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UPDATE | Ohio Employers Are Entitled to Worker's Compensation Premium Reimbursement

Posted on Fri, May 30, 2014 @ 11:47 AM

by David J. SchmittDavid J. Schmitt

Early last year, I blogged about the trial court’s decision in the San Allen v. Ohio Bureau of Workers’ Compensation case.  An update is now clearly in order.

Pursuant to the trial court ruling, employers who paid Ohio Worker’s Compensation premiums between 2001 – 2008, and which were not group-rated, are 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 case was granted class-action status meaning that any employer that paid premiums to the BWC on a nongroup-rated basis during any one or more of the policy years in question is automatically part of the class unless it affirmatively opted-out.

The plaintiffs initially requested close to $1.3 Billion in reimbursement for class members. In a decision issued December 28, 2012, Judge Richard McMonagle determined that the BWC did indeed overcharge the plaintiff employers and that the class is entitled to reimbursement in the amount of $860 Million Dollars.

Unsurprisingly, the Ohio BWC appealed the decision to the Cuyahoga County Court of Appeals.  After several months of waiting, the Court has upheld the lower court’s decision, meaning that the BWC is still on the hook for $860 Million Dollars. The court’s written opinion was particularly harsh. In the very first sentence, the Court stated, “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, including the over $2Million Dollars per month in interest on the original verdict that has been piling up during the pendency of the appeal.

The BWC stated that it is disappointed in the decision and is reviewing its options. These may include appealing the case to the Ohio Supreme Court. If that were to occur, it will  likely be another year at least before any distribution would be made to class members.

On the other hand, the State may decide that it is time to settle. The BWC can afford it. The agency has over $8 Billion in its surplus fund, and has had the judgment amount in escrow for many months.

Regardless of whether it is a class member, all Ohio employers should continue to follow this case. Class members will naturally be interested in how much reimbursement they may be entitled to. Non-class members may still be impacted because if the BWC’s appeal fails and it has to pay this judgment, it may have to raise premiums in order to recoup some or all of its losses.

As developments continue to arise in this case, Cors & Bassett will provide further information and guidance to assist you. Please contact David Schmitt  at djs@corsbassett.com or by phone at 513-852-2587 if you would like to discuss this matter further.

Tags: Ohio Workers' Compensation

Telecommuting | Required Reasonable Accommodation Under the ADA?

Posted on Tue, May 27, 2014 @ 08:39 AM

by Jack B. HarrisonJack B. Harrison

In what should be a decision of great importance for employers, the United States Court of Appeals for the Sixth Circuit issued a decision on April 22, 2014, holding that employers may be required under the Americans with Disabilities Act (“ADA”) to allow telecommuting as a “reasonable accommodation” for a disabled employee.  The Court of Appeals rendered this decision despite evidence presented by the employer that personal interaction with other employees and customers was an essential function of the position held by the employee.

In EEOC v. Ford Motor Company, the employee, Jane Harris was employed as a resale buyer for Ford.   In her position as a resale buyer, Harris purchased steel and resold it to entities that manufactured and supplied vehicle parts to Ford’s plants.  Ford took the position that the position of resale buyer was “highly interactive,” arguing that the interactions between resale buyers and those with whom they deal professionally should optimally occur face to face.

Throughout her career, Harris repeatedly had attendance issues.  In 2009, she requested that she be allowed to telecommute as an accommodation for her irritable bowel syndrome.  Ford investigated possible ways in which to accommodate the request, but ultimately rejected Harris’ request, concluding that her job required face to face interactions.  Ford concluded that if Harris was unable to be physically present for her work, then she did not meet the essential qualifications for the job.

Following the denial of her request, Harris sued Ford, with the EEOC ultimately pursuing the case on her behalf.  Ford then moved for summary judgment, arguing that face to face interactions were an essential function of the job of resale buyer.  Because Harris was unable to be physically present, Ford argued that she was not “otherwise qualified” for the position as required by the ADA.  The district court accepted Ford’s arguments and granted summary judgment.  In discussing whether telecommuting is a reasonable accommodation in the case of Harris, the district court stated, “in general, courts have found that working at home is rarely a reasonable accommodation.”

The EEOC then appealed the decision of the district court to the United States Court of Appeals for the Sixth Circuit.  On appeal, the Court of Appeals reversed the lower court decision.  Unlike the district court, the Court of Appeals did not defer to the employer’s conclusion that being physically present was an essential function of Harris’ position as resale buyer.  Rather, the Court of Appeals reviewed other factors, such as the employee’s own sense of how much of her job involved face to face interactions and how much took place via conference calls.  The Court of Appeals concluded that based on the entire record, it was error for the district court to conclude, as a matter of law, that Harris needed to be physically present at the office to perform her job as a resale buyer.

The Court of Appeals went even further by noting that prior decisions holding that being physically present in the workplace is an essential function of a particular position may well be based on antiquated notions of the “workplace.”  The Court of Appeals stated:

When we first developed the principle that attendance is an essential requirement of most jobs, technology was such that the workplace and an employer’s brick-and-mortar location were synonymous. However, as technology has advanced in the intervening decades, and an ever-greater number of employers and employees utilize remote work arrangements, attendance at the workplace can no longer be assumed to mean attendance at the employer’s physical location.  Instead, the law must respond to the advance of technology in the employment context, as it has in other areas of modern life, and recognize that the “workplace” is anywhere that an employee can perform her job duties. Thus, the vital question in this case is not whether “attendance” was an essential job function for a resale buyer, but whether physical presence at the Ford facilities was truly essential. Determining whether physical presence is essential to a particular job is a “highly fact specific” question. Hoskins, 227 F.3d at 726. Accordingly, we consider several factors to guide our inquiry, including written job descriptions, the business judgment of the employer, the amount of time spent performing the function, and the work experience of past and present employees in the same or similar positions. See 29 C.F.R. § 1630.2(n)(2).

Employers, particularly those within the jurisdiction of the Sixth Circuit, should find this decision troubling, particularly given the refusal of the Court of Appeals to defer to the employer's business judgment in managing its workforce.  In response to this decision, prudent employers should carefully review their job descriptions to insure that where the employer sees physical presence as an essential function of a position, such a requirement is clearly delineated in the job description.  Additionally, when an employer has a telecommuting policy, those policies should be reviewed to insure that they are narrowly drafted to specifically define when such an employment arrangement is allowed.

Tags: Americans with Disabilities Act, Sixth Circuit Court of Appeals, EEOC

NLRB Decision Impacts Employer Social Media Policies

Posted on Mon, May 19, 2014 @ 10:03 AM

by Jack B. HarrisonJack B. Harrison

On April 22, 2014, an administrative law judge for the National Labor Relations Board (“NLRB”) held that certain provisions of the Kroger Co. of Michigan’s online communication policy was unlawfully broad because specific provisions of the policy could reasonably be interpreted as infringing upon employees rights under the National Labor Relations Act.  Specifically, the decision held that the provisions at issue could be interpreted as unlawful limitations on employees’ rights under Section 7 of the Act to “self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities.”

The four specific policy provisions that were of concern to the Board in this decision follow:

  1. If you identify yourself as an associate of the Company and publish any work-related information online, you must use this disclaimer: “The postings on this site are my own and do not necessarily represent the postings, strategies or opinions of The Kroger Co. family of stores.”

  2. You must comply with copyright, fair use and financial disclosure laws, and you must not use without permission or compromise in any way the Company’s intellectual property assets (like copyrights, trademarks, patents or trade secrets –including, for example, Kroger or banner logos, or trade names of products, or non-public information about the Company’s business processes, customers or vendors).

  3.  Confidential and proprietary information should not be discussed in any public forum unless it has been publicly reported by the Company. Confidential and proprietary information includes but is not limited to: financial results, new store designs, current or future merchandising initiatives, and planned technology uses or applications. Do not comment on rumors, speculation or personnel matters.

  4. When online, do not engage in behavior that would be inappropriate at work—including, but not limited to, disparagement of the Company’s (or competitors’) products, services, executive leadership, employees, strategy and business prospects.

In each instance, the Board concluded that the provisions were unlawfully broad, in that a broad application of these restrictions would, in the Board’s view, necessarily implicate an employee’s legitimate Section 7 activity.  For example, the Board found unlawful the following sentence included in these policies: “Do not comment on rumors, speculation or personnel matters.”  The Board’s reasoning for finding this statement unlawful was that a “rule prohibiting employees from commenting on “personnel matters” strikes at the heart of Section 7 activity,” in that this rule could arguably lead employees to believe that they were prohibited from discussing conditions of employment and wages with union representatives, a right protected by Section 7.

The important learning for employers from this decision is that they must be cautious in the language used in Social Media policies to insure that they do not potentially reach activity protected by the National Labor Relations Act.  In drafting these policies, prudent employers should adhere closely to the language provided in the Board’s Social Media Policy Guidance Memoranda, keeping in mind that the Board has made it clear that it will interpret even the language contained in the sample policies in its own Memoranda very narrowly.

With the dramatic increase in the use of social media in the workplace and by employees outside the workplace, it is important that employers have policies in place that both protect their interests and can withstand Board scrutiny.  Additionally, as the law in this area is rapidly changing, employers must constantly review their social media policies to insure that they are consistent with the current state of the law.

Tags: Social Media Policy, NLRB

Kentucky Enacts New Data Breach Law

Posted on Sun, May 11, 2014 @ 01:58 PM

Jospeh S. Burns

by Joseph S. Burns

The Kentucky General Assembly has enacted a new law regarding data breaches (H.B. 232), making it the 47th state to have a data breach notification law.  The new laws will take effect on July 15, 2014.

The new law applies to any person or business conducting business in Kentucky that is not otherwise governed by Title V of the Gramm-Leach-Bliley Act (“GLBA”) or the Health Insurance Portability and Accountability Act (“HIPAA”).  The law covers unencrypted unredacted computerized “personally identifiable information,” which is defined as an individual’s first name and (a) a driver’s license number, (b) bank or credit card account number, or (c) social security number.   

The duty to notify under the new law is triggered when unencrypted unredacted computerized data is acquired in an unauthorized fashion, thereby compromising the security of an individual’s personally identifiable information.  After discovering a breach, the information holder must notify any Kentucky resident whose personally identifiable information is reasonably believed to have been acquired by an unauthorized person.  The effected individual(s) must be contacted in writing without “unreasonable delay.”  While the information holder is not required to notify the Kentucky Attorney General, if more than 1,000 persons are affected by the discloser, the information holder must notify consumer reporting agencies.

For businesses, the new law highlights the importance of (i) encrypting electronic data; and (ii) maintaining policies and procedures regarding data security and the investigation of security breaches, and training employees on such policies and procedures.

Tags: Business Law, Corporate Law, Data Breach

Don't Gloss Over Boilerplate Provisions

Posted on Tue, May 06, 2014 @ 11:51 AM

by Joseph S. BurnsJoseph S. Burns

On March 27, 2014, in a decision styled Biotronik AG v. Conor Medsystems Ireland, Ltd., the New York Court of Appeals highlighted, in a 4-3 decision, the pitfalls of glossing over boilerplate contract language, when it ruled that a “no consequential damages” clause in an agreement did not preclude the plaintiff from proceeding with a $100 million claim for lost profits.

Plaintiff, an exclusive distributor of defendant’s medical devices, sued for breach of contract – claiming lost profits – when the defendant terminated the distribution agreement. A clause in the agreement provided as follows: "Neither party shall be liable to the other for any indirect, special, consequential, incidental, or punitive damages with respect to any claim arising out of this agreement (including without limitation its performance or breach of this agreement) for any reason."  Relying on this provision, defendant argued that plaintiff’s claim for lost profits was clearly barred, as lost profits fell within the definition of consequential damages.

It is generally believed that lost profits – particularly those that do not directly flow from a breach of the agreement – are consequential damages.  The Biotronik court pointed out, however, that lost profits may be either general or consequential damages, depending on whether the non-breaching party bargained for such profits and such profits were the direct and immediate fruits of the contract – i.e., such profits were a direct and likely result of the breach. Indeed, after conducting a very fact-intensive analysis, the court concluded that plaintiff’s lost profits should be considered general damages (rather than consequential) because the damages were a direct and probable result of the breach, even though the profits would have been earned pursuant to a contract other than the breached agreement. As such, the court concluded that plaintiff’s claim for loss profits was not barred by the provision prohibiting the recovery of consequential damages.

The takeaway from this decision is that attention should be paid to these sorts of standard boilerplate clauses. Indeed, such provisions should be crafted to avoid the scenario in Biotronik. For instance, consider the following:

  • Identify with specificity any and all damages that should be excluded.  For example, the limitation of liability provision could specify that the other party shall not, in any event, be entitled to recover “lost profits, lost revenue, lost income, or any revenue arising from loss of anticipated business, even if such damages were or should have been foreseeable by the breaching party.”

  • Include a liquidated damages provision that excludes recovery for actual damages, and be sure to note that such sum is not a penalty, but a reasonable estimate of damages in the event of a breach.

  • Specify that the limitation of liability provision is an integral part of the agreement that has been bargained for by the parties, and that such provision will remain in effect even if any other provision of the agreement fails of its essential purpose.

Tags: Business Law, Corporate Law, Contracts

Sixth Circuit Strikes Down Merger of Ohio Hospitals

Posted on Thu, May 01, 2014 @ 12:17 PM

Joseph S. Burns

by Joseph S. Burns

In a unanimous opinion on April 22, 2014, a three-judge panel of the Sixth Circuit Court of Appeals in Cincinnati ordered ProMedica Health System, Inc. (“ProMedica”) to unwind its merger with rival St. Luke’s Hospital (“St. Luke”) in Lucas County, Ohio. 

In 2010, ProMedica, a nonprofit healthcare system based in Toledo, entered into a merger agreement with St. Luke’s, a community hospital located in Lucas County.  In 2011, the Federal Trade Commission (“FTC”) ordered ProMedica to divest St. Luke’s, citing antitrust laws and finding that the merger of the two hospitals would impede competition and create an unfair advantage in the market.  ProMedica subsequently filed a petition to overturn the FTC’s ruling.

The Sixth Circuit upheld the FTC’s ruling. Given that it controlled 46.8 percent of the healthcare market in Lucas County prior to the merger, ProMedica was already the “dominant” healthcare player in Lucas County, according to the Court. Adding St. Luke’s – which controlled approximately 11.5 percent of the county’s healthcare market prior to the merger – would lead to a tremendous increase in concentration in a market that already was highly concentrated.  The merger, according to the Court, would provide ProMedica with undue leverage to control reimbursement rates with health insurers, leading to higher prices for patients.

The Sixth Circuit’s ruling signals a difficult challenge for hospitals that are more aggressively seeking mergers to establish economies of scale and boost their bargaining power with insurers.

Tags: Business & Corporate Transactions, Sixth Circuit Court of Appeals, Mergers & Acquisitions, Federal Trade Commission