ACA Expands Employee Protection for Blowing the Whistle by Denise M

Vol. 50 | No. 7 | July 2013

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reprint Reproduced with permission from Benefits Magazine, Volume 50, No.7, Web Exclusives, July 2013, published by the International Foundation of Employee Benefit Plans (www.ifebp.org), Brookfield, Wis. All rights reserved. Statements or opinions expressed in this article are those of the author and do not necessarily represent the views or positions of the International Foundation, its officers, directors or staff. No further transmission or electronic distribution of this MAGAZINE material is permitted. PU138020 pdf/613 The Affordable Care Act includes broad whistleblower protections for employees who report violations of requirements to provide preventive services, prohibitions on lifetime limits and preexisting condition exclusions, and other aspects of ACA. In 2014, antiretaliation provisions will also apply to group health plans and health insurance issuers. ACA Expands Employee Protection for Blowing the Whistle by Denise M. Keyser and Mark F. Kowal “Whistleblowing” provisions are common in federal and cused on ensuring that their group health plans meet the new state legislation. Many recent laws include protection against law’s requirements. The public’s attention, as well, has been workplace retaliation for those who “blow the whistle” on elsewhere, centered largely on the creation of health care ex- employer fraud or other illegal actions. changes, mandated changes to employer-sponsored health Such statutes and who they protect include the famil- plans, wellness initiatives and the “pay or play” penalties. iar Occupational Safety and Health (OSH) Act, employees ACA’s whistleblower protections currently are flying un- who report workplace safety violations1; the Sarbanes-Oxley der the radar. If recent trends continue, these provisions will Act (SOX), employees who report alleged mail, wire, bank garner more attention once “Obamacare” becomes fully ef- or securities fraud2; and the Consumer Financial Protec- fective, for retaliation has become one of the most popular tion Act3, for reporting violations of Dodd-Frank or similar causes of action both before various government agencies laws, as well as the lesser known Asbestos Hazard Emergen- and in the courts. cy Response Act, violations of the law relating to asbestos in For example, for fiscal year 2012, over 37,000 retaliation schools4; and the Moving Ahead for Progress in the Twenty- claims were filed with the Equal Employment Opportunity First Century Act, information about motor vehicle defects.5 Commission (EEOC) under the many federal antidiscrimi- Often overlooked on this list is the Patient Protection and nation laws that the agency enforces, making retaliation the Affordable Care Act (ACA).6 most frequently filed EEOC claim for the last four years.7 And As the 2014 implementation date for many of ACA’s most it isn’t just the sheer number of claims that have businesses controversial provisions draws near, most businesses are fo- worried; these cases have the potential to result in substantial

WEB exclusive july 2013 benefits magazine 1 jury awards. A recent study published by Thomson-Reuters retaliation complaints under the various whistleblower found that the median whistleblower award, for 2005-2011, statutes delegated to OSHA. Key changes include (1) the stood at $218,921 while the mean award topped $750,000.8 requirement that investigators attempt to interview the As businesses struggle to comply with health care reform, complainant in every case; (2) clarification that complaints there should be little doubt that retaliation claims under ACA may be filed orally or in writing, in any language, and elec- will create a new headache for many employers and insurers. tronically (via the Whistleblower Protection website, www .whistleblower.gov); and (3) expanded advice on handling ACA’s Whistleblower Provisions uncooperative respondents and the use of administrative ACA’s whistleblower protections are broad, forbidding subpoenas to obtain needed evidence from them. These discrimination against any employee with respect to “com- changes are expected to make it easier for employees to file pensation, terms, conditions or other privileges of employ- complaints and more likely that those complaints will be ment” because that employee (1) reports a violation of ACA’s thoroughly investigated. Title I (which includes requirements to cover preventive The Whistleblower Protection Program now reports di- services and prohibits lifetime coverage limits, preexisting rectly to the Office of the Assistant Secretary—a move that condition exclusions and the use of certain factors to set the U.S. Department of Labor has described as reflecting “a rates); (2) refuses to participate in an activity the employee significantly elevated priority status for whistleblower en- reasonably believes violates Title I; (3) assists/participates in forcement.” Accordingly, OSHA has been provided with the a whistleblower proceeding under ACA; or (4) receives a tax tools to act on its enforcement priorities and, over the past credit or cost-sharing reduction as a result of participation in two years, has added a significant number of investigators a health insurance exchange, or marketplace. and staff, increased its emphasis on investigator training and In 2014, these antiretaliation provisions will be expanded strengthened its internal audit program. to apply to group health plans and health insurance issuers offering group or individual health insurance coverage. In- Complaint Procedure and Enforcement surance providers will be prohibited from retaliating against On February 22, 2013, OSHA addressed the newest law individuals who are not their own employees. Thus, for ex- to come within its purview and issued an interim final rule ample, an insurance provider will be barred from canceling establishing procedures and time frames for ACA retaliation or limiting a whistleblowing individual’s health insurance complaints.9 coverage. At the time of this writing, the public comment period on the rule was scheduled to end on April 29, 2013. The rule is OSHA’s Whistleblower Protection Program “complainant friendly.” Specifically: ACA’s whistleblower provisions will be enforced by the • An individual who believes he or she has been the vic- Occupational Safety and Health Administration (OSHA), an tim of retaliation may file a complaint with OSHA agency best known for administering the federal workplace within 180 days of the claimed retaliation. No specific safety law. While OSHA may seem an odd choice, it already form is required; the ACA complaint simply must alert enforces the antiretaliation provisions of 20 other laws, in- OSHA to the allegation of retaliation. OSHA may then cluding OSH Act and SOX. choose to conduct a full investigation. Thereafter, un- OSHA recently launched several enforcement initiatives der the rule, OSHA would have the power to award that included overhauling its Whistleblower Protection Pro- damages and other remedies, including reinstatement gram after audits by the General Accounting Office concluded of employment. The agency also has the option to at- that the program was riddled with problems and woefully tempt to negotiate an amicable resolution. ineffective. In response, OSHA generated a string of systemic • Parties that disagree with an agency order may appeal changes to the program that reflect the agency’s increased administratively and, ultimately, to the appropriate vigor under the Obama administration and its commitment federal appeals court. Although an appeal will stay the to protecting, in the words of Dr. David Michaels, OSHA’s entry of most relief, it will not stay an order of rein- assistant secretary, “[t]he ability of workers to speak out and statement. Thus, an employer may be required to re- exercise their legal rights without fear of retaliation.” employ an alleged whistleblower during what could be Consequently, in August 2011, OSHA released a new an extended appeal process. edition of its Whistleblower Investigations Manual, which • A complainant need not remain at OSHA. If the provides internal guidance for its investigators in handling agency does not take prompt action (within 210 days),

2 benefits magazine july 2013 WEB exclusive the complaining individual may ority, and engage the board of di- sources department and should go directly to federal court. And rectors and senior management be an individual with experience if OSHA does not enter an order in policy statements and actions in internal investigations as well on its findings within 90 days that identify ethics and legal as a knack for dealing with the (presumably because the agency compliance as a business priority. entire range of company employ- is attempting to resolve the mat- 2. Implement and distribute a cor- ees. The ombudsman should have ter amicably), the individual may porate code of ethics that makes sufficient “clout” to enforce the choose not to wait for an order this commitment explicit. no-retaliation pledge and to re- and, again, may go directly to 3. Include a well-publicized and ef- solve complaints effectively. court. fective complaint procedure. • The burden of proof is relatively Consider reissuing the code of Dealing With a Whistleblower light for the complainant, who ethics and the complaint proce- What if, despite an employer’s must demonstrate, by a prepon- dure annually and having em- best efforts, a whistleblower claim is derance of the evidence, direct or ployees formally acknowledge brought, either internally or externally? circumstantial, only that the pro- that they have read and under- A business must proceed with care if tected activity was a motivating stand the policies. Include the op- the complaining worker is still em- factor (not the motivating factor) tion to make anonymous com- ployed. in the alleged retaliatory action. plaints via a hotline or similar While ACA forbids retaliation in The respondent (employer or in- process. the form of any adverse employment surance provider) then has the 4. Many businesses now conduct action, this does not mean that a com- burden to show, by clear and antiharassment training on a pe- plaining employee is “bulletproof.” An convincing evidence (a higher riodic basis. Consider similar employer may discipline and/or dis- standard of proof), that the busi- training on the code of ethics and charge a worker who has made a com- ness would have taken the same complaint procedure. plaint but must be prepared to show by action notwithstanding the pro- 5. Train supervisory staff. No matter “clear and convincing evidence” that it tected activity. Thus, if the rule how committed a business may would have done the same thing even becomes final in its current form, be with respect to its antiretalia- absent the protected activity. Before businesses will find it more diffi- tion policies, it will be only as any action is taken against the whistle- cult to defend ACA claims as successful as its people permit. blower, an employer should review its compared to many employment Management should receive file carefully, ensuring proper docu- cases, which do not all place such training in recognizing and re- mentation exists to support the action a heavy burden on the defense. sponding to claims of unlawful and that the employee is being treated conduct or retaliation. Managers consistently with company policy, Protecting Businesses Against and supervisors must understand past practice and comparable work- Whistleblower Claims what constitutes retaliation, how ers. A similar analysis applies to claims With the specter of increased OSHA difficult those claims can be to brought against insurance providers by scrutiny, it makes sense for businesses defend and the potential liability covered individuals. to minimize the chances that employ- they carry. Several recent whistleblower cases ees (and covered individuals) will raise 6. Consider appointing an ombuds- are instructive on just how difficult it whistleblowing claims under ACA— man, especially if the company can be to manage employees who have or any other antiretaliation law—and has had prior problems with made a legally protected complaint. Al- maximize the chances that any such whistleblowers and/or has a rela- though these cases did not arise under claims are raised and resolved in-house tively weak or inexperienced ACA, they warn that seemingly “no- and without outside intervention. management team. The ombuds- brainer” discharge decisions can be- With that goal in mind, here are six man should be a clear alternative come “close calls” when the employee steps that can be taken now to create to lodging a complaint through has participated in protected activity. and sustain a corporate culture of com- the general chain of command. In Coleman v. Donahoe,10 the Af- pliance: Thus, the ombudsman should be rican-American plaintiff made com- 1. Make compliance a strategic pri- separate from the human re- plaints of unlawful discrimination

WEB exclusive july 2013 benefits magazine 3 against her white supervisor at the U.S. Postal Service. She ment but, after realignment of sales territories, her perfor- then took a medical leave necessitated by psychiatric prob- mance declined and she was put on a 90-day performance lems. While on leave, she told a psychiatrist that she had improvement plan, which was followed by 60 days’ probation homicidal thoughts about the supervisor. This was reported and discharge. She sued, alleging retaliation for having filed to the supervisor who, in turn, reported it to the police. At a charge with EEOC. On appeal, the court upheld a jury ver- about the same time, the plaintiff filed two EEOC charges. dict for her because, among other things, her supervisor was She was thereafter discharged for her threats. In a lawsuit a difficult manager who did not like employees who “stood alleging retaliation for filing the charges, an appeals court up” to him and especially did not like the plaintiff (this sup- reversed judgment for the employer, essentially because the ported the inference that the manager was the sort of person Postal Service had suspended but not discharged two white who would engage in retaliation); Xerox’s policies called for workers who had threatened an African-American employee, counseling and coaching before formal warnings; the termi- the plaintiff’s threat was not judged to be a “true threat,” and nation process started just days after the employee filed her the close timing between the plaintiff’s complaints of dis- EEOC charge and before the expiration of probation; and, crimination and her discharge suggested retaliation. just weeks after she filed the charges, her manager wrote her In Smith v. Xerox Corp,11 a different federal appeals court up over two trivial issues, without getting her side of the concluded that the employee presented enough evidence of story. retaliation to sustain a verdict in her favor. Here, the employee As these cases and the statistics cited earlier in this article had received positive evaluations for much of her employ- illustrate, retaliation cases are on the rise, and have real “jury appeal.” Liability can be substantial. A successful plaintiff is Denise M. Keyser is a partner at not limited simply to economic damages such as back pay, Ballard Spahr LLP in Cherry Hill, “front pay” and lost benefits. Under ACA, a successful re- bios New Jersey. She has 30 years of taliation plaintiff, in addition to these damages, is entitled to experience representing national, reinstatement and may recover his or her attorney fees and 12

<< regional and locally based businesses costs. in labor and employment matters including Thus, as 2014 approaches, employers, insurance carriers whistleblower/retaliation lawsuits under various and group health plans must be prepared for ACA whistle- state and federal laws, traditional labor law (such blower claims and should implement policies now that will as collective bargaining and arbitrations), OSHA, minimize the potential for significant liability down the ERISA, wage and hour, wrongful discharge, road. discrimination management training, executive compensation and affirmative action. Keyser holds Endnotes

a B.A. degree from State University of New York at 1. 29 U.S.C. §660(c). Stony Brook and earned a J.D. degree from the 2. 18 U.S.C. §1514A. 3. 12 U.S.C. §5567. University of Pennsylvania Law School. 4. 15 U.S.C. §2651. Mark F. Kowal is an associate in the 5. 49 U.S.C. §30171. 6. 42 U.S.C. §18001 et seq. Labor and Employment Group at 7. U.S. Equal Employment Opportunity Commission Charge Statistics Ballard Spahr LLP in Cherry Hill, FY 1997 Through FY 2012, available at www.eeoc.gov/eeoc/statistics/ enforcement/charges.cfm, last visited April 2, 2013. New Jersey and focuses his practice 8. Employment Practice Liability: Jury Award Trends and Statistics (2012-13 Ed.). on defense of employment discrimi- 9. Procedures for the Handling of Retaliation Complaints under Sec- nation and retaliation claims. He earned a B.S. tion 1558 of the Affordable Care Act, Fed. Reg. 78, 25 (Feb. 6, 2013) (to be codified at 29 C.F.R. pt.1986). degree from the College of New Jersey and a J.D. 10. 667 F.3d 837 (7th Cir. 2012). degree from Rutgers, the State University of New 11. 371 Fed. Appx. 514 (5th Cir. Mar. 2010) and 602 F.3d 320 (5th Cir. 2010). Jersey School of Law. 12. See the Patient Protection and Affordable Care Act, Pub. L. No. 111- 148 §1558 (2010); see also 21 U.S.C. §218C; see also 15 U.S.C. §2087(b).

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