Firing Allegedly Motivated by Medical Bills

​A court ruled that an employee's termination for apparently violating an employer's no-call/no-show policy may have been motivated to free the employer from the significant medical bills of the employee's son, which arguably would violate the Employee Retirement Income Security Act (ERISA).

The employee took medical leave from his position at Atlas Industries for a torn meniscus. While on recovery, the worker's doctor told him that he would be released to work Aug. 10. However, the release slip the employee gave to Atlas released him to work July 20 with only office work until Aug. 10. Atlas expected the employee to return to work the following Monday, but the employee thought he was still on leave. On Monday, Tuesday and Wednesday, the employee neither showed up for work nor called in. According to Atlas policy, employees who missed three workdays without notification were subject to automatic termination, so, on Thursday, Atlas fired the employee.

The employee's son has a debilitating neurological condition that required a "very expensive hospitalization," according to the worker. The employee argued that his firing was motivated by Atlas' desire to rid itself of his son's medical bills, and, as such, Atlas retaliated and interfered under ERISA.

[SHRM members-only HR Q&A: What is a fiduciary and what are fiduciary responsibilities under an ERISA-covered group health plan?]

The 6th U.S. Circuit Court of Appeals found enough evidence of retaliation and interference that Atlas had to present a nondiscriminatory reason for the firing. Atlas maintained a self-insured employee health care plan, which spent over $500,000 on medical expenses for the son the year before firing the plaintiff and had publicly expressed its worry about skyrocketing health care costs in a series of employee notices.

The plaintiff alleged that the vice president of operations twice told him that he hoped his son would be released from the hospital soon because his care was getting expensive. Moreover, the human resources director purportedly discussed how "astronomical payouts" were causing Atlas' health insurance costs to go up and showed another employee a document listing the son's medical expenses. Although Atlas challenged the seven months between the son's medical expenses and the plaintiff's firing as being too long, the 6th Circuit remarked that Atlas knew the son's condition to be permanent and debilitating, so a reasonable juror could infer that Atlas was motivated by the prospect of future medical costs.

Atlas was able to demonstrate a nondiscriminatory reason for the firing: the plaintiff's failure to return to work or call in after his doctor released him for light duty.

Next, the plaintiff needed to show that a reasonable jury could find that unlawful considerations were a motivating factor in the employer's actions.

The court noted that the plaintiff, a 20-year employee, had won at least one perfect attendance award and had worked overtime when asked. As the three days after the employee's release to light duty rolled by, Atlas reached out to his doctor and its third-party administrator for workers' compensation claims to double-check that the plaintiff had been released, but the company did not reach out to the plaintiff. Although Atlas was not required to contact the employee, the court remarked that the fact that it did not do so could raise suspicions about its motives. Particularly, the plaintiff produced evidence suggesting that his superiors selectively enforced the absenteeism policy by calling some employees when they failed to show up for work but not others.

The 6th Circuit further emphasized that Atlas' employee handbook indicated that workers had to "complete a return to work fitness exam and drug screen prior to returning to work" that "would be scheduled by the Human Resource department," yet Atlas did not schedule a drug screen before firing the plaintiff. Finally, Atlas' list of 55 employees terminated under its no-call/no-show policy did not indicate whether the terminations were similar to the plaintiff's in relevant respects.

The 6th Circuit concluded that the combination of Atlas' documented concerns about skyrocketing health care costs and its managers' purported comments about the son's claims, permitted an inference that Atlas may have been motivated at least in part by its "desire to be free from a medical-cost albatross."

Stein v. Atlas Industries Inc., 6th Cir., Case No. 17-3737 (April 9, 2018).

Professional Pointer: An employer should ensure consistency in its policies relating to termination or demotion. An employer's deviations from such policies have constituted relevant evidence of pretext.

Roger S. Achille is an attorney and professor at Johnson & Wales University in Providence, R.I.