SLF LABOR AND EMPLOYMENT ALERT June 2009

Implementation of the Medicare Medicaid and SCHIP Extension Act of 2007 (“MMSEA”)

On December 29, 2007, President George Bush signed into law the “Medicare Medicaid, and SCHIP Extension Act of 2007 (“MMSEA”).” Among other things, this new law establishes new reporting guidelines for group health plans, liability insurers, no-fault insurers, workers’ compensation insurers and self insurers. These insurers will now be required to determine whether any person who files a claim against the insurer or covered entity is entitled to Medicare benefits. The law becomes effective January 1, 2009 for group health plans and July 1, 2009 for non-group health plan insurers.

These new reporting requirements will enable Medicare to examine settlements, judgments and awards to ensure that conditional payments are identified and reimbursed, and also to determine if an allocation for related medical expenses is provided. If a settlement does not contain an allocation for Medicare reimbursement, Medicare has a statutory right to recover up to the entire amount of the settlement, judgment or award.

Upon implementation, liability insurers (including those who are self-insured), no-fault insurance and workers’ compensation plans are now required to:

Make a specific determination for each claimant whether they are entitled to collect Medicare benefits;

If a claimant is found to be a Medicare beneficiary, the insurer is required to electronically submit claimant’s identity to the Secretary of Health and Human Services so a determination can be made regarding the coordination of benefits and recovery of any benefits advanced by Medicare

These reporting requirements apply both to claimants filing a claim directly against an insurance plan and to individuals filing a claim against an individual or entity covered by the applicable plan. Failure to comply with these reporting requirements may result in a fine of $1,000 per day of non-compliance for each claimant. These fines are in addition to any other penalties such as Medicare secondary payer claims.

Compliance

The Centers for Medicare and Medicaid Services has provided detailed information to assist responsible reporting entities with the new reporting requirements. This assistance includes detailed computer based training, exemplar forms for gathering information to determine Medicare eligibility, and instructions on how to electronically submit the required information. More information may be found at http://www.cms.hhs.gov/MandatoryInsRep/01_Overview.asp#TopOfPage.

Because these new provisions include substantive changes and requirements, CMS should be consulted frequently in order to stay abreast of the rapidly changing reporting requirements.

Supreme Court Rejects Mixed Motive Cases Under
The Age Discrimination In Employment Act

The United States Supreme Court recently rejected the “mixed-motive” theory of liability under the Age Discrimination in Employment Act (“ADEA”). In Gross v. FBL Financial Services, Inc., the Court distinguished ADEA cases from other discrimination cases arising under Title VII which expressly permits claims where discriminatory bias was only one of the factors resulting in adverse employment action.

A Title VII plaintiff may establish discrimination by showing discriminatory bias was a “motivating factor” in the adverse employment action, thereby permitting a claim if the improper motive was one of several motivating factors. If the plaintiff provides direct evidence that the discriminatory intent was one of the factors resulting in adverse action, the burden shifts to the employer to prove by a preponderance of evidence that it would have taken the same action absent the improper motive.

The Court rejected this burden-shifting framework in ADEA claims; instead it held that age must be the motivating factor in the employer’s decision to take adverse action. Because the ADEA plaintiff must prove that “but-for” their age, they would not have suffered the adverse action, the burden never shifts to the employer to prove it would have made the same decision in spite of the direct evidence of age bias. Therefore, even in cases where ADEA plaintiffs provide direct evidence of age bias, they retain the burden of persuasion to prove by a preponderance of the evidence that age was the cause of the challenged employment decision.

This decision may have significant impact on the litigation of ADEA claims as well as Florida Civil Rights Act age discrimination claims which are patterned after the ADEA. Employers, insurers and their counsel should reassess pending age discrimination claims to ensure plaintiffs can meet their burden of proof.

The full text of the opinion may be found at http://www.supremecourtus.gov/opinions/08pdf/08-441.pdf.

Pension Benefits Determined by “Bona-fide Seniority System” prior to the Pregnancy Discrimination Act Upheld by U.S. Supreme Court

In a recent 7-2 ruling, the Supreme Court has held that a company who utilized a bona fide seniority system to determine eligibility for and calculation of pension benefits which treated pregnancy-based leave differently from other types of temporary leave, and which was only in use prior to the April 1979 effective date of the Pregnancy Discrimination Act (“PDA”), did not violate Title VII of the 1964 Civil Rights Act, and was therefore not liable for damages to affected individual plaintiffs. In AT&T Corp. v. Hulteen, the Court stressed that the company’s policy was lawful when in use and that the PDA, which amended Title VII to provide that pregnancy was a protected characteristic within the ambit of discrimination based upon sex, was not retroactive.

Four former AT&T employees who took pregnancy leave prior to the PDA’s enactment were granted a maximum of 30 days of service credit toward their retirement benefit plan, while other employees who were on leave for other temporary disabilities received full credit. Once the employees reached retirement in the 1990s, AT&T calculated their pensions based on the previously calculated accruals, and not on the full credit those employees would receive after the PDA.

In overturning the Ninth Circuit’s ruling, the Court stated that “there is no necessary violation” of Title VII when an employer makes pension calculations pursuant to a “bona fide seniority system,” expressly protected by §703(h) of Title VII. Benefit differentials which would be the result of such a plan are permissible unless they are “the result of an intention to discriminate.” At the time AT&T used this plan it was considered perfectly lawful and non-discriminatory. Furthermore, the Court’s decision was meant to uphold the policy of established seniority systems generally. “Bona fide seniority systems allow, among other things, for predictable financial consequences, both for the employer who pays the bill and for the employee who gets the benefit.”

Governor Charlie Crist Signs Law Impacting Retiring
Public Employees and Elected Officials

On June 18, 2009, Florida Governor Charlie Crist signed CS/CS/HB 479. The provisions of the bill will directly impact public employees and elected officials. Prior to the signing of the bill, public employees and elected officials participating in Florida’s Retirement System were permitted to retire and then return to work after 30 days. This allowed certain individuals to collect retirement benefits and a salary at the same time. In an article published in the Bradenton Herald on June 18, 2009, titled Double-dipping reform bill signed into law, author Sara Kennedy noted that the purpose of the law is to “close a loophole that has allowed more than 9,000 people, about 200 of whom are elected officials, to collect retirement benefits and a salary at the same time, officials have said previously.”
SB 479 closes the loophole by requiring, among other things, that public employees and elected officials remain retired for a minimum of 6 months. The law will apply to all retirements that occur on or after July 1, 2010.
To access the details of SB 479, including the full text of the bill, please visit the following link:
http://www.myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=40366&SessionId=61.

Discrimination Claims at Record High

The U.S. Equal Employment Opportunity Commission reports that a record high 95,402 private sector discrimination charges were filed during fiscal year 2008. Increases were noted in all categories of bias. For more information on the EEOC’s statistics, go to: www.eeoc.gov/stats/enforcement.html.

Michael P. Spellman Joins Firm

Michael P. Spellman has joined the Firm as a shareholder, which will now be known as Sniffen & Spellman, P.A. Mr. Spellman has extensive experience in employment and civil rights litigation, tort litigation and commercial litigation, and also represents public sector entities as general counsel. Mr. Spellman also represents public employers in collective bargaining and other labor related matters. He is a graduate of the University of Florida, where he was a member of Sigma Phi Epsilon fraternity and Florida Blue Key. In 1987, he served as General Chairman of Homecoming and has been inducted into the University of Florida Hall of Fame. Mr. Spellman received his J.D. with honors from Florida State University.

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