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Archive for January, 2016

Employers Win a Healthy Victory Against The EEOC on Employee Wellness Programs

Posted on: January 19th, 2016

By: Amanda Cash

While the EEOC filed multiple lawsuits in 2014 challenging the employee wellness programs of three different companies, employers won a significant victory on the last day of 2015 in the wellness program arena.  On December 31, 2015, a district court in Wisconsin found that a company’s challenged wellness program fell within the “safe harbor” provision of the Americans with Disabilities Act (“ADA”).  In this particular case, the EEOC sued Flambeau, Inc., a plastics manufacturer, alleging that its wellness program, which required employees to complete a health risk assessment and biometric testing in order to be eligible for participation in the company’s group health plan, violated the ADA because the exams were not voluntary.

The EEOC based their lawsuit on the ADA’s general prohibitions against employers making health-related inquiries or requiring medical examination of employees and argued that the only “exception” to this prohibition was if the employee wellness program was “voluntary.”  The EEOC claimed that Flambeau’s program was not voluntary as employees had to participate in the employee wellness program in order to qualify for health insurance.

The Court, however, noted that the ADA also provides a safe harbor for employers in their establishment and administration of the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks.   In considering whether Flambeau met the “safe harbor” requirements, the court considered whether Flambeau’s wellness program was (1) a “term” of its insurance plan and (2) based on underwriting, classifying, or administering risks.

The court found that Flambeau’s wellness program satisfied both requirements.  Because employees had to participate in the wellness program in order to qualify for health insurance at Flambeau, the court found that the wellness program was clearly a term of the health insurance plan, even though it was not a part of the written plan documents.  In addition, the Court found that because Flambeau used the data collected from the exams to develop the Company’s insurance plan, classify health risks, calculate projected insurance costs, and set premiums, the exams were based on underwriting, classifying or administering risks.  The Court relied heavily on an Eleventh Circuit case that found a similar wellness  program requirement was valid under the “safe harbor” provision.

While this is certainly a win for employers who wish to establish wellness programs that are connected to a voluntary health insurance plan, employers should be aware that this case is not likely to change the EEOC’s position on wellness programs.  Employers are thus cautioned to carefully review their wellness programs to evaluate whether the program is in compliance with the ADA, as well as other laws such as the Genetic Information Nondiscrimination Act (“GINA”), and the Affordable Care Act which also govern employee wellness programs.   Employers should also stay tuned to see whether the EEOC’s proposed rule on employee wellness programs is adopted.  Given the complexity of the rules governing employee wellness programs, employers are encouraged to consult with counsel for assistance.

Gearing Up for H-1B Season

Posted on: January 14th, 2016

By: Nina Maja Bergmar

With less than three months left before the FY 2017 filing period, it is high time for employers to start gearing up for this year’s H-1B season.

Under the current cap system, the USCIS allots a mere 65,000 visas per year for applicants with a Bachelor’s degree and 20,000 additional visas for applicants with advanced degrees. Last year, the USCIS received a whopping 233,000 H-1B petitions within the first six days of the filing period, after which it stopped accepting applications altogether. The Commission then performed a computer-generated process to randomly select 85,000 visas to review and rejected the remaining applications outright.

The continuous increase in petitions over the last few years is a strong indicator that the statutory cap will be reached within the first week of this year’s filing period. Employers should therefore be ready to file their petitions on April 1, 2016—the first day of the filing period—to maximize their chances of securing an H-1B visa.

While obtaining an H-1B visa for a prospective employee can seem daunting, FMG’s attorneys are available to help guide employers through each step of the process. We are also available to discuss other types of non-immigrant visas, such as L-1 intracompany transferee visas, H-3 trainee visas, J-1 intern/trainee visas, and TN visas, as well as how to obtain a Green Card through employment.

The Tripartite Relationship: Minefield or Common Sense?

Posted on: January 11th, 2016

By: Jeremy W. Rogers

            The tripartite relationship between the attorney, insurance carrier, and the insured, has been the subject of innumerable law review articles, blogs, seminar presentations, and other publications. The vast majority of these publications stress that the tripartite agreement is one that is beset with considerable pitfalls for the attorney and, potentially, the carrier.  The relationship arises when defense counsel is appointed by the carrier to represent an insured in defense of a claim or lawsuit, and it may arise in any type of case where insurance coverage is afforded for the particular type of claim. Ideally, the three parties to the relationship work in concert to reach a favorable and mutually beneficial resolution. However, as is often the case, the relationship does not always work “ideally.” What is the best course of action when a conflict arises between the carrier and the insured? And, if such a situation arises, is the attorney’s course of action that terribly complicated or one simply calling for the application of common sense?

            During a recent mediation conference, I was faced with a difficult situation involving an insured that really did not want to concede on any points and a carrier that wanted the case settled. This was not a case that involved consideration of just the financial cost of resolution.  There were several non-financial considerations dealing with the future relationship of the parties, professional competition, the terms of a prior contract, and a multitude of interpersonal issues. After several hours of negotiation, completing the agreement came down to consent of the insured.  The insured was extremely reluctant to consent to the terms of the preliminary agreement, but the carrier was 100% on board. Obviously, everyone was involved in the negotiations, but the insured had second thoughts when it came down to time to sign off on the agreement.  This brought about the decision of the carrier to have a very frank discussion with the insured.  As the attorney, this made for a very uncomfortable situation.

Fortunately, I anticipated, based on prior dealings with the insured, that there may be some considerable push-back on settling the case despite the carrier’s intent to resolve the matter. I had several conversations with the insured explaining the conflict and why, if this scenario arose, I would not be able to advise her on how to proceed. I also recommended that she consult with separate counsel in the event a disagreement arose with the carrier. With this recommendation, she was able to have personal counsel available to speak with once the carrier explained to her how they intended to proceed in the event consent was withheld. The insured was able to protect her interests, and I avoided any questions by the insured about why I needed to stay away from the conflict.

So is the tripartite relationship truly a minefield, or can it be navigated with the exercise of common sense? If one knows the obligations owed to the carrier and the obligations owed to the insured, the relationship does not have to be complicated.

SCOTUS Hears Case on Effect of TCPA Offer of Judgment

Posted on: January 8th, 2016

By: Matt Foree

The U.S. Supreme Court recently heard oral argument on a case affecting the resolution of Telephone Consumer Protection Act (“TCPA”) cases in which a defendant has submitted a Rule 68 Offer of Judgment to a plaintiff. The transcript and audio of the oral argument are located here. In the Campbell-Ewald Company v. Gomez case, the Court considered whether a case becomes moot and therefore beyond the judicial power of Article III when the plaintiff receives an offer of complete relief on his claim.  The Court also considered whether the answer to that first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.

Although recent Federal Court decisions have held that claims are not mooted by an unaccepted offer of judgment, the oral argument in the Campbell-Ewald case was divided.  Justices Ginsberg, Kennedy and Sotomayor presented tough questions to the Petitioner, Campbell-Ewald Company, who is seeking to enforce its offer of judgment.  The Justices seemed to struggle with Petitioner seeking to have a judgment entered based on an unaccepted offer of judgment and cited the language of Rule 68, which provides that the offer is deemed withdrawn if it is not accepted.  Interestingly, Justice Sotomayor told Petitioner that the only way she saw a court entering judgment under the Federal Rules of Civil procedure is through a Rule 56 judgment.  She stated that she did not know why the Court has to make a merit determination based solely on an unaccepted offer of judgment.

Respondent’s counsel argued that an offer of complete relief cannot render a case moot. He said that at most the offer might justify a forced entry of judgment, but not a jurisdictional dismissal.  Chief Justice Roberts, Justice Alito and Justice Kennedy raised probing questions as to what else Respondent should receive if, hypothetically, he was given an offer of money for all of the damages he sought.  Specifically, Justice Kennedy asked what concrete injury resulted in adversity.  Respondent stated that the concrete injury is the past injury already suffered.  He argued that the fact that the injury has already been remedied is a defense that goes to the merits and not to Article III.  Chief Justice Roberts quipped that Respondent’s argument was that he does not want the money he is asking for; he wants a judgment that will give him the money.  The Chief Justice also noted that Respondent put a lot of weight on the plaintiff’s interests, but there is another interest at stake – the interest of the court.

Much of the remainder of the argument devolved into a discussion of semantics concerning the term “mootness.” Justice Scalia stated that Respondent’s counsel was contrasting a forced entry of judgment on the one hand with mootness on the other, but that a forced entry of judgment is one of the remedies for mootness.  Respondent’s counsel argued that those are mutually exclusive and that, if the case is moot, a court cannot enter a judgment ever under any circumstances.  Respondent’s counsel further stated that if a court is entering a judgment by definition, the case is not moot.  He argued that mootness requires a jurisdictional dismissal and forbids the entry of any type of judgment.  When asked by Chief Justice Roberts if Petitioner offered to give Respondent everything he wanted, would the case be over, Respondent’s counsel replied that “it certainly would not be moot.”  Additionally, Respondent argued that any individual plaintiff who has gotten everything that he has asked for is entitled to proceed with the litigation because he might get a bonus from a class action that he would like to lead.

In the meantime, TCPA and class action lawyers are anxiously awaiting the Court’s opinion on the effect of offers of judgment, including as it relates to individual claims and putative class actions. TCPA defense lawyers are hoping that the ruling could provide them with another arrow in a (currently) very small quiver for attacking TCPA claims.

Court of Appeals Clarifies Georgia Law Regarding Insurance Policy Notice Provisions

Posted on: January 6th, 2016

By: Connor Bateman

The Georgia Court of Appeals recently ruled in Plantation Pipe Line Co. v. Stonewall Ins. Co. that an insured’s two-year delay in notifying its excess liability insurer of potential third-party claims, although untimely as a matter of law, did not necessarily preclude coverage under the policy. This decision could carry significant implications for insurers with excess liability policies issued in Georgia. In addition, the case provides a comprehensive overview and application of Georgia’s current law on notice provisions in primary and excess liability policies.

The insured, Plantation Pipe Line Co. (“Plantation”), sought coverage from its excess liability insurer, Stonewall Insurance Co. (“Stonewall”), for third-party claims arising from a 1976 pipeline leak in North Carolina. Although Plantation immediately repaired the leak and compensated the only affected landowner, the leak resulted in significant soil contamination that that went undiscovered for nearly thirty years.

At the time of the initial leak in 1976, Plantation had $1,000,000 in primary coverage under a comprehensive general liability policy and two tiers of excess coverage. The first level of excess coverage provided $1,000,000 of additional insurance under an umbrella policy issued by Lexington Insurance Company. The second tier provided $4,000,000 of excess coverage under policies issued by six different carriers, including the defendant Stonewall. Although Plantation was generally aware of these coverage limits when it discovered the contamination in April of 2007, the identity of many of the excess carriers, including Stonewall, remained unknown.

In February of 2008, Plantation notified the known carriers of an estimated $2.061 million in costs stemming from investigating, remedying, and defending the soil contamination issue. Two years later, in February of 2010, Plantation’s coverage counsel uncovered the 1975-1976 Stonewall policy while gathering documents from Plantation’s former law firm. Finally, in April 2010, Plantation sent written notice to Stonewall that this excess liability policy may be implicated by third-party claims arising from the 1976 leak. Stonewall denied liability, arguing that Plantation’s notice was untimely.

Initially, the Court noted that the question of timely notice depends largely on the event that triggers the insured’s duty to provide notice to its carrier. The Court explained that, under an excess liability policy, the notice obligation is typically triggered by the insured’s assessment of whether their liability might exceed the coverage ceiling of an underlying primary policy or lower-level excess policy. Thus, because Plantation knew in 2008 that its remediation and defense costs would likely exceed $ 2 million (the “attachment point” of Stonewall’s policy), the Court found Plantation’s two-year delayed notice untimely as a matter of law.

Plantation argued that its notice to Stonewall was reasonable under the circumstances because it did not become aware of the Stonewall policy until 2010. In rejecting this argument, the Court noted that Plantation was generally aware of several unidentified companies that had issued excess liability policies for the 1975-1976 period. Because there was no evidence that Plantation could not have discovered the Stonewall policy earlier than 2010, the Court concluded that Plantation’s ignorance of the policy’s existence did not excuse the delayed notice.

Despite the untimeliness of Plantation’s notice, the Court proceeded to explain why Stonewall could not automatically deny coverage to Plantation on this ground. First, the Court reaffirmed that, absent a showing of justification for the late notice by the insured, an insurer is not obligated to provide a defense or coverage if the insurance contract expressly makes timely notice a condition precedent to coverage. Further, the Court explained that an insurer is not required to show that it suffered prejudice from the delay when the insurance contract makes timely notice a valid condition precedent. If, however, the insurance contract does not make coverage expressly conditional on timely notice, an insured’s failure to comply with the notice provision will not result in a forfeiture of coverage unless the insurer can show that it suffered actual harm from the delayed notice.

The Court thus looked to whether the Stonewall policy expressly made notice a condition precedent to coverage. The pertinent provision in the Stonewall policy reads:

When an occurrence takes place which, in the opinion of the insured, involves or may involve liability on the part of the company, prompt written notice shall be given by or on behalf of the insured to the company or its authorized agents. . . . Failure to so notify the company of any occurrence which at the time of its happening did not, in the opinion of the insured, appear to involve this policy but which, at a later date, appears to give rise to a claim hereunder shall not prejudice such claim provided notice is then given. For purposes of this policy, the word “opinion” shall mean informed opinion or opinion formed on advice of counsel.

According to the Court, this language did not expressly stipulate that compliance with the notice provision was a condition precedent to coverage. Further, the Court pointed out that the policy did not contain even a general provision stating that no action would lie against the insurer unless, as a condition precedent thereto, the insured fully complied with all terms of the policy. Thus, because the policy did not make coverage expressly conditional on timely notice, the Court concluded that Stonewall could only deny coverage by showing prejudice suffered as a result of the delay.

To make this showing, Stonewall contended that the late notice deprived them of the opportunity to timely investigate the soil contamination issue. The Court concluded, however, that this bare assertion was insufficient to meet Stonewall’s burden of showing prejudice as a matter of law. The Court reasoned that while excess carriers are indeed entitled to “timely” investigate claims for which they may ultimately be held liable, the notice obligations under excess policies are triggered by events distinct from those which trigger the notice duties under primary policies. Specifically, while an insured’s duty to notify its excess carrier is generally triggered by an assessment of whether its exposure is likely to exceed the ceiling of the underlying primary policy, the notice obligation under a primary policy is triggered by the insured’s actual or constructive knowledge of an occurrence that may result in liability.  Thus, the Court explained that an excess insurer will not automatically be entitled to an opportunity to investigate in the early days following an occurrence, as a primary carrier may often be. Accordingly, as an excess carrier, Stonewall was required to show more than a deprivation of its opportunity to immediately investigate the issue—an opportunity generally afforded only to primary insurers. For these reasons, the Court concluded that Plantation’s delay in notice did not preclude coverage under Stonewall’s excess policy.

Over a strong dissent, the Court stressed that its ruling should not be construed to suggest that excess carriers are never entitled to timely notice or never prejudiced by untimely notice. Instead, the Court explained that such carriers must show prejudice with particularized evidence of harm, rather than bare assertions that an inability to promptly investigate an occurrence is inherently prejudicial. Nevertheless, excess carriers should be aware of this decision’s potential impact on their burden of showing prejudice in cases of delayed notice. In addition, this case highlights the importance of including express language in primary and excess liability policies to make timely notice a condition precedent to coverage.