ERISA doesn’t just protect the right to receive your benefits under the company benefit plan. It also prohibits your employer from retaliating against you or interfering with your claims for those benefits.
A recent decision from the Third Circuit Court of Appeals (the federal appellate court that hears appeals from Pennsylvania and its neighboring states in the mid-Atlantic region) has an interesting illustration of ERISA’s protections from retaliation. Although the decision, Kairys v. Southern Pines Trucking, Inc., isn’t binding precedent on courts in Washington State, it’s still a useful application of ERISA’s protections against retaliation.
Shortly after Kairys was recruited as Southern Pines Trucking’s Vice President of Sales, he was diagnosed with degenerative arthritis. He required expensive treatment.
This treatment was covered by Southern Pines Trucking’s ERISA plan. The plan was self-funded, meaning that, instead of buying insurance to cover health claims, Southern Pines Trucking paid claims out of its own pocket. This is a not uncommon feature of ERISA-governed health plans. Among other things, self-funding can make it easier for the plan’s administrators to insulate their decisions about which claims to pay from judicial review.
Southern Pines Trucking wasn’t happy about paying for this. It terminated Kairys shortly after the bills came in. The company told Kariys his position was eliminated because there was no work for that role to perform. But it hired a part-time replacement to do the same work soon after terminating Kariys.
Kariys filed a lawsuit alleging, among other things, that the company violated ERISA by retaliating against him for using the company’s medical plan. The case went to trial. The jury found in favor of the company on several of Kariys’ claims.
But, because ERISA doesn’t allow for jury trials, the judge considered the evidence independently. The judge determined Kariys had proved the company fired him in retaliation for making medical benefit claims under the company health plan. It ordered the company to pay Kariys his lost wages and attorneys’ fees.
Southern Pines Trucking appealed that decision to the Third Circuit. First, the company argued that the jury’s finding against Kariys on his other claims should have required the judge to dismiss the ERISA claim. The Third Circuit disagreed. It decided the jury’s verdict, which was in the form of a “check the box” verdict slip, did not address the specific facts of Kariys’ ERISA claim.
The Third Circuit also found the evidence supported Kariys’ ERISA claim. Section 510 of ERISA makes it unlawful to fire workers for claiming benefits under an employee benefit plan. ERISA also prohibits terminating employees for the purpose of preventing them from claiming those benefits. In other words, ERISA prevents employers from either retaliating against employees for using their benefits in the past or from interfering with employees’ attempts to use those benefits in the future.
The appellate court had little difficulty determining the evidence supported a verdict against the company on those claims. It noted Kariys’ testimony that he was told to “lie low” because company leadership was angry at his expensive health plan claims. It rejected the company’s argument that it terminated Kariys for a lack of work, citing evidence that the company’s workload for that position varied on a monthly basis and that the company’s witness testimony about the supposed lack of work had never been disclosed before trial. And, it emphasized that Kariys had been a high performing employee who was paid a bonus a week before being fired, with no documentation explaining the decision to terminate him. Perhaps most importantly, the company leadership admitted under oath that they may have reviewed health claim invoices shortly before making the decision to fire Kariys.
This decision is an excellent illustration of the facts that are important to prove a claim for illegal retaliation under ERISA.