those damages attributable to that defendant's fault.   (In this way, the innocent victim bears the weight of the "third-party's" uninsured or uncollectible share of fault.  The reform legislation also allowed the defendant in a lawsuit to blame others who are "at fault" in causing the victim's injuries, without actually suing them.  Insurers had argued that they should be able to place blame on third parties, and avoid responsibility for their "share" of responsibility, even if the third party wasn't included in the lawsuit.  They went an additional step, next, and argued that they should be able to deduct damages for the "fault" of a third-party who owed no duty to the victim.