Benefits & Long-Term Care
Donnelly v. Greenburgh Central School District, a recent federal court decision, addresses one of the core eligibility issues under the Federal Family & Medical Leave Act (FMLA).
The court focused on what hours must be counted toward the 1,250 hours of actual work when determining whether an employee is eligible for leave under the FMLA leave. In particular, the court focused on counting work from home or away from the workplace. The former high school teacher alleged that he was denied tenure in retaliation for taking FMLA leave. The district defended by arguing that Donnelly was not eligible for FMLA leave because he had not worked at least 1,250 hours during the previous 12 months.
The district relied on the certificated collective bargaining agreement to calculate the number of hours Donnelly actually worked. The collective bargaining agreement provided that the maximum work day for a teacher was 7.5 hours, which is one hour longer than the school day. The district multiplied this number by the number of days Donnelly worked during the previous year and found that he worked 1,247 hours (only three hours shy of qualifying for FMLA leave).
Donnelly argued that he typically worked 1.5 hours before and after class and that additional time should be included in calculating his FMLA eligibility. A judge disagreed and relied upon the maximum work day in the collective bargaining agreement in finding that Donnelly was not eligible for FMLA leave because he could not produce reliable evidence showing that he actually worked 1.5 hours each day before and after class performing work that was integral to his teaching job. Accordingly, the judge dismissed his FMLA retaliation claim.
The Affordable Care Act (ACA) is considered the most significant, albeit poorly written, law that Congress has passed in the last 50 years. As regulators devise the details needed for the law to be fully implemented, unprecedented new administrative and compliance burdens are looming for employers. Independent Third Party Administrators (TPAs) have decades of experience guiding employers through the pitfalls of government rules and requirements. This expertise makes independent Third Party Administrators invaluable to employers trying to mitigate the impact of health care reform.
A Brief History Of The Third Party Administrator Industry
Most employee benefit plans are highly technical and difficult to administer. Those complexities gave birth to the Third Party Administrator industry.
While there are reports of a Third Party Administrator operating as early as 1933, the modern Third Party Administrator concept is rooted in servicing mostly pension plans codified in the 1946 Federal Taft-Hartley Act. Such plans are typically comprised of several employers whose employees belong to a single union.
By the late 1950s, there were also a few Third Party Administrators specializing in servicing medical plans sponsored by single employers. The industry boomed after the enactment of the Employee Retirement Income Security Act of 1974, as employers began exploring the option of self-funding when traditional insurance coverage failed to meet their cost expectations. Today, the administration of self-funded medical plans is the primary line of business for many independent Third Party Administrators.
Where May Care Occur?
The best policies pay for care in a nursing home, assisted living facility, or at home. Benefits are typically expressed in daily amounts, with a lifetime maximum. Some policies pay half as much per day for at-home care as for nursing home care. Others pay the same amount, or have a "pool of benefits" that can be used as needed.
Under What Conditions Will The Policy Begin Paying Benefits?
The policy should state the various conditions that must be met.
- The inability to perform two or three specific "activities of daily living" without help. These include bathing, dressing, eating, toileting and "transferring" or being able to move from place to place or between a bed and a chair.
- Cognitive impairment. Most policies cover stroke and Alzheimer's and Parkinson's disease, but other forms of mental incapacity may be excluded.
- Medical necessity, or certification by a doctor that long-term care is necessary.
What Events Must Occur Before The Policy Begins Paying Benefits?
- Some older policies require a hospital stay of at least three days before benefits can be paid. This requirement is very restrictive — you should avoid it.
- Most policies have a "waiting period" or "elimination" period. This is a period that begins when you first need long-term care and lasts as long as the policy provides. During the waiting period, the policy will not pay benefits. If you recover before the waiting period ends, the policy doesn't pay for expenses you incur during the waiting period. The policy pays only for expenses that occur after the waiting period is over, if you continue to need care. In general, the longer the waiting period, the lower the premium for the long-term care policy.
September's National Labor Relations Board (NLRB) order requiring the buyer of a California nursing home to pay approximately $1.25 million in backpay and interest, rehire 50 employees and recognize the seller's union reminds buyers of union-organized businesses of some of the significant risks of mishandling union-related obligations in merger and acquisition, bankruptcy and other corporate transactions under the National Labor Relations Act (NLRA) and other federal labor laws.
Buyer's Obligations To Honor Seller's Collective Bargaining Obligations
Under the National Labor Relations Act, new owners of a union facility that are "successors" of the seller generally must recognize and bargain with the existing union if "the bargaining unit remains unchanged and a majority of employees hired by the new employer were represented by a recently certified bargaining agent." See National Labor Relations Board v. Burns Sec. Servs., 406 U.S. 272, 281 (1972).
In assembling its workforce, a successor employer also generally "may not refuse to hire the predecessor's employees solely because they were represented by a union or to avoid having to recognize a union." U.S. Marine Corp., 293 National Labor Relations Board 669, 670 (1989), enfd., 944 F.2d 1305 (7th Cir. 1991).
Nasaky, Inc. National Labor Relations Board Order
September's National Labor Relations Board Order requires Nasaky, Inc., the buyer of the Yuba Skilled Nursing Center in Yuba City, California, to recognize and honor collective bargaining obligations that the seller Nazareth Enterprises owed before the sale and rehire and pay backpay and interest to make whole 50 of the seller's former employees who the National Labor Relations Board determined Nasaky, Inc. wrongfully refused to hire when it took over the facility from the prior owner, Nazareth Enterprises.
Before Nasaky, Inc. bought the nursing home, many of the employees at the nursing home were represented by the Service Employees International Union, United Healthcare Workers West (Union). After Nasaky, Inc. agreed to buy the facility but before it took control of its operations, Nasaky, Inc. advertised in the media for new workers to staff the facility and told existing employees at the facility that they must reapply to have a chance of keeping their jobs under the new ownership.
When Nasaky, Inc. took operating control of the facility, facility operations continued as before with the same patients receiving the same services. The main difference was the workforce. The new staff included 90 employees in erstwhile bargaining unit positions, of which forty were former employees of the predecessor employer and fifty were newcomers. Nasaky, Inc. then took the position that the change in the workforce excused it from responsibility for recognizing or bargaining with the union or honoring the collective bargaining agreement between the union and seller Nazareth Enterprises.
When the union demanded that Nasaky, Inc. recognize the union and honor the union's collective bargaining agreement with Nazareth Enterprises, Nasaky, Inc. refused. Instead, Nasaky, Inc. notified the union that it would not allow the union on its premises, would not honor the union's collective bargaining agreement with the seller, and did not accept any of the predecessor's terms and conditions of employment. The union then filed charges with the National Labor Relations Board, charging that Nazareth Enterprises had breached its obligations as a successor under the National Labor Relations Act.
After National Labor Relations Board Regional Director Joseph F. Frankl agreed and issued a complaint, California Administrative Law Judge Gerald Etchingham found all the allegations true based on a two-day hearing. He rejected all of Nasaky's explanations for why it declined to hire most of those who had worked for the previous employer. See the Administrative Law Judge Decision. Since Nasaky, Inc did not file exceptions, the National Labor Relations Board ordered Nasaky, Inc. immediately to recognize and bargain with the union, hire the former employees and make them whole. The amount of backpay and interest is expected to approximate $1.25 million.
This is Part 5 of a five-part series on legal barriers to implementing international providers into Medical Provider Networks for workers' compensation. Previous articles in the series can be found here: Part 1, Part 2, Part 3, and Part 4.
Medical Malpractice And Liability Laws
One major criticism of medical tourism is the lack of legal remedy for patients claiming injury from medical malpractice.91 Medical malpractice and liability laws in foreign countries are not as strict as laws in the U.S.92 Awards for malpractice are generally not as generous either as those in the U.S.93 Physicians overseas do not typically have the same amount of malpractice insurance as their American counterparts.94 And the threshold for determining malpractice is higher outside the U.S.95 Limited recourse through the court systems of many countries is a problem, and the right to sue may not exist for injured patients.96 In India, even though the court system is similar to that in the U.S., medical malpractice awards are rare and never reach the multi-million dollar amount common in U.S. court systems.97
Before recognizing a suit, an American court must have personal jurisdiction over a foreign provider.98 The issue of personal jurisdiction over the foreign provider is a difficult burden for anyone initiating a suit.99 U.S. courts are reluctant to assert personal jurisdiction over physicians who are not residents of the U.S. and do not practice in the forum state.100 Minimum contacts sufficient to exercise personal jurisdiction could be difficult to establish over a physician who performed a harmful procedure outside of the forum state.101 If a U.S. court does find evidence to support personal jurisdiction, the case could be dismissed on the grounds of forum no conveniens (not suitable to the forum).102 If the case is not dismissed, then choice of law conflicts arises.103 104 If a court recognizes a valid claim against a defendant, it is likely the defendant will be successful challenging the location of the suit.105 Most jurisdictions would apply the laws of the country where the malpractice occurred, decreasing the likelihood of a finding of malpractice, and a reduction of damages.106
Patient Privacy And Medical Record Laws (Including HIPAA)
In recent years, the U.S. health care industry has outsourced the processing and interpretation of x-rays and other medical records to countries such as India,107 where the data entry costs are less than half of those in the U.S.108 Half of the $20 billion medical transcription industry is outsourced.109 This is due to the fact that information technology is not a core competency of the health care industry and has proven itself to be a prime candidate for outsourcing. Other tasks such as billing, coding, data-clearing, claims processing, and electronic records data processing and storage also are outsourced.110
One example of a task that is outsourced to India, and that pertains to the workers' compensation industry is the outsourcing of the initial processing of medical bills for health care claims that are later determined to be workers compensation claims. A company this author had contact with in 2008 conducts subrogation recovery on those medical bills paid by their health care clients when injured workers present their employer's health care insurance card at time of treatment, and does not inform staff that he was injured on the job. The provider bills the health insurer, rather than his employer's workers' compensation carrier. The subrogation company, working on a pilot project for the NYS Workers' Compensation Board under the Health Insurers' Match Program (HIMP), outsources the initial processing of the medical bills for health care claims to an office they have contracted with in Gurgaon, India.
Since much of the current business of medical tourism is conducted through facilitators, or medical tourism brokers, as mentioned in Part 1 of this series, they must conform to national or state legislation that governs the privacy and confidentiality of medical records and patient information. The locations in which they are located should bind them to the laws of that jurisdiction, and therefore, they would have to conform to the Health Insurance Portability and Accountability Act (HIPAA) regarding privacy of medical records.111
HIPAA privacy applies to a limited subset of health care entities.112 Those "covered entities" include health plans, health care providers, and health care clearinghouses that process nonstandard information. "Business associates" of covered entities are organizations that perform certain functions or activities on behalf of, or provide certain services to, a covered entity. Examples of functions or activities include claims processing, data analysis, utilization review, and billing. Their services are limited to legal, actuarial, accounting, consulting, data aggregation, management, administrative, accreditation, or financial services.113
HIPAA rules are strict, and health plans in the U.S. must follow them even for services provided abroad. However, they are not applicable to foreign hospitals and doctors. Business Associate agreements under HIPAA should be placed with offshore vendors, and vendors should have their contracts with hospitals and other providers conform to HIPAA standards.114
Medicare and Social Security are in deep trouble — deep trouble. The nominal national debt is puny compared to the unfunded liabilities in Medicare and Social Security. How does $16T — yes "T" as in trillion — compare to $86T? There is a good article in the Wall Street Journal written by Chris Cox and Bill Archer. Click here to read the full article.
Historically, the government has had success in transferring these types of liabilities to the private sector. One way was to deliberately underpay doctors and hospitals under Medicare with the full expectation that those shortfalls would be absorbed by private payers. In my career I had discussions with the Centers for Medicare and Medicaid Services about that very thing. One Centers for Medicare and Medicaid Services official admitted that was part of their strategy. He also said that would continue as long as private payers were willing to absorb the Medicare underpayments to providers. That has worked so far.
Another example was when the government declared that private group plans would be primary over Medicare for workers over age 65. For those of you too young to remember, that was not always the case.
Citing "knowing, deliberate and intentional" violations of federal wage and hour law, the Labor Department is suing Boston Hides and Furs Ltd. and company officials seeking at least $500,000 in back wages and an equal amount in liquidated damages for allegedly underpaying employees of the Chelsea wholesale animal hide business. See Solis v. Boston Hides & Furs Ltd., Anthony Andreottola, Angelo Andreottola and Antoinetta Andreottola Parisi, CV-1:12-CV-11997-MLW. The suit illustrates the significant liability that companies or their owners or management risk by failing to properly pay workers covered by the Fair Labor Standards Act and meet other Fair Labor Standards Act requirements.
Fair Labor Standards Act Wage & Hour Laws Big Business Responsibility
The Fair Labor Standards Act generally requires that an employer pay each covered employee at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates for every hour they work beyond 40 per week. When the state minimum wage is higher than the federally mandated wage, and employees work more than 40 hours in a week calculated in accordance with applicable state laws, employees paid at the minimum permissible level are entitled to overtime compensation based on the higher state minimum wage. Time credited may be determined differently under state law versus the Fair Labor Standards Act. Employers must ensure proper crediting, recordkeeping and payment in time to meet both applicable requirements.
The Fair Labor Standards Act also requires employers to maintain accurate records of covered employees' wages, hours and other conditions of employment and prohibits employers from retaliating against employees who exercise their rights under the law. Special rules also may apply to the employment of children or other special populations.
The rules generally establish a legal presumption that a worker performing services is working as a covered employee of the recipient. Unfortunately, many businesses that receive services often unintentionally incur liability because they ill-advisedly misclassify workers as performing services as independent contractors, salaried employees or otherwise exempt by failing to recognize the implications of this presumption. The presumption that a worker is a covered employee generally means that an employer that treats a worker as exempt bears the burden of proving that a worker is not a covered employee and of keeping accurate records to show that it has properly tracked the hours of and paid each covered employee.
Do you honestly believe that individuals deserve the right and responsibility to make their own choices about health care? Before you answer, remember, the party in charge of spending the money becomes the ultimate decision-maker. When it comes right down to it, most people say they support patient rights, but only in the context of someone else paying the bill.
Here's why those two issues cannot be separated:
When discussing health savings accounts with employers, I often hear concern that connecting financial factors to health decisions will lead to employees making bad choices (mostly by not getting the care they need). I hear a widespread belief that asking people to take financial accountability for healthcare produces negative outcomes, not positive ones.
Rarely do I hear policy-makers acknowledge that the opposite is also true. Actually, when we remove financial accountability we actually expose people to risk because we encourage people to stay uninformed.1 Economists use the term "rational ignorance" to describe instances where the cost of becoming informed exceeds the perceived value and hence people remain rationally ignorant.
If you understand that all medical procedures — especially those done unnecessarily — contain inherent risk, then remaining uninformed increases the risk associated with healthcare decisions. (For a refresher on why more care is NOT better for patients, review the wonderful work of Fisher and colleagues.2 3)
(hint: the key to lower health care and absence costs isn't about health)
When medical and disability costs are high, conventional wisdom assumes there must be more illness driving up costs, right? But how much of total cost can we actually attribute to health status versus other factors?
Four components contribute to health and absence costs. It may surprise some readers to learn that health status is not as powerful a predictor of cost as one might expect. Research from nearly two million employees and their families across the US shows that a shockingly small amount of the variation in health care costs can be attributed to health status alone.
This article describes how each of four components independently influences cost when all the others are held constant. The first two components contributing to medical costs and absence involve "non-modifiable" costs that cannot easily be influenced or changed, while the second two parts involve costs we consider to be "modifiable."
The results come from a sophisticated statistical analysis of health and absence data, along with hundreds of other variables about the companies, workers and jobs (1).
Part I: Basic Needs And Bad Luck
Could health care and disability costs actually go to zero if we had a very young, generally healthy population? Clearly no. To explore the possibility though, we constructed a model that would approximate such a population. We selected characteristics that correlate with lower costs. We took a young (late 20s), mostly male, single (not having children), highly-educated, highly-paid workforce, in a region known for low-cost care, with all benefit policies and business practices aligned for optimal use of benefits.
Can you guess what it would cost to cover the health care spending of this virtually risk-free group? Our data say it is somewhere near $1,300 on average per year. Some costs would be associated with basic needs and some would be the result of misfortune due to genetics or accidents. As you might expect, the majority in this population would have very small expenditures, with a few high outliers. One can debate whether this number is valid because it is virtually impossible to have a population this young, highly-paid, in a specific region, and with a specific gender and marital-status profile. However, it was never intended to be an achievable situation, just the lowest imaginable.
So, the lowest imaginable total for Part I: $1,300 per adult person per year.
President Obama's declaration on October 1, 2012 of October as National Disability Employment Awareness Month reminds business that U.S. businesses and their leaders need to tighten their disability discrimination risk management and compliance in light of the Obama Administration's emphasis on aggressively interpreting and enforcing disability discrimination laws, rising private plaintiff lawsuits and other recent regulatory and judicial changes.
With the Administration expected to step up further its already substantial educational outreach to the disabled and their advocates, U.S. employers should brace for this month's celebration to fuel even more disability discrimination claims and other activity by the disabled and their activists.
Since taking office, President Obama has made enforcing and expanding the rights of the disabled in employment and other areas a leading priority. In his proclamation, President Obama reaffirmed his often stated commitment to the aggressive enforcement of disability laws and other efforts to promote opportunities for disabled individuals, stating "[My Administration remains committed to helping our businesses, schools, and communities support our entire workforce. To meet this challenge,... we are striving to make it easier to get and keep those jobs by improving compliance with Section 508 of the Rehabilitation Act."
As the administration marks the month, U.S. employers and other business leaders can expect the Obama Administration will be stepping up its already aggressive outreach to disabled Americans to promote awareness of their disability law rights and tools for asserting and enforcing these rights. See, e.g. October Is National Disability Employment Awareness Month (NDEAM).
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Dave Dias
David Axene
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Mark Webb