Last week, in Meeks v. Allen Memorial Hospital, a state court in Iowa approved a $2 million settlement in a race discrimination class action against an Iowa hospital. This case is yet another reminder that health care employers must consider both federal and state laws when assessing their employment practices.

The named plaintiff in the case, Robyn Meeks, is an African-American nurse who had previously worked for Allen Memorial Hospital until she resigned in 2003 after a failed mediation in a race discrimination case she filed with the Equal Employment Opportunity Commission (EEOC) against the hospital.

Then, in 2010, Meeks filed suit in state court under the Iowa Civil Rights Act, rather than Title VII of the Civil Rights Act of 1964, on behalf of African-American applicants and employees who she claimed were denied employment and promotions due to a pattern and practice of race discrimination. In support of her claim, Meeks alleged that she applied for a number of nursing jobs with Allen Hospital starting in 2008 and was rejected for each position. Meeks further alleged that she was asked during one interview whether she had considered applying for a position with another hospital. Meeks claimed that the applicants who were ultimately selected for the available positions were less-qualified white applicants.

The hospital denied any wrongdoing but nevertheless agreed to settle the class action for $2 million. As part of the settlement, Meeks was reinstated with back pay. Additionally, the hospital agreed to review some 14,000 job applications to determine if race was a factor in any of the employment decisions.

This case serves as yet another reminder that healthcare employers must consider both federal and state laws when assessing their employment practices.  A number of states place additional employment requirements on employers while creating additional protections for employees that are not available under Title VII or other federal laws.  Additionally, even where the state substantive law is essentially the same as its federal counterpart, state courts may have class action procedures that are more hospitable to class action plaintiffs, and potential damages may be greater, creating a further incentive for plaintiffs to pursue relief under state statutes.  Accordingly, it is critical for healthcare employers to consider both federal and state laws when developing employment policies and making employment decisions based on those policies.

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In D.R. Horton, Inc., the National Labor Relations Board (“Board”) last week ruled that arbitration agreements imposed as a condition of employment prohibiting employees from filing class action claims violate the National Labor Relations Act (“NLRA”). It found that filing a class or collective action claim is protected activity under Section 7 of the NLRA, which says employees have the right to engage in concerted activities for “mutual aid and protection,” and that an arbitration agreement employees are required to sign as a condition of employment that waives an employee’s right to bring a class action in both arbitration and court violates the employee’s Section 7 rights.

For health care employers that were looking to last year’s Supreme Court ruling in AT&T Mobility v. Concepcion as unchallenged support for mandatory employment arbitration agreements with class action waivers, this NLRB ruling is a step the other way. It remains to be seen how this will play out.  Hospital employers may yet find that arbitration agreements required as a condition of employment are a pathway to avoiding exposure in misclassification and off-the-clock overtime cases, and other potential class action claims in heavily-populated job titles that include individuals covered as “employees” under the NLRA, but likely will have to wait to see if the Federal Arbitration Act trumps the NLRA or vice–versa.

In the meantime, this will be a year in which effectiveness and status of workplace arbitration agreements, particularly as to class issues, will be in flux. For more information, see Littler’s ASAP on this recent case.

Healthcare employees who object to providing patient care for women seeking an abortion have long presented a thorny issue for healthcare employers. A recent settlement in the United States District Court for the District of New Jersey is a reminder that this issue continues to raise tricky questions. Nonetheless, a careful employer can successfully navigate these issues and avoid common pit-falls.

Hospitals that receive federal funds are prohibited from requiring employees to participate in abortions if it “would be contrary to [their] religious beliefs or moral convictions.” 42 U.S.C. § 300a-7. In Danquah v. University of Medicine & Dentistry of New Jersey (UMDNJ), a group of nurses sought to enforce this prohibition through an injunction after UMDNJ changed its policies in September 2011, requiring all nurses to assist in termination-of-pregnancy procedures. The parties entered into a settlement that allows the objecting nurses to refrain from participating in non-emergency care of patients seeking or obtaining an abortion. While all hospitals and medical facilities that receive federal funds through the Public Health Service Act, the Community Mental Health Services Act, or the Developmental Disabilities Services and Facility Act should be mindful of this prohibition, medical providers that do not receive federal funds should also beware of potential pit-falls when an employee objects to participating in abortion-related medical care.

Two more cases have been added to the growing list of FLSA collective actions against large healthcare systems that have been either decertified or denied certification, granting the holiday wishes of two major healthcare systems in Pennsylvania. In Kuznyetsov v. West Penn Allegheny Health System, Inc., Judge Ambrose of the U.S. District Court for the Western District of Pennsylvania decertified a class of 824 hospital employees who worked in 1,174 different departments at 142 different locations with 312 different supervisors. In Camesi v. University of Pittsburgh Medical Center, Judge Bissoon, of the same district court, likewise granted  a motion to decertify a class of plaintiffs in 500 different job titles working in over 1,000 different hospital departments. The Kuznyetsov and Camesidecisions, issued on the same day, are strikingly similar in their analyses and conclusions – and an all-around win for hospital employers.

In both cases the plaintiffs, who included nurses, technicians, secretaries, couriers, maintenance workers, dishwashers, and many others, alleged the hospitals violated the FLSA by automatically deducting 30-minute meal periods from their wages, regardless of whether they worked through the unpaid meal periods. In granting the motions for decertification, and denying plaintiffs’ motions for certification, both courts emphasized the “extremely wide variety” and the “plethora of differences” in the employees’ work settings, as well as individual supervisors’ discretion to dictate how meal breaks would be taken and paid.

The Kuznyetsov and Camesi classes had been conditionally certified under the “lenient” first stage of FLSA class certification, in which the courts relied heavily on affidavits and allegations of common policies. After discovery had been obtained from a sample of the plaintiffs, and the courts proceeded to the “more rigorous” second stage of the FLSA class certification process, the evidence in both cases revealed significant dissimilarities among the plaintiffs. For example, the plaintiffs worked overtime with varying frequency, some plaintiffs received scheduled meal periods while others did not, and they reported and were paid for missed meal periods using a variety of different methods.

These differences would have required the courts to examine each individual’s particular circumstances to determine liability. Proceeding as a collective action would have denied the hospitals an opportunity to develop individualized defenses. Accordingly, both courts concluded that collective action treatment would not serve the interests of fairness or efficiency.

At the heart of both decisions was the decentralized implementation of meal break policies in different departments by different supervisors. Although the hospitals had a common policy of automatic deductions for meal breaks (which had ostensibly justified conditional certification), supervisors had discretion to implement these policies according to business needs. As Judge Ambrose explained:

“[W]hile it is true that there is a Meal Break Deduction Policy and all employees were subject to an automatic deduction that could be cancelled, the application and implementation of the policy was not standard by any means. It differed based on a number of factors, not the least of which was based on the nature of jobs performed by Plaintiffs, the departments in which the Plaintiffs worked, the supervisors’ procedures, and the shifts the Plaintiffs worked.”

Both judges cited a “growing consensus” of federal courts rejecting collective action treatment of automatic meal deductions, citing a number of cases previously discussed on this blog (see here and here), as well as two cases in which Littler successfully represented the defendants, Blaney v. Charlotte-Mecklenburg Hosp. Auth., and Saleen v. Waste Mgmt., Inc. 

Insights from these cases will be useful both for litigation strategy and preventative planning. For example, both cases emphasized high rates of withdrawal or non-participation when discovery was requested of plaintiffs. In Kuznyetsov, the sampling was to include 75 opt-in plaintiffs, but only 18 opt-ins actually participated. In Camesi, the parties also agreed to conduct discovery regarding 75 opt-ins. After the initial selection, 35 withdrew or were dismissed for non-participation. Of the replacements, 33 withdrew or were dismissed. In the end, only 52 opt-ins participated. Despite the relatively small samples, there was sufficient evidence of dissimilarities among the plaintiffs to grant decertification in both cases.

On the planning side, in Camesi, Judge Bissoon specifically noted the hospitals’ “significant efforts to advise employees and managers regarding the substance of the meal break policies and Defendants’ efforts to monitor and ensure compliance.” Employees were trained and educated about the meal break policies and the process for cancelling meal break deductions and reporting time worked during meal breaks. Not only did this enable the hospitals to rebut the plaintiffs’ assertions that the hospitals had “shirked” their FLSA obligations, but it also produced evidence that many plaintiffs had actually been paid for meal periods through the cancellation process.

While these decisions are cause for celebration, healthcare employers with automatic meal deduction policies should carefully evaluate the procedures in place for overriding deductions and reporting time worked during meal breaks, as well as their efforts to educate and train supervisors and employees about these procedures. Hospital and other healthcare employers should also evaluate state meal and rest break laws in their particular localities. 

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In what a spokesperson for the New York State Nurses Association (“NYSNA” or union) called a model for other New York City hospital contract negotiations, the NYSNA recently reached a four-year agreement with New York Presbyterian Hospital that includes an agreement to continue health benefits unchanged without employee contributions.

This part of the agreement contradicts an arbitrator’s award issued on June 20, 2011, that mandated new benefit plan options and provided for employee contributions for plans offered by the New York State Nurses Association Benefit Fund, the plans that provide health benefits for New York Presbyterian’s nurses and some 14,500 nurses employed at 40 hospitals and nursing homes in New York City and its vicinity. The arbitration was the result of a deadlock between the employer and union trustees of the NYSNA Benefit Fund.

In May 2010, the employer trustees, in light of what they saw as unprecedented cuts in revenue and noticeable changes in the nature of employer-provided benefits, initiated discussions to change and update benefit plan design and provide for employee contributions. The union trustees opposed the proposals, and, after mediation failed to break the deadlock, the parties submitted the issues to arbitration. The arbitrator’s award granted the employer trustees’ proposals for new plan designs and employee contributions.

Under the award, the premium sharing options were to go into effect on the effective date of the new collective bargaining agreements for the individual hospitals.

The New York Presbyterian Hospital agreement plainly ignores the arbitrator’s award and conflicts with the mandated changes. Apparently recognizing this, the agreement states that the health benefits in the settlement are subject to approval by the NYSNA Benefit Fund. The agreement also provides that if the provision is rejected, the employer has agreed to alternate approaches: either complying with the Fund’s contribution requirements and reimbursing employees or, if the Fund rejects that approach, providing benefits outside the Fund that maintain the level of benefits without employee contributions.

Thus, in the case of New York Presbyterian Hospital, the union managed to negotiate away the arbitration award that was ostensibly binding on the 40 hospitals and the union participants in the Fund.

It remains to be seen how the Fund trustees treat the New York Presbyterian Hospital agreement and whether the union will attempt, as they stated, to use the New York Presbyterian Hospital agreement as a model in other pending hospital negotiations, in effect negating the arbitration award.

St. Luke’s Roosevelt announced a settlement with the union averting a strike called for January 3. Interestingly, that settlement provided for employee contributions for healthcare coverage but also provided for year-end bonuses that may offset the employee contributions.

TRICARE is the federal government’s healthcare program for active duty and retired military members and their families. For many years, healthcare systems reasonably assumed that their subcontracts to provide services or benefits to federal employees under TRICARE would not invoke the jurisdiction of the Office of Federal Contract Compliance Programs (OFCCP), and thus would not mandate federal equal employment and affirmative action obligations. This assumption seemed particularly rational where the subcontract expressly provided that the healthcare system was not a federal contractor. In addition, the OFCCP’s own March 2003 directive stated that healthcare providers that have a relationship with participants in the Federal Employees Health Benefits Program (FEHBP) are not covered under OFCCP’s programs based solely on that relationship and thus are not subject to OFCCP’s federal contractor requirements.

According to a Michigan federal district court decision, Garlitz v. Alpena Regional Medical Center, a hospital may be liable for violations of the Americans with Disabilities Act (ADA), Title VII, and violation of privacy rights for withdrawing an employment offer to a medical technologist after she refused to answer a post-offer, preemployment questionnaire, directed only to females, about her sexual and reproductive history and plans for pregnancy. The questionnaire at issue was part of a medical screen conducted by a medical clinic retained by the hospital. The decision serves as an important reminder that employers need to be very careful when inquiring into medical or other private matters relating to applicants and employees. The decision also underscores the importance of monitoring third parties that are engaged to assess potential new hires or employees.

Plaintiff Shelly Garlitz applied for a job with Alpena Regional Medical Center, where she had previously worked for 12 years before leaving to complete school and work as a traveling medical technologist. Her performance reviews when she worked for the hospital had generally been positive. When she reapplied for a job she was offered a position subject to completion of a drug test and a medical examination. She was then sent by the hospital to HealthWise Medical Clinic, an independent clinic retained by the hospital to perform preemployment medical examinations. At the clinic, the plaintiff was asked to complete a medical history form that asked questions relating to, among other things, past pregnancies, planned future pregnancies, abortions, miscarriages, and contraception.

The plaintiff refused to answer the questions asserting they were not relevant to a preemployment physical. She was then given a brief examination by a nurse practitioner but told that she would not pass the medical examination if she did not complete all of the questions on the form. After the examination, the nurse practitioner informed the hospital that the plaintiff “had withheld information and I was concerned that she was withholding information about her health.”

The hospital sent the plaintiff a letter stating it was withdrawing its employment offer based on “preemployment guidelines and your denial [sic] to complete the requirements.” The plaintiff sued the hospital claiming that it violated the ADA  by asking her questions unrelated to her essential job functions in a preemployment medical examination; discriminated against her on the basis of sex in violation of Title VII because only women were required to respond to questions about sexual activity; and violated her constitutional right to privacy by inquiring into her private sexual life.

The hospital sought summary judgment on all of the claims, asserting that its withdrawal of the offer was solely due to the attitude the plaintiff demonstrated in her interactions with the hospital’s staff and the clinic.

First addressing the ADA claim, the court noted that the ADA prohibits employers from conducting a pre-offer medical examination or making pre-offer inquiries regarding disability status or the nature or severity of a disability. The court also recognized that once an employer has made a “real offer of employment,” the ADA permits an “employment entrance examination” that includes topics unrelated to job functions [though the ultimate employment decision must still be based on whether the employee can perform the essential functions of the job with or without reasonable accommodation]. However, for a job offer to be “real,” the employer must have evaluated all relevant non-medical information that it reasonably could have obtained and analyzed prior to making the offer. In this case, the court concluded, the hospital may not have obtained all reasonably available non-medical information regarding the plaintiff’s attitude before extending the conditional offer. Thus, the court held, there was a question of fact as to whether a “real offer” had been made to the plaintiff and the hospital’s actions violated the ADA.

The court next turned to the Title VII claim. According to the court, the hospital did not contest that the clinic’s form was facially discriminatory. Instead, it argued that hospital was not responsible for the questions posed in the clinic’s form. The court found this argument presented a “closer question,” but nevertheless held that there was a genuine issue of material fact as to whether clinic was the hospital’s agent for purposes of the preemployment screen.

Finally, the court denied summary judgment to the hospital on the plaintiff’s claim for violation of her right to privacy. The court rejected the defendant’s argument that public employers may inquire about an employee’s private sexual life if the inquiry is job related, noting dryly that the hospital failed to explain how its inquiry into the plaintiff’s private sexual life is “related” to the job she applied for.

In sum, although healthcare employers may have special requirements when hiring employees, based on the legitimate needs of the job, it is important to keep in mind the many federal and state laws that apply to the hiring process, selection criteria, and employment decisions.

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Although the U.S. District Court for the Northern District of Illinois conditionally certified a class of Utilization Review Case Managers who claimed they were misclassified as exempt employees, the court in Babych v. Psychiatric Solutions, Inc. et al. limited the class to employees at a single facility in Streamwood, Illinois where the two named plaintiffs worked. The ruling was particularly significant, as later court filings indicated that there are only four additional potential plaintiffs.

At the time the lawsuit was filed, Psychiatric Solutions, Inc. owned 95 inpatient behavioral healthcare facilities throughout the U.S., Puerto Rico, and the U.S. Virgin Islands. The plaintiffs sought nationwide certification of a class of “all current and former employees of Psychiatric Solutions, Inc. during the statutory period who were Utilization Review Case Managers, Utilization Review Case Specialists, or who held a similarly titled position and job duties,” on the theory that the misclassification of these positions was company-wide. The court refused to grant such a broad request, finding that none of the evidence plaintiffs submitted “demonstrated that employees with similar job titles worked more than 40 hours per week at other facilities or were classified as exempt under the FLSA. Nor has Babych cited testimony of [the employer’s] managers or directors that would indicate that every PSI facility had a common policy of misclassification.”

Although the court’s adherence to a lenient standard for conditional certification may continue to incentivize plaintiffs’ attorneys to pursue FLSA collective actions against large healthcare systems, this decision is a reflection of the willingness of some courts to recognize that, in the absence of specific evidence to the contrary, employees of large employers with multiple facilities cannot be assumed to be similarly situated. The decision is also a useful reminder of the importance for defense counsel of focusing the court’s attention on the differences in policies and practices in multi-facility institutions, as well as the differences between the named plaintiffs and others in a proposed class.

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As we recently reported

In just the past few months, a number of cases have been filed against hospitals and other health care employers by whistleblowers at all organizational levels alleging they were retaliated against for complaining about or reporting issues. Most recently, for instance, the U.S. Department of Labor filed suit on behalf of a receptionist against a medical clinic that allegedly fired her because she had complained to the Occupational Safety and Health Administration (OSHA) about unsafe working conditions at the clinic.

In another recent case, Zawislak v. Memorial Hermann Hospital System, a federal district court denied a hospital’s motion to dismiss a lawsuit by a physician who claimed his medical staff privileges were revoked in retaliation for submitting reports to the Emergency Department Medical Director and the Root Cause Analysis Committee that on-call physicians at the hospital transferred patients before providing stabilizing treatment. Most strikingly, the court rejected the hospital’s argument that the federal Health Care Quality Improvement Act (HCQIA) shielded it from liability for its decision, which was reached pursuant to its professional review process. The court found that the physician’s allegations that his privileges were terminated in retaliation for his reports were sufficient to suggest that he could rebut the presumption that “the review committee had a reasonable belief that terminating his privileges was warranted by the facts known.” Such reasonable belief is a required element for immunity under the HCQIA.

Notably, however, many of the whistleblower retaliation cases against healthcare employers assert claims for retaliation other than termination of employment or staff privileges. For example, a neurosurgeon at New York’s Upstate Medical University filed a lawsuit claiming he and his wife were harassed and intimidated by his employer after it learned he had spoken to several newspaper reporters to express his concerns about medical practices at Upstate. According to the lawsuit the doctor and his wife were confronted by two hospital investigators waiting in a parked car outside their home, and the next day the investigators telephoned his wife, telling her that her husband was in “big trouble” and asking her to cooperate with them against him.

Similarly, a physician and director of Hi-Desert Memorial Health Care District filed suit against the hospital district for intimidation and harassment allegedly in retaliation for complaining about poor patient care. He claimed he was “cut off and intimidated” from communicating with the Medical Executive Committee members or staff administrators, that the Committee reported him to the California Medical Board “with the intention to seek a revocation of [his] medical license,” he was subjected to “unreasonable restrictions” that kept him from performing some procedures, and his emergency room surgical coverage schedule was cut, resulting in financial hardship.

A breast cancer surgeon filed suit against the University of New Mexico (UNM) claiming that after six years at UNM’s Cancer Research and Treatment Center, where she headed a subcommittee that reviewed treatment and served on an internal “breast tumor board,” she was demoted and her salary was cut 15 percent after she allegedly complained of poor patient care. When she refused to renew her contract on these terms, she was terminated.

Whistleblower retaliation cases may be costly in terms of the expense of resolving them as well as the adverse publicity they engender. For instance, the Winkler County Memorial Hospital, a small county owned hospital in Winkler, Texas, generated a story in newspapers across the country, including the New York Times, when it paid $750,000 to two nurses who were fired and criminally prosecuted for harassment after filing medical ethics complaints against a hospital physician with the state’s medical board. The nurses had filed the medical board complaint anonymously, but the physician and a complicit hospital administrator identified them as the whistleblowers with assistance from the County Sheriff. The sheriff, who was the physician’s friend and a patient, used his authority as a law enforcement official to pierce the confidentiality of the medical board complaint. The sheriff, physician and hospital administrator then influenced the Winkler County Prosecutor to wrongfully initiate criminal prosecution of the whistleblowing nurses. In addition to the civil whistleblower retaliation claims settled by the hospital, the physician and the hospital administrator, as well as the sheriff and the county prosecutor, were charged and prosecuted on a variety of criminal charges stemming from the retaliatory actions taken against the nurses. The hospital administrator was fined and sentenced to serve time in jail, and just this month the physician plead guilty and lost his medical license in addition to being fined and serving time in jail. The nurses, for their part, were quickly acquitted and/or had the harassment charges against them withdrawn.

Regardless of the merits of the underlying claims, these types of cases are often time consuming and costly to defend. There is often a great deal of factual and legal dispute about what constitutes “protected activity” under the whistleblower statutes and regulations, and whether there was a causal connection between the “protected activity” and the allegedly adverse employment action, not to mention the factual disputes regarding whether any of the alleged adverse action actually occurred. Particularly during economic downturns, changes in compensation, employment status, or the work environment create fertile ground for retaliation lawsuits.

What can healthcare employers do to reduce the risk of such claims? First and foremost, managers at all levels, from top leadership on down, should understand that retaliation against whistleblowers can take many forms – not just termination – and is strictly forbidden. This message can be delivered not only by a clearly worded policy, but also by specific and targeted training that is periodically reinforced.

Second, employees and others who work or do business with a health care provider should be encouraged to report issues internally. To this end, health care employers should consider establishing a well-publicized, user-friendly internal reporting system. After all, it is far better to learn of problems internally first so they can be investigated, addressed and remedied, if necessary, rather than learning of them through a government agency. Also, evidence that an easily accessible complaint system was available, but no internal complaint was made by the alleged whistleblower may serve as a defense in the event of a whistleblower retaliation case. When complaints are filed they should be taken seriously, and investigated by trained compliance officers, HR personnel or legal counsel in a manner appropriate to the nature of the complaint. The complaint, the investigation, and any remedial action should be carefully documented, with supporting evidence and steps taken to maintain appropriate confidentiality and privilege. If no problems are found this evidence may be useful to prove that the whistleblower’s allegations were taken seriously, and that the health care company had no reason or motive to retaliate. In addition, in the event of an outside investigation by a government regulatory or law enforcement agency, the thoroughness and independence of the health care company’s internal investigation, and the effectiveness of its self-critical analysis, will be given substantial weight by government agencies in assessing corporate culpability. If problems are uncovered, evidence of quick and effective remedial measures taken will also be very helpful.

Third, managers should be trained to conduct performance evaluations objectively and to apply discipline consistently, and the basis for employment decisions ought to be carefully and accurately documented. Among other things such documentation can be used to refute allegations of retaliatory motive or intent in the event of a claim or lawsuit. Health care employers should also consider requiring managers to review all significant employment decisions with HR before taking action.

In light of the recent proliferation of whistleblower retaliation claims against health care employers, it is wise for employers to consider reviewing their policies, procedures and training programs now to reduce the likelihood of claims later.

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