United States: Labor and Employment Law Weekly Update (Week of May 17, 2010)

Headed to the Bargaining Table? Remember That the Health Care Landscape Is Vastly Different

As a general matter, most parts of the new federal health care law (the Patient Protection and Affordable Care Act, or PPACA), do not immediately become effective upon group health plans in union contracts that are already in force. Instead, the new law generally delays the effective dates of its provisions until the expiration of the labor contract that was in effect prior to March 23, 2010.

As a result, any collectively bargained health plan negotiated after March 23, 2010 will be subject to the PPACA changes that become effective in 2011, 2012, 2013, and later. Employers need to understand — before negotiations start — that several years worth of PPACA changes could affect health benefits arising under their new labor contract, including benefit levels and costs.

Unfortunately, it remains unclear exactly how these changes will be applied, how much money they will cost, and what all the implications will be for employers. Thus, employers should strive for some measure of flexibility regarding their health plans and avoid promises to provide a static level of benefits for a fixed cost.

For example, starting in 2014, if a lower-paid employee pays more than 9.8 percent of his or her household income for health plan coverage, and that employee purchases health insurance on one of the new state insurance exchanges, then the employer will have to pay a penalty tax of $3,000 for that employee. Will your company be willing to pay that cost, or will your bargaining agreement give your company flexibility to lower the employee contribution amounts to avoid the penalty (while also reducing plan benefits to account for the fact that employees will be paying less for their coverage)? This is just one of many rules that will become effective during the course of your new labor contract. There will be many more.

Labor negotiators should be thinking of ways to address these issues in two main areas: (1) changes to plan design, and (2) allocating increased costs and possible excise taxes between the employer and the employees.

With respect to plan design, the employer may want to reserve the right to at least change benefits to the extent required (or permitted) under PPACA. Thus, rather than promising that "Employees will retain the benefit coverage in their existing medical plan," a limiting clause may also be added such as "except to the extent modifications are required to comply with laws governing medical plans, or to avoid tax penalties based upon the current plan design."

With respect to cost allocation, the employer should consider whether to bargain for a cap on the level of contributions that will be provided by the employer or, alternatively, to share any cost increases with the employees. For union employees who are already in a salaried plan, the employer may bargain for the right to make changes consistent with any plan design changes made to the salaried plan, including the amount charged to employees for coverage.

As various elements of PPACA become effective over the next several years, new regulations will help to clarify this area of the law. For now, certainty is in short supply. But one thing is certain: a "business as usual" approach to negotiating health care benefits could potentially add substantial costs to the bottom line, while a creative and nimble approach could result in substantial savings.

Five Days Not Considered Reasonable Time to Correct FMLA Medical Certification

While an employer may require an employee to provide a completed medical certification before granting leave under the FMLA, the employer also must give the employee a reasonable opportunity to correct the certification the employer contends is incomplete. Wellman v. Sutphen Corp, 2010 WL 1644018 (S.D. Ohio April 23, 2010). The Court found that five days to cure was insufficient and permitted the employee to proceed on his claims that his employer interfered with his right to medical leave the FMLA.

Mr. Wellman worked at Sutphen for six years before his firing. He was diagnosed with arthritis in his hands and wrists and, in March 2006, inquired about his eligibility for upcoming absences relating to his medical condition. On March 9, 2006, Mr. Wellman's supervisor gave him four FMLA documents to be completed, including a blank certification of health care provider. Sutphen did not provide Wellman with an instruction sheet and none of the forms stated a return deadline. Sutphen contended that Mr. Wellman never returned the certification. Wellman claimed that he returned the completed Certification on March 22, 2006, his first day back to work after his March 20 doctor appointment. More than two months later, Mr. Wellman received a letter from Sutphen notifying him that Sutphen had not received the completed certification and that he had five days to complete and return it. That same day, Wellman also received a written warning for insubordination for failing to complete and return the FMLA forms.

Pursuant to Section 825.305(b) of the FMLA regulations, when leave is foreseeable, an employee must provide the employer with medical certification at least 30 days prior to the scheduled absence. When this is not possible, the employee must provide the requested certification within the time frame requested (which must allow at least 15 days after the employer's request), unless it is not practicable under the circumstances. Section 825.305(d) provides that if the employer views a certification provided by an employee as "incomplete," the employer must advise the employee of this belief and provide the employee a "reasonable opportunity" to cure any deficiency.

Sutphen maintained that the case should be thrown out, even if Mr. Wellman submitted the certification, because he failed to cure an alleged defect or "incompleteness" in that certification. Sutphen argued that the certification Mr. Wellman claimed he submitted "must be deemed incomplete" within the meaning of 825.305(d) because Sutphen had no relevant information regarding Mr. Wellman's condition or need for leave in its possession. The Court specifically found that if the employer contends that it never received the certification, it cannot rely upon the regulations relating to an "incomplete" certification within the meaning of subsection 825.305(d).

The Court noted that even if it found that the employee had submitted an "incomplete" certification, Sutphen failed to satisfy its obligation to provide the employee with a reasonable opportunity to cure by giving Mr. Wellman only five days to submit the required information. Mr. Wellman had asked Sutphen to clarify exactly what additional information it required and to extend the submission deadline, but his requests went unanswered.

This case underscores the importance of giving employees adequate time to supplement any incomplete or unsatisfactory medical certification information, under all federal, state, and local leave laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.