by David J. Schmitt
Any company selling or distributing goods in California which contain any plastics should take special notice of this looming deadline.
On December 20, 2014, California’s Proposition 65 warning requirements for consumer, occupational, and environmental exposures to diisononyl phthalate (“DINP”) will take effect. DINP is used as a PVC plasticize as well as in a variety of consumer products containing soft plastic or vinyl, including toys, fashion accessories, apparel, hardware products, and home goods. It is also present in some some rubbers, inks, pigments, paints, lacquers, coated fabrics, adhesives, and sealants. DINP is widely understood to have replaced other phthalates, such as DEHP, DBP, and BBP.
Manufacturers, brand owners, distributors, and retailers of products containing DINP will run the risk of being sued under Proposition 65 unless a clear and reasonable warning is provided for exposure to a Proposition 65 carcinogen or unless the regulated party can demonstrate that exposure from the product is below a level that would create a significant risk of causing cancer (a “no significant risk level,” or “NSRL”).
December 2013 Listing of DINP as Carcinogen
California’s Proposition 65 requires publication of a list of chemicals “known to the state” to cause cancer or reproductive toxicity. On December 20, 2013, California’s Office of Environmental Health Hazard Assessment (“OEHHA”) listed DINP as a carcinogen known to the state to cause cancer. OEHHA has not identified a NSRL or safe-harbor level for exposure to DINP, so a regulated party whose product contains any amount of DINP risks liability unless it either conducts a study and exposure assessment that proves exposure from a given product is below the NSRL, or it provides a Proposition 65 carcinogen warning as outlined in the Proposition 65 regulations. The Proposition 65 regulations also contain warning provisions for occupational and environmental exposures to listed chemicals.
Proposition 65 Citizen Suits
Proposition 65 allows citizens acting as “private attorneys general” to bring suits to enforce the warning requirements. But a citizen plaintiff must notify the prospective defendant and public prosecutors of its intent to sue 60 days before a suit may be filed. On and after the December 20, 2014 warning effective date, we anticipate that many manufacturers, brand owners and retailers of consumer products sold in California will begin to receive 60-day notices for products that allegedly expose users to DINP.
Note: Under the federally mandated Consumer Product Safety Improvement Act (CPSIA), DINP is restricted to maximum levels of 0.1% in mouthable toys and components and remains legal for use in non-mouthable toys and inaccessible components.
Cors & Bassett can provide further information and guidance to assist you. Please contact David Schmitt at email@example.com or by phone at 513-852-2587 if you would like to discuss this issue further.
by David J. Schmitt
The way you pay BWC for workers’ compensation coverage is changing. You may remember a prior blog post back in 2013 indicating that BWC was proposing a change from retrospective to prospective billing. This change, meaning that employers will be paying for worker’s compensation coverage in advance, is now upon us.
BWC is transitioning private employers to prospective billing on July 1, 2015. BWC believes that this effort will help it modernize its operations and provide better service to Ohio’s employers.
This switch to prospective billing impacts rating plan and program sign-up deadlines.
For the policy year beginning July 1, 2015, these deadlines are:
- Jan. 30, 2015 – group-retrospective rating, individual-retrospective rating, Deductible Program and One Claim Program;
- May 29, 2015 – Destination: Excellence programs.
In May 2015, private employers will receive estimated premium notices and certificates of coverage. Employers should review the certificates for accuracy and contact BWC if any of the information is incorrect. Each certificate will contain new language that says coverage is conditional upon payment of the premium.
In order to streamline the transition, BWC is providing a transition credit to private employers, as long as their worker’s compensation coverage is in good standing. Lapsed policies must be rectified prior to July 1, 2015, to receive the transition credit. You will receive an invoice from BWC for your September and October premium payment, which will be due Aug. 31, 2015. On that invoice, you will see a transition credit which will cover your premiums for July and August, 2015.
As the transition progresses, Cors & Bassett will provide further information and guidance to assist you. Please contact David Schmitt at firstname.lastname@example.org or by phone at 513-852-2587 if you would like to discuss this issue further.
by Jack B. Harrison
While the EEOC has consistently been reviewing employers’ social media policies to determine whether they violate employees’ rights under the National Labor Relations Act (“the Act”), the National Labor Relations Board (“NLRB”) recently got into the act with its decision in Three D, LLC (Triple Play), 361 NLRB No. 31 (2014). Previously, an Administrative Law Judge for the NLRB addressed the issue of an employer’s social media policy in The Kroger Co. of Michigan v. Granger, case number 07-CA-098566. Increasingly, both the EEOC and the NLRB are faced with applying a Depression era law to the very modern world of social media. In Triple Play, the NLRB addressed both the limitations on employees when they post social media content that may be protected by Section 7 of the Act and whether simply clicking the “Like” button regarding social media content is protected activity under Section 7 of the Act.
In Triple Play, the employer, a bar and restaurant in Watertown, Connecticut, fired two employees after examining posts on Facebook that involved the employees, a former employee, and a customer. The comments posted to Facebook were critical of the owners of Triple Play. The comments were precipitated by employees concluding that the owners made an error in calculating the employees’ state tax withholding after the employees discovered that they owed Connecticut state taxes for 2010.
The Facebook conversation began when a former employee Jamie LaFrance (“LaFrance”) posted the following:
Maybe someone should do the owners of Triple Play a favor and buy it from them. They can’t even do the tax paperwork correctly!!! Now I OWE money...Wtf!!!!"
Additional comments followed from LaFrance’s post, including comments from a customer and a current employee of Triple Play. In further comments, LaFrance stated that she planned to report the tax withholding mistake to the Connecticut “labor board.” At some point during this exchange, Vincent Spinella (“Spinella”), a current employee, clicked the “Like” button related to LaFrance’s original comment. At one point in the exchange, LaFrance posted the following comment regarding one of the owners:
Hahahaha he’s such a shady little man. He prolly [sic] pocketed it all from all our paychecks.
In response to this statement by LaFrance, Jillian Sanzone (“Sanzone”), another current employee, posted the following:
I owe too. Such an asshole.
Upon discovering this exchange on Facebook, the owners terminated both Spinella and Sanzone, who then challenged their termination.
In reviewing this case, the NLRB concluded that, depending on the context, an employee clicking on the “Like” button related to a comment on a social media site can constitute protected activity under the Act. In Triple Play, the employer did not challenge the conclusion that the employees had engaged in concerted activity. However, the employer argued that the comments at issue, including the “Like” of one employee, were not protected by Section 7 of the Act because they were defamatory and disparaging. In reviewing this issue, the NLRB held that the appropriate test when analyzing communications posted on social media is whether the employee communications are related to an ongoing dispute between the employees and the employer and whether the communications are so disloyal, reckless or maliciously untrue that they are outside the protections of Section 7 of the Act. The NLRB based its articulation of this test for analyzing communications on social media on its prior decisions, as well as two Supreme Court decisions. MasTec Advanced Technologies, 357 NLRB No. 17 (2011). NLRB v. Electrical Workers Local 1229 (Jefferson Standard), 346 U.S. 464 (1953) and Linn v. Plant Guards Local 114, 383 U.S. 53 (1966).
In applying this test in Triple Play, the NLRB determined that the comments at issue, including the “Like,” were related to an ongoing dispute between the employees and their employer and that they were not so disloyal as to place them outside the protection of Section 7 of the Act. As the NLRB stated: “The comments at issue did not even mention the Respondent’s products or services, much less disparage them.” The NLRB concluded that the Facebook exchange at issue in Triple Play was analogous to a conversation among employees that could possibly be overheard by an outside third party, rather than communications that were specifically targeted to the general public with the intent to harm the employer.
In its decision in Triple Play, the NLRB made clear that while the employee’s “Like” in this case was protected under Section 7, given the context, not every “Like” would be protected. The NLRB focused on the specific context of the “Like,” determining that in this case, the “Like” was specifically directed to the initial post concerning the tax withholding, not to later statements made by the former employee that were arguably defamatory. Thus, it would appear that the NLRB will look to the specific context of each “Like” in order to decide which specific post on social media the “Like” is directed. Based on that analysis, the NLRB will then determine whether or not the specific post on social media to which the “Like” was directed is protected under Section 7 of the Act.
In light of the method of analysis used by the NLRB in Triple Play, employers should not conclude that an employee affirms or ratifies every statement in a discussion posted on social media simply by selecting “Like.” Instead, employers should look closely to see what specific post the employee has “Liked” or otherwise endorsed. Additionally, before concluding that a comment posted to social media by an employee is defamatory regarding the employer, the NLRB appears to require proof that the comment was posted with “actual malice.” In other words, in order to support a termination based on a defamatory comment about the employer on social media, the employer must prove that the employee made the comment knowing it was false or made the comment with a reckless disregard for the truth. The NLRB also indicated in Triple Play that it will treat differently comments that disparage an employer’s products or services as opposed to comments that defame the employer or other workers personally. Thus, employers should be very cautious, and certainly should consider consulting with counsel, prior to disciplining or terminating an employee based on the fact that an employee selected “Like” related to some comment on social media or posted some comment regarding the employer or other workers.
by David J. Schmitt
This post is the latest, and perhaps the most important, follow-up to the long saga of the San Allen workers compensation litigation.
As you may recall the class in this litigation consists of Ohio employers who were not group-rated during some or all of the period of 2002-2008. The class prevailed in both the Cuyahoga County Court of Common Pleas and the Court of Appeals. Rather than continue to slug it out in the Ohio Supreme Court, the State and the plaintiff class in the San Allen v. BWC litigation recently reached a tentative settlement in the amount of $420 Million Dollars.
Proof of Claim forms have now been mailed to all members of the class and companies should receive it shortly if they have not received it already. It is essential that employers fill out this form and return it by October 22, 2014 if they wish to make a claim. Although somewhat reduced by the settlement, the potential recovery for many employers is still quite substantial. The information accompanying the form also provides a website address that employers can visit to verify the amount of their claims.
A Final Approval Hearing for the settlement is scheduled in front of Judge McMonagle of the Cuyahoga County of Common Pleas on November 19, 2014.
The Proof of Claim form asks for a company representative to certify certain information and to provide banking information so that restitution funds can be electronically transferred.
The attorney’s at Cors & Bassett are available to assist any employers who may have questions regarding the litigation or completing the Proof of Claim form. Please contact David Schmitt at 513-852-2587 or by email at email@example.com.
by Jack B. Harrison
In a victory for student-athletes and in a setback for the NCAA, the United States District Court for the Northern District of California recently held that NCAA rules prohibiting major college football and men’s basketball student-athletes from receiving compensation for the use of their names, images and likenesses in video games and broadcasts violated federal antitrust laws. Judge Claudia Wilken’s ninety-nine page opinion followed a three week trial which took place in June of this year.
In the case, the plaintiffs, a group of athletes led by former UCLA basketball player Ed O’Bannon, alleged that the NCAA violated federal antitrust laws by colluding with universities and with athletic conferences to ensure that student-athletes could not receive any share of revenues that resulted from the use of their images in video games and broadcasts. While the plaintiffs waived their right to seek damages in the case in order to be able to have the case heard by a judge, rather than a jury, Judge Wilken issued an injunction ordering the NCAA to cease enforcing rules that prohibited student-athletes from receiving funds that resulted from the use of their names and images. In ordering the injunction, Judge Wilken specifically held that “[t]he challenged NCAA rules unreasonably restrain trade in a market for certain educational and athletic opportunities offered by NCAA Division I schools.”
In her ruling, Judge Wilken did hold that the NCAA was permitted to establish a cap on funds that could be paid to student athletes for the use of their names and images. However, she indicated that the NCAA must permit at least $5,000 per student-athlete for every year of competition at major football and basketball schools. Under the terms of the injunction issued by Judge Wilken, these funds could be paid into a trust by the school for every year that a student-athlete remains academically eligible to compete. In practical terms, this would mean that student-athletes at major football and basketball schools could potentially receive no less than $20,000 when they leave school, so long as they were academically eligible for four years. Judge Wilken indicated that she established the $5,000 cap in order to address fears expressed by witnesses on behalf of the NCAA who testified about the economic result of allowing large payments to student-athletes. As Judge Wilken stated in her opinion, “the NCAA’s witnesses stated their concerns about student-athlete compensation would be minimized or negated if compensation was capped at a few thousand dollars per year.”
In further limiting the scope of her decision, Judge Wilken refused to hold that student-athletes should be allowed to receive funds for endorsing specific commercial products. In so holding, Judge Wilken stated, “[a]llowing student-athletes to endorse commercial products would undermine the efforts of both the NCAA and its member schools to protect against the ‘commercial exploitation’ of student-athletes.”
Judge Wilken specifically held that her decision would not have an immediate impact on colleges and student-athletes. The decision indicates that the court’s ruling regarding student-athletes receiving funds for the use of their names and images in video games and broadcasts would not take effect until the start of the next football and basketball recruiting period, having no effect on prospective football or basketball recruits before July 1, 2016.
While this decision would seem to erode the strong control that the NCAA has historically exercised over both schools and student-athletes, it is likely that the NCAA will appeal Judge Wilken’s ruling. However, this decision represents a continued effort by student-athletes to be compensated in some fashion for their playing efforts, particularly when the schools for which they are playing are reaping millions of dollars in revenue from those athletic programs. These legal developments should be of keen interest to all fans of college sports. We will provide updates as other related developments occur.
By David J. Schmitt
Governor Kasich announced recently that the Ohio Bureau of Workers’ Compensation (BWC) Net Asset Fund should return an additional $1 billion to Ohio employers as a premium rebate. The rebate will be based on the premiums paid by private and public employers during their 2012 policy year, equal to 60 percent of their premiums.
The Ohio BWC Board of Directors will consider the recommendation at the August meeting and will likely approve the proposal in September. If the voting timeline is kept, Ohio employers could receive a second round of premium rebate checks as early as October.
Governor Kasich also revealed that the Ohio BWC will invest in the extension, expansion and research of various existing safety programs to assist Ohio businesses with the prevention of workplace injuries.
Urgent Note: An employer with a lapsed status on September 5, 2014 will NOT be eligible for the premium rebate. Employers must be in an active, reinstated, combined or debtor-in-possession status effective September 5, 2014.
If you have any questions regarding the rebate or need assistance curing a lapsed status, please contact David Schmitt at 513-852-2587 or by email at firstname.lastname@example.org.
by Jack B. Harrison
Recently, the U.S. Equal Employment Opportunity Commission (EEOC) approved a new guidance on the Pregnancy Discrimination Act (PDA). The EEOC adopted this new guidance by a 3-2 vote. The new guidance represents the EEOC’s first significant update on the subject of discrimination against pregnant employees in over thirty years. The new guidance, “Enforcement Guidance on Pregnancy Discrimination and Related Issues” is intended to replace the EEOC’s 1983 Compliance Manual chapter related to the issue of pregnancy discrimination. Additionally, the new guidance addresses the application of the Americans with Disabilities Act (ADA) to pregnancy-related disabilities.
The PDA prohibits an employer from firing, refusing to hire, demoting, or taking any other adverse action against a woman if pregnancy, childbirth, or a related medical condition is a motivating factor in the adverse employment action. Under the PDA, where pregnant women are able to work, they must be allowed to do so under the same terms and conditions as other employees. In situations where pregnant women are not able to work, the PDA requires that they be given the same rights, leave privileges, and other benefits available to other similarly-situated employees. In its new guidance, the EEOC underscores the position that the PDA’s treatment of discrimination based on pregnancy, childbirth, or a related medical condition is considered a form of sex discrimination.
As part of its guidance on this issue, the EEOC issued a list of what it considers to be “best practices” for employers. Prudent employers should review their policies that may impact pregnant employees in light of the EEOC’s guidance and its list of “best practices.” This list of “best practices” is as follows:
- Develop, disseminate, and enforce a strong policy based on the requirements of the PDA and the ADA.
Make sure the policy addresses the types of conduct that could constitute unlawful discrimination based on pregnancy, childbirth, and related medical conditions.
Ensure that the policy provides multiple avenues of complaint.
- Train managers and employees regularly about their rights and responsibilities related to pregnancy, childbirth, and related medical conditions.
Review relevant federal, state, and local laws and regulations, including Title VII, as amended by the PDA, the ADA, as amended, the FMLA, as well as relevant employer policies.
- Conduct employee surveys and review employment policies and practices to identify and correct any policies or practices that may disadvantage women affected by pregnancy, childbirth, or related medical conditions or that may perpetuate the effects of historical discrimination in the organization.
- Respond to pregnancy discrimination complaints efficiently and effectively. Investigate complaints promptly and thoroughly. Take corrective action and implement corrective and preventive measures as necessary to resolve the situation and prevent problems from arising in the future.
- Protect applicants and employees from retaliation. Provide clear and credible assurances that if applicants or employees internally or externally report discrimination or provide information related to discrimination based on pregnancy, childbirth, or related medical conditions, the employer will protect them from retaliation. Ensure that these anti-retaliation measures are enforced.
Hiring, Promotion, and Other Employment Decisions
- Focus on the applicant's or employee's qualifications for the job in question. Do not ask questions about the applicant's or employee's pregnancy status, children, plans to start a family, or other related issues during interviews or performance reviews.
- Develop specific, job related qualification standards for each position that reflect the duties, functions, and competencies of the position and minimize the potential for gender stereotyping and for discrimination on the basis of pregnancy, childbirth, or related medical conditions. Make sure these standards are consistently applied when choosing among candidates.
- Ensure that job openings, acting positions, and promotions are communicated to all eligible employees.
- Make hiring, promotion, and other employment decisions without regard to stereotypes or assumptions about women affected by pregnancy, childbirth, or related medical conditions.
- When reviewing and comparing applicants' or employees' work histories for hiring or promotional purposes, focus on work experience and accomplishments and give the same weight to cumulative relevant experience that would be given to workers with uninterrupted service.
- Make sure employment decisions are well documented and, to the extent feasible, are explained to affected persons. Make sure managers maintain records for at least the statutorily required periods. See 29 C.F.R. § 1602.14.
- Disclose information about fetal hazards to applicants and employees and accommodate resulting requests for reassignment if feasible.
Leave and Other Fringe Benefits
- Leave related to pregnancy, childbirth, or related conditions can be limited to women affected by those conditions. Parental leave must be provided to similarly situated men and women on the same terms.
- If there is a restrictive leave policy (such as restricted leave during a probationary period), evaluate whether it disproportionately impacts pregnant workers and, if so, whether it is necessary for business operations. Ensure that the policy notes that an employee may qualify for leave as a reasonable accommodation.
- Review workplace policies that limit employee flexibility, such as fixed hours of work and mandatory overtime, to ensure that they are necessary for business operations.
- Consult with employees who plan to take pregnancy and/or parental leave in order to determine how their job responsibilities will be handled in their absence.
- Ensure that employees who are on leaves of absence due to pregnancy, childbirth, or related medical conditions have access to training, if desired, while out of the workplace.
Terms and Conditions of Employment
- Monitor compensation practices and performance appraisal systems for patterns of potential discrimination based on pregnancy, childbirth, or related medical conditions. Ensure that compensation practices and performance appraisals are based on employees' actual job performance and not on stereotypes about these conditions.
- Review any light duty policies. Ensure light duty policies are structured so as to provide pregnant employees access to light duty equal to that provided to people with similar limitations on their ability to work.
- Temporarily reassign job duties that employees are unable to perform because of pregnancy or related medical conditions if feasible.
- Protect against unlawful harassment. Adopt and disseminate a strong anti-harassment policy that incorporates information about pregnancy-related harassment; periodically train employees and managers on the policy's contents and procedures; incorporate into the policy and training information about harassment of breastfeeding employees; vigorously enforce the anti-harassment policy.
- Develop the potential of employees, supervisors, and executives without regard to pregnancy, childbirth, or related medical conditions.
- Provide training to all workers, including those affected by pregnancy or related medical conditions, so all have the information necessary to perform their jobs well.
- Ensure that employees are given equal opportunity to participate in complex or high-profile work assignments that will enhance their skills and experience and help them ascend to upper-level positions.
- Provide employees with equal access to workplace networks to facilitate the development of professional relationships and the exchange of ideas and information.
- Have a process in place for expeditiously considering reasonable accommodation requests made by employees with pregnancy-related disabilities, and for granting accommodations where appropriate.
- State explicitly in any written reasonable accommodation policy that reasonable accommodations may be available to individuals with temporary impairments, including impairments related to pregnancy.
- Make any written reasonable accommodation procedures an employer may have widely available to all employees, and periodically remind employees that the employer will provide reasonable accommodations to employees with disabilities who need them, absent undue hardship.
- Train managers to recognize requests for reasonable accommodation, to respond promptly to all requests, and to avoid assuming that pregnancy-related impairments are not disabilities.
- Make sure that anyone designated to handle requests for reasonable accommodations knows that the definition of the term "disability" is broad and that employees requesting accommodations, including employees with pregnancy-related impairments, should not be required to submit more than reasonable documentation to establish that they have covered disabilities. Reasonable documentation means that the employer may require only the documentation needed to establish that a person has an ADA disability, and that the disability necessitates a reasonable accommodation. The focus of the process for determining an appropriate accommodation should be on an employee's work-related limitations and whether an accommodation could be provided, absent undue hardship, to assist the employee.
- If a particular accommodation requested by an employee cannot be provided, explain why, and offer to discuss the possibility of providing an alternative accommodation.
by Jack B. Harrison
In addition to its Hobby Lobby decision, the Supreme Court issued another decision on the last day of its term that may have implications for unions and employers going forward. In Harris v. Quinn, the Supreme Court was faced with the question of whether certain Illinois partial-public employees could be required to pay “fair share” fees when they elected not to join the public employees union. While the Supreme Court’s decision in this case is narrow, it does lay the groundwork for future challenges to “fair share” fees for all public employees.
The plaintiffs in Harris were “personal assistants” who provided homecare services under the Illinois’ Home Services Program. Under this program, eligible individuals may receive Medicaid funding for homecare services from a personal assistant. Under the terms of this program, while the state pays the salary for the personal assistant, the individual who receives the care from the personal assistant is deemed to be the employer. In 2003, the Illinois Legislature adopted a statute under which personal assistants were deemed to be “public employees” solely for the purpose of collective bargaining under the Illinois Public Labor Relations Act. The statute specifically did not provide any benefits normally available to public employees to personal assistants. Following the passage of the statute, the SEIU, the relevant public employees’ union, entered into a collective bargaining agreement with the state under which personal assistants that chose not to join the union were required to pay “fair share” fees. These fees were automatically deducted from the personal assistants’ Medicaid payments.
In Harris, personal assistants alleged that the “fair share” fees were unconstitutional, arguing that the fees violated their First Amendment rights by requiring them to support a union against their wishes. In addressing this issue, both the district court and the court of appeals rejected this First Amendment argument, relying primarily on the prior decision of the Supreme Court in Abood v. Detroit Board of Education, 431 U.S. 209 (1977). In Abood, the Supreme Court held that even where public employees choose not to join a union, they may still be required to pay “fair share” fees.
In Harris, the Supreme Court reversed the decision of the lower court, refusing to apply the reasoning of Abood to the personal assistants in this case. Writing for the Court, Justice Alito noted that, in this case, the personal assistants at issue were not full-fledged public employees, but rather were deemed public employees solely for the purposes of collective bargaining. The Court concluded that the “fair-share” fee requirement violated the personal assistants’ First Amendment rights, in that the state had not met its burden of showing that the fee requirement served a compelling government interest in the least restrictive manner.
Most importantly, however, the Court strongly criticized the reasoning underlying its prior decision in Abood. While the Court did not overrule Abood, it certainly provided a framework for future challenges to “fair share” fees. In dissent, Justice Kagan attempted to create a firewall against future challenges to the reasoning of Abood, pointing out how “deeply entrenched” the rule from Abood has become and noting that the Courts own “precedent about precedent makes it impossible for this Court to reverse that decision.”
Like its decision in Hobby Lobby, the Supreme Court’s decision in Harris, while intentionally narrow, opens the door to future challenges to required “fair share” fees in the public employee context. It will be important for employers and unions, particularly those in the public sector, to continue to monitor this issue.
by David J. Schmitt
A lot can change in a few weeks. Only a matter of days ago, the State of Ohio appealed the San Allen litigation to the Ohio Supreme Court. If you have seen my earlier blog posts on this case, you may recall that pursuant to the trial court ruling, employers who paid Ohio Worker’s Compensation premiums between 2001 – 2008, and which were not group-rated, were found to be entitled to reimbursement for a portion of their premiums.
In the case of San Allen, Inc., et al, v. Stephen Buehrer, Administrator of the Ohio BWC, Cuyahoga County Court of Common Pleas, Case No. CV-07-644950, the plaintiffs consist of Ohio employers who paid workers compensation premiums during the indicated period, and which did not receive group-rated premium discounts. The lawsuit contended that the BWC’s premium discounts for group-rated employers were too steep and that the BWC overcharged other employers to make up the difference.
The plaintiffs initially requested close to $1.3 Billion in reimbursement for class members. In a decision issued December 28, 2012, Judge Richard McMonagle that the class was entitled to reimbursement in the amount of $860 Million Dollars.
Unsurprisingly, the Ohio BWC appealed the decision to the Cuyahoga County Court of Appeals. That Court has upheld the lower court’s decision, and was unstinting in its criticism of the BWC, stating, “Reduced to its irreducible essence, this appeal is about a cabal of Ohio Bureau of Workers’ Compensation bureaucrats and lobbyists for group sponsors who rigged workers’ compensation premium rates so that for employers who participated in the BWC’s group-rating plan, it was “heads we win” and for employers who did not participate in the group-rating plan, it was “tails you lose”.
The Court of Appeals also returned the case to the trial court for a recalculation of damages, based on the State’s assertion that some employers were being credited for years in which they were not actually class members. This led to a reduction in the award from $860 Million to $650 Million.
Even after this reduction, the State appealed the case to the Ohio Supreme Court, but continued to negotiate with class counsel. Yesterday, a tentative settlement in the amount of $420 Million was announced. I describe this as “tentative” because the settlement must be approved by the trial court judge. Judge McMonagle has shown himself to be sympathetic to the plaintiff employers, and there is some chance, albeit a small one, that he may refuse to approve the settlement and tell the parties to negotiate further. Additionally, attorney’s fees will be deducted from the total, and those too must be approved by the judge.
Once approved, class counsel will be required to notify all class members of the settlement and the method by which they can submit their claim for reimbursement. While the formula is not yet known, it will undoubtedly be based on the amount of premiums paid and the number of years in which the company was a class member, i.e., was not group rated.
As developments continue to arise in this case, Cors & Bassett will provide further information and guidance to assist you. Please contact David Schmitt at email@example.com or by phone at 513-852-2587 if you would like to discuss this matter further.
by Hans M. Zimmer
In a somewhat surprising opinion issued by the federal Court of Appeals for the DC Circuit (Halbig v. Burwell), the court ruled that the federal government lacks the authority to provide subsidies on healthcare.gov to encourage persons currently without health insurance to buy insurance. The court based its decision on the language in the statute that limits subsidies to health insurance policies that can be purchased on exchanges run by state governments. At present, state-run exchanges are available in only 16 states and the District of Columbia. The remaining 36 states operate the exchange through healthcare.gov.
The plaintiff, Jacqueline Halbig, is a West Virginia resident who never had health insurance but also did not want to buy it. Under the Affordable Care Act (“ACA”), she would either have to buy insurance or pay the penalty imposed by that statute as the individual mandate. West Virginia is one of the 34 states that does not have its own exchange but relies on healthcare.gov, the federal exchange. The court ruled that the plain language of the statute limited subsidies to exchanges “established by the states” and as West Virginia had not established such an exchange, no subsidy could be granted. The effect of this interpretation is that not only does the individual mandate disappear in states that do not have their own exchange, but the employer mandate disappears along with it. The judges writing the opinion conceded that the effect of their ruling would be to drastically reduce the number of persons who would be able to gain coverage, but that it was not their job to write laws, only to interpret the law as written by Congress.
This opinion is directly contrary to an opinion issued by another federal circuit court of appeals the same day (King v. Burwell). That court heard the same arguments advanced in the DC Circuit but said that the language in the statute limiting subsidies to exchanges “established by the state” was ambiguous. As the language in the statute was ambiguous, the court relied instead on the regulation issued by the IRS, which permits the subsidies in “exchanges” and then goes on to define exchanges as marketplaces established either by the states or by the Department of Health and Human Services. The court viewed the regulation issued by IRS as a reasonable exercise of its regulatory discretion and upheld the subsidies.
The split between 2 federal circuits on an issue this crucial to the implementation of ACA likely means that the United States Supreme Court will again have to decide the future of ACA. The Obama administration already announced their decision to appeal earlier this afternoon. In 2012, the Supreme Court generally upheld the validity of ACA in a very divided opinion with the majority ruling stating that ACA was a valid exercise of Congress’ power to impose taxes as opposed to an invalid limitation on the rights of individuals in the country to decide their own fate with respect to health insurance. It will be interesting to follow the course of this issue over the next year. Current numbers indicate that over 8,000,000 individuals in states where the only marketplace is healthcare.gov are subject to the individual mandate and the penalties imposed. These individuals would now be free from that mandate. In addition, in those same states, 250,000 firms with 57,000,000 employees would now be freed from the employer mandate that requires employers to offer “affordable” insurance to their employees. In contrast, only 5,000,000 individuals signed up for coverage in the 34 states relying on the federal exchange and are receiving the subsidy that was declared illegal by the DC Circuit.Given the number of persons involved on both sides of this issue, Supreme Court involvement appears likely.