Employer must pay $325K for canceling fired employee’s health insurance early

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By Joy Waltemath

By Dave Strausfeld, J.D.

An employer must pay $325,000 in compensatory and punitive damages for retroactively canceling a fired sales manager’s last month of healthcare coverage while his wife was receiving cancer treatments, held the Eleventh Circuit in an unpublished decision, upholding a jury verdict. The evidence at trial supported a finding that the company canceled his insurance to retaliate against him for filing an EEOC charge alleging age and gender discrimination. While the company brought a Batson challenge to the jury selection process, it was unable to show that the employee improperly used peremptory strikes to remove white males from the venire panel (Virciglio v. Work Train Staffing LLC, December 30, 2016, Carnes, J.).

Employee’s wife was terminally ill. The sales manager was fired early in January 2012 after failing to meet a sales quota, at a time when his wife was being treated for cancer. At his termination meeting on January 6 he was told his health insurance was paid through the end of the month, he said. Later he discovered that the company had canceled his health insurance retroactively to December 31, which meant he had no medical coverage whatsoever for the month of January—a month in which his wife incurred more than $50,000 in medical expenses.

Claiming that the company canceled his health coverage early to punish him for filing an EEOC charge, he filed this lawsuit. A jury rendered a verdict in his favor and awarded him $325,000—$75,000 in compensatory damages, plus an equal amount for a willful violation under the ADEA, and tacked on another $175,000 in punitive damages under Title VII.

Retaliation. On appeal, the Eleventh Circuit upheld the jury’s verdict. The evidence of retaliatory cancelation of health insurance was sufficiently damning: Although the employee was fired on January 6, the company canceled his insurance effective to December 31, without offering to repay the portion of the January premium that was deducted from his last paycheck. Also, a company official appeared to falsely inform Blue Cross that the employee was fired in December rather than January. And, the retroactive cancelation came just a few weeks after the company learned about the employee’s EEOC charge, of which it had been unaware at the time it fired him. “Based on this evidence, the jury was authorized to find the cancellation was retaliatory,” the appeals court held.

Batson challenge. The company raised a challenge to the jury verdict based on the fact that the employee, following voir dire, used each of his three peremptory strikes to remove white males from the venire panel. After conducting a Batson hearing, the district court expressed serious doubt that the company was able to make a prima facie showing, given that white males, who represented 64 percent of the venire panel, constituted 75 percent of the jury that was actually selected. Even assuming the company established a prima facie case, the employee adequately articulated race and gender-neutral reasons for the challenged strikes, the district court found. The Eleventh Circuit found no clear error in the district court’s Batson ruling.

Jury instruction. The company also maintained that the jury was not properly instructed on the “but for” causation standard that applied to the employee’s retaliation claims, but the appeals court found nothing amiss about the instruction. Even though the pattern instruction on causation that was given to the jury here did not use the words “but for,” it incorporated the meaning of but-for causation.

COBRA notice. Finally, the employee also brought a claim under COBRA alleging he was not given the statutorily required notification of his right to continuation of health insurance coverage. The company responded that it was exempt from COBRA because it had fewer than 20 employees.

But the appeals court rejected the company’s method of counting its employees. The company was a temporary staffing agency and it had significantly more than 20 employees if staffing workers were counted along with its full-time employees such as the plaintiff. Although staffing workers were outsourced to other job sites, they remained employees of the company, as shown by the fact that the company was designated as their “sole employer” in its client contracts. Also, the company handled their payroll and taxes, and held itself out as their employer by claiming federal tax credits for them. Given this evidence, the company satisfied the 20-employee threshold of COBRA, the Eleventh Circuit reasoned, affirming the district court’s imposition of a $3,300 COBRA penalty in addition to the damages awarded on the retaliation claims.

Source:: Employment Law Daily Newsfeed


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