"Dependent Eligibility Audits" Newest Trend for HR Departments

Posted on November 19, 2007 by Daniel Schwartz

What's the latest trend that human resources departments are using to control costs? Morgue File - kidsAccording to a Business Week article in this week's issue, it's "Dependent Eligibility Audits".  What are they? The article explains:

Dependent eligibility audits," in which companies demand proof that spouses and children qualify for medical benefits, are swiftly becoming both fashionable and financially rewarding for companies frantic to curb the runaway costs of health coverage. Companies such as Boeing, General Motors, and American Airlines have been asking workers to send in marriage licenses, birth certificates, student IDs, and tax returns. The goal: to cull the benefits rolls of ineligibles, which could include ex-spouses, stepchildren who live elsewhere, or 29-year-old college grads still being claimed as dependents.

While this may appear to simply be a "benefit" issue, some companies are taking this issue serious, including firing some employees, according to the article.

At many companies, missing the deadline for sending in paperwork risks having a dependent's coverage dropped. Still, there are usually appeal windows of up to 60 days during which coverage can be reinstated if employees show proof. A few companies, however, are getting tough on those who procrastinate or are caught signing up an unqualified person. Some have made employees wait until the next open enrollment period before reinstating insurance if they repeatedly missed deadlines. [One consultant] said one client even fired workers discovered to have enrolled ineligible people because they violated its stringent code of conduct.

While such audits would, at first glance, appear to implicate privacy concerns, employees seeking benefits from a company routinely have to provide information on their dependents anyways. The risks in conducting the audit therefore have to do more with perceptions and managing employees, rather than privacy concerns. 

For the HR professionals there, feel free to post your experiences, if any, with such audits and whether this is indeed, a developing trend.

Tags: , , , ,

Benefits Determination Not Dispositive on ADA Issue

Posted on September 19, 2007 by Daniel Schwartz
Denials of motions for summary judgment tend to be routine matters. Find a "disputed material fact" or two and it becomes a matter for a jury to consider. Similarly, some motions for summary judgment are so obvious that only a short decision.  However, a recent decision by District Court Judge Dominic Squatrito highlights two issues that ought to be a concern for employers and defense counsel.
 
In Abbate v. Cendant Mobility Services Corporation, (July 13, 2007),  the District Court denied summary judgment to an employer on an ADA claim.

The employer, in seeking summary judgment, sought to rely on the fact that the employee received disability benefits and was "totally disabled" under the short-term and long-term disability plans provided by Aetna.  It appears that the employer sought to rely almost entirely on this aspect. 

However, the court found that the benefits determination that the employee was "totally disabled" did not consider her ability to do the job with a reasonable accommodation. Therefore, the benefits determination was not  an "inreconcilable direct conflict" with evidence the employee submitted that suggested she could do the job with a reasonable accommodation.
 
The lesson for employers here is obvious: If you are going to suggest that the employee is not "otherwise qualified" for a position under the ADA, you should not simply rely on the benefits determination. Rather, you should seek out other sources to show that the employee is unable to work under any circumstances.  Notably, this decision does not hold that the benefits determination is inadmissible as evidence; only that the determination is not dispositve of the issue.
 
A second point for employers to consider is that the court -- in determining whether the employer's reason for the termination was pretextual (i.e. not worthy of credence) -- relied on questions that the employer's counsel asked at the deposition.  In its moving papers, the employer claimed that the employee was fired for failure to provide a return to work statement. However, at the deposition, counsel for the employer asked the employee if she was "now aware" that her position was eliminated, purporting to challenge the employee's belief of her claims. 
 
This aspect of the decision is troubling because even in jury instructions, juries are often instructed to ignore attorney's questions or statements because they are not evidence.  Thus, this opinion should serve as a cautionary tale to counsel and employers that the reasons for the employee's termination need to be settled and firm early on. Any changes to the theory -- even in small "tweaks" -- leaves the employer open to criticism that it is changing its reasons.
Tags: , , , , , , ,