Tag Archives: ada

Dare to Be Different: New Ways to Communicate With Customers

Two insurance industry surveys for 2014, released by J.D. Powers (Auto Purchase and Property Claims), conclude that timely and relevant communication is the dominant factor in customer satisfaction. The studies show the intrinsic value of communication in building trust with customers, resulting in retention and in growth.Roughly 45% of insurers cited customer-experience levers as top business goals in research on customer communication released by Forrester in November 2012. So we would expect insurers to tap into the opportunity to engage customers in ways that drive renewals, deepening relationships and brand affinity. Obvious, right?The reality is a far cry from this.Instead, insurers have been focusing on the very obvious savings from the reduced need to print and mail the communication documents, by pushing the customers to digital channels.Here comes the second paradox.You would hope that customers are now far more engaged through the digital platform. But a survey conducted by Nationwide Insurance reveals that 60% of customers have not read their policy in full in a year, and only one in five customers believed that they completely understood their policy. The top two reasons cited are that documents are too long and too complicated.

The Consumer Bill of Rights in Texas is nine pages long — even those who receive it won’t read the full document. For most, buying insurance is like buying a car without knowing if it will accommodate your two wonderful kids, wife, the bags from your normal shopping trips and a stroller.

Nearly 85% of communications with a customer after a sale are in categories covered by regulation: contracts, endorsements, notices, amendments, bills and statements, notifications, follow up notices, reminders, etc. According to the Forrester study, two out of three insurers are worried about avoiding noncompliance rather than focusing on communications that can deliver far more measurable returns from better customer engagement.

Meanwhile, more than half of customers who file a claim don’t understand how to do so and can have a bad and emotional experience, while those who don’t file a claim are never given a way to visualize the protection they enjoy.

Are insurers too focused on regulatory issues and not engaged enough with the customers whose hard-earned money they hope to keep receiving? Can insurers build trust with customers and sell more and faster?

Our research suggests that some insurers have taken the lead and have implemented communication capabilities that are delivering benefits in silos. But the industry as a whole has not yet unlocked the value of service communication to generate lower-cost relationships and build trust faster, replacing expensive strategies led by marketing. We believe the starting point is to have a good understanding of contact strategy and its nuances, mapped to what customer value at different stages.

Here is what insurers can do to go from Regulation to ROI.

  • Produce a blueprint of customer communication touch-points across the product lifecycle. The important factors are: business process, event, frequency, emotion, customer segment, channel and interaction sequence. It’s crucial to define the right performance indicators and establish a tracking mechanism. The blueprint will unlock the value of relationship through continuous engagement. Today, communications operations mainly take a “stay out of jail” approach.
  • Make communication proactive, not reactive. Several surveys show that timely communication can limit escalation to 6% of customer issues, whereas delays and unclear communications increase complains by as much as a factor of three. Billing presents the best opportunity to engage customers, through snippets of communication before and after the billing transaction. The same approach can be used to prepare customers for changes in premiums, rather than going through several painful calls around renewals that erode trust. For example, Allstate communicates “reason for premium change,” which reduced the call volume and cost of contact drastically.
  • Make a meaningful channel shift — Of the increasing number of customers who own a smartphone, 90% want the option of buying and obtaining service through mobile apps. The importance of mobile is demonstrated by the fact that 95% of text messages are opened within seven minutes of being received; insurers should look into using push notification through this low-cost channel. To avoid customer pushback about SMS cost, insurers should look for free-to-end-user (FTEU) SMS, which is cheaper than print-and-mail. An integrated communication center should be developed that spans across digital channels and other communication options, including paper. Investigate the possibilities of social media. Include capabilities for e-signatures.
  • Provide a digital policy with intuitive drilldown into all features. Mobile policy download, catastrophe alerts, billing alerts, claims alerts, mobile ID cards and a digital locker all drive up channel adoption and communication effectiveness, and there is opportunity to go much further in treating a policy as a mobile app.
  • Produce creative content. AT&T’s smart video bill directly addresses the population that wants information on-the-go. Smart video is customized for individual customers and helps in visualization of benefits. Allstate’s “Mayhem” advertisement provides this sort of visualization, albeit from a marketing perspective. The same investment can easily be used to address the accessibility requirements for ADA (Americans with Disability Act). GEICO’s coverage coach is an animated tool used for educating the customers as to what coverage can be right for them. Imagine if this visual approach was applied to claims, at the filing stage; it would help customers understand their coverage and reduce complaints. Progressive, GEICO and USAA send periodic news through print and emails that are relevant to the season; for example, something explaining ways to protect a boat or motorcycle during winter. This communication improves customer engagement across the life cycle.
  • Leverage emerging approaches, such as in-car-entertainment, wearable media and the “connected home.” Gamification — using techniques like those for Angry Birds, rather than like a traditional insurance policy — is another emerging approach that can be used. The customer can also be provided virtual assistance to simulate an accident scene, which will help with an assessment while greatly reducing fraud. Gamification should be used to provide customers a visualization of the claims process and the roles they play, which will improve the experience and increase retention.
  • Understand the customers better – Most insurers deliver marketing messages often but do not see a corresponding lift in their results. This is simply because they aren’t taking advantage of today’s data and analytic technology to understand customers as well as they could and to deliver more-individualized, relevant messages. Effective use of all available information about the customer is the cornerstone of this approach. Retailers tend to lead the pack here; insurers can learn from them. Try to sell when the customer is happy; if he is not happy, then create happiness in him and sell. This approach has delivered proven results.

With evolving customer needs and emerging channel and content technologies, insurers have a great opportunity to improve their communication to build trust with their customers, deliver much better returns on their sales efforts and contain most preventable costs, while providing an experience that customers value. Are you up for the challenge?

New AMA Classification Of Obesity: How It Affects Workers’ Compensation And Mandatory Reporting

On June 16, 2013, the American Medical Association voted to declare obesity a disease rather than a comorbidity factor. This change in classification will affect 78 million American Adults and 12 million children. The new status for obesity means that this is now considered a medical condition that requires treatment. In fact, a recent Duke University / RTI International / Centers for Disease Control and Prevention study estimates 42 percent of U.S. adults will become obese by 2030.

According to the Medical Dictionary, obesity has been defined as a weight at least 20% above the weight corresponding to the lowest death rate for individuals of a specific height, gender, and age (ideal weight). Twenty to forty percent over ideal weight is considered mildly obese; 40-100% over ideal weight is considered moderately obese; and 100% over ideal weight is considered severely, or morbidly, obese. More recent guidelines for obesity use a measurement called BMI (body mass index) which is the individual's weight divided by their height squared times 703. BMI over 30 is considered obese.

The World Health Organization further classifies BMIs of 30.00 or higher into one of three classes of obesity:

  • Obese class I = 30.00 to 34.99
  • Obese class II = 35.00 to 39.99
  • Obese class III = 40.00 or higher

People in obese class III are considered morbidly obese. According to a 2012 Gallup Poll, 3.6% of Americans were morbidly obese in 2012.

The decision to reclassify obesity gives doctors a greater obligation to discuss with patients their weight problem and how it's affecting their health while enabling them to get reimbursed to do so.

According to the Duke University study, obesity increases the healing times of fractures, strains and sprains, and complicates surgery. According to another Duke University study that looked at the records for work-related injuries:

  • Obese workers filed twice as many comp claims.
  • Obese workers had seven times higher medical costs.
  • Obese workers lost 13 times more days of work.
  • Body parts most prone to injury for obese individuals included lower extremities, wrists or hands, and the back. Most common injuries were slips and falls, and lifting.

The U.S. Department of Health and Human Services said the costs to U.S. businesses related to obesity exceed $13 billion each year.

Furthermore, a 2011 Gallup survey found that obese employees account for a disproportionately high number of missed workdays. Also earlier National Council on Compensation Insurance (NCCI) research of workers' compensation claims found that claimants with a comorbidity code indicating obesity experience medical costs that are a multiple of what is observed for comparable non-obese claimants. The NCCI study demonstrated that claimants with a comorbidity factor indicating obesity had five times longer indemnity duration than claimants that were not identified as obese.

Prior to June 16, 2013, the ICD code for comorbidity factors for obesity in workers' was ICD-9 code 278. This is related to obesity-related medical complications, as opposed to the condition of obesity. Now the new ICD codes will indicate a disease, or condition of obesity which needs to be medically addressed. How will this affect work-related injuries?

Instead of obesity being a comorbitity issue, it can now become a secondary claim. If injured workers gain weight due to medications they are placed on as a result of their work-related injury or if an injured worker gains weight since they cannot exercise or keep fit because of their work-related injury and their BMI exceeds 30, they are considered obese and are eligible for medical industrially related treatment. In fact, the American Disability Act Amendment of 2008 allows for a broader scope of protection and the classification of obesity as a disease means that an employer needs to be cognizant that if someone has been treated for this disease for over 6 months then they would be considered protected under the American Disability Act Amendment.

Consider yet another factor: with the advent of Mandatory Reporting (January 1, 2011) by CMS that is triggered by the diagnosis (diagnosis code), the new medical condition of obesity will further make the responsible party liable for this condition and all related conditions for work-related injuries and General Liability claims with no statute of limitations. It is vital to understand that, as of January 1, 2011, Medicare has mandated all work-related and general liability injuries be reported to CMS in an electronic format. This means that CMS has the mechanism to look back and identify work comp related medical care payments made by Medicare. This is a retroactive statute and ultimately, it will be the employer and/or insurance carrier that will be held accountable.

The carrier or employer could pay the future medical cost twice — once to the claimant at settlement and later when Medicare seeks reimbursement of the medical care they paid on behalf of the claimant. This is outside the MSA criteria. The cost of this plus the impact of the workers' compensation costs as well as ADAA issues for reclassification of obesity for an employer and carrier are incalculable.

The solution is baseline testing so that only claims that arise out of the course and scope of employment (AOECOE) are accepted. If a work-related claim is not AOECOE and can be proved by objective medical evidence such as a pre- and post-assessment and there is no change from the baseline, then not only is there no workers' compensation claim, there is no OSHA-recordable claim, and no mandatory reporting issue.

A proven example of a baseline test for musculoskeletal disorders (MSD) cases is the EFA-STM program. EFA-STM Program begins by providing baseline injury testing for existing employees and new hires. The data is only interpreted when and if there is a soft tissue claim. After a claim, the injured worker is required to undergo the post-loss testing. The subsequent comparison objectively demonstrates whether or not an acute injury exists. If there is a change from the baseline site specific treatment, recommendations are made for the AOECOE condition ensuring that the injured worker receives the best care possible.

Baseline programs such as the EFA-STM ensure that the employee and employer are protected and take the sting out of the new classification by the AMA for obesity.

Skiing The Slippery Slope Of Employment Practices Liability In The Nonprofit Sector

One of your employees has been out on disability with a workers’ compensation injury and you have been getting great advice and service from your workers’ compensation carrier regarding managing the employee while out on leave. Ultimately, you are advised that it has been determined in the workers’ compensation case that the employee has reached maximum medical improvement (known as permanent and stationary in some states) and cannot return to her job due to a permanent disability. With regret, you terminate the employee since she is now receiving workers’ compensation vocational rehabilitation benefits and you have heard that workers’ compensation is the exclusive legal remedy for employees suffering workplace injuries.

Not so fast! If an employer has 15 or more employees, it is subject to the Americans with Disabilities Act (ADA) and/or a state disability accommodation law with a different threshold for applicability. In this instance, even though you acted appropriately in terms of not discriminating based on a work-related injury in violation of workers’ compensation law, you have violated the Americans with Disabilities Act for failing to engage in the interactive process to determine if there is any reasonable accommodation that would have allowed the employee to return to work for you — perhaps in a different job. Failing to engage in the interactive process prior to terminating a disabled employee is a violation of the Americans with Disabilities Act and would subject you to legal liability resulting from the termination.

Okay, so maybe you knew about that issue. But what about the other employment law moguls out there just waiting for you? Let’s explore some of the common — and maybe not so common — employment practices law issues that face nonprofits, how to guard against mistakes, what it can cost if you do err, and how insurance fits into the picture.

Timing Really Is Everything
Culled from the claims files of the Nonprofits’ Insurance Alliance of California (NIAC) and the Alliance of Nonprofits for Insurance (ANI), member companies in the Nonprofits Insurance Alliance Group (NIA Group) that insures over 11,500 nonprofits around the country, here are just a few examples of seemingly appropriate terminations by 501(c)(3) nonprofits that failed to withstand scrutiny because of their timing.

  • A couple of disruptive employees whose paychecks had been withheld for failure to have reports done on time filed a complaint about not being paid and were then terminated. (Two strikes on this one!) First, most states prohibit withholding paychecks just for poor performance. Second, terminating these two employees after they complained resulted in valid claims under the state’s “whistleblower” laws.
  • A poorly performing employee complained of sexual harassment. A thorough investigation concluded no harassment had taken place. The employee was then terminated on performance grounds alone. Problem — no contemporaneous documentation of the alleged poor performance existed, so it appeared to the state administrative agency that the termination was a result of the harassment allegation because it followed closely behind the report of it.
  • A long-term employee of an elder daycare facility, who was a “mandatory reporter” under state law, filed a report with the state about inadequate staffing at the facility when an elderly client was left unattended and was found wandering around in traffic. She was terminated for not following “internal reporting procedures” (in this case a warning was the appropriate remedy, not immediate termination).

So What’s An Employer To Do?
Let’s start with the exposures under Employment Practices Liability (EPL) that give rise to liability claims. Both federal — and most state — laws proscribe the most commonly known unfair employment practices of wrongful termination, sexual harassment, discrimination and ADA violations. Embedded in each of those categories, however, are some lesser known prohibitions and strict liabilities.

By now most everyone knows that in most jurisdictions you can’t terminate someone based on age, race, gender, or sexual preference. But what if a poor performing employee is the only one working for your nonprofit that’s in a protected category? Termination here may have the appearance of discrimination sufficient to subject you to administrative or civil exposure.

You know that sexual harassment is illegal and that procedures need to be in place to train supervisory and management personnel about its ins and outs. But what if you’re in a state that imposes strict liability on an employer, even if the employer didn’t know the harassment was occurring? Or what about a delivery person that’s been making inappropriate suggestions to your receptionist, or if the delivery person believes that one of your employees has been harassing him or her? That can get you into as much trouble as the typical case.

So, what to do? Defense of Employment Practices Liability claims starts with your agency having documented procedures in place that you and your counsel can use to demonstrate to an administrative agency or a court that you intended to be — and were — in compliance. This is best accomplished from the beginning with a robust personnel handbook that includes policy statements and procedures around at least 12 key subjects.

Twelve Components of a Model Personnel Handbook

Following are twelve components that we recommend all personnel handbooks contain:

  • Introductory Statements
  • Nondiscrimination and Sexual Harassment
  • Organization and Structure
  • Training and Orientation
  • Employee Classifications and Categories
  • Employment Policies, Including Wage and Hour Regulations
  • Benefits Disclaimer
  • Leaves of Absence and Time Off
  • Standards of Performance
  • Workplace Violence Prevention and Safety
  • Search and Inspection
  • Drug-Free Workplace

At a minimum, the handbook should include statements regarding at-will employment, probationary, introductory or benefit waiting periods, and examples of disciplinary offenses (always prefaced with “including, but not limited to” language). Always have employees sign a written acknowledgment that they have read and understand the policies, or you might as well not have created them in the first place.

Next comes training and adherence. Regardless of size, every nonprofit needs to train its management personnel about the employment laws relevant to their jurisdiction and the policies and procedures the agency has adopted. Include here any state mandates such as sexual harassment training for supervisory personnel. Then, walk the talk! Follow those policies and procedures diligently — every day. Oh, and did you remember to include your board members in the training? They are at risk as much as the Executive Director because they are ultimately responsible for the agency’s overall management.

The Old “Ounce Of Prevention”
The last, and most overlooked, step in Employment Practices Liability claim prevention is checking in with experienced employment counsel before taking a significant personnel action. A poorly drafted employment offer letter can bind you for a lot more than you thought. So can the improperly announced new personnel policy or procedure — even if it’s meant to be a “positive” for employees.

More than anything else, however, is every Employment Practices Liability defense lawyer’s wish that you consult counsel before termination. There would be obvious questions about clear documentation of performance issues, protected classes of employees, and compliance with your own policies and procedures, but some circumstances might require some “drill down” inquiry. Suppose a health issue, disclosed or not, is involved. Is the employee perhaps entitled to an ADA accommodation? What about Family and Medical Leave Act entitlement, or workers’ compensation benefits?

Always, always, check with counsel experienced in employment law. Some are available on a pro bono basis — check with your local bar association. A number of Directors and Officers and Employment Practices Liability insurance carriers provide this service to their policyholders, although sometimes on a limited basis. So ask them if they do. If they don’t, ask them for a referral. At ANI-RRG and NIAC, we feel so strongly about the importance of our members getting good advice before they take an important employment action that we have three experienced labor law attorneys dedicated solely to providing preventative advice on this subject to our member-insureds.

And The New “Pound of Flesh”
If you haven’t heard or read about it, employment practices law is one of the latest and greatest fertile fields for aggressive plaintiff’s attorneys. It matters not that you are a charitable nonprofit (particularly if you have good insurance limits). Six-figure jury verdicts have become more frequent, particularly in metropolitan areas where the majority of the nonprofit sector does its work. Need convincing? Think about this data from ten recent years of our closed claim files:

  • One out of every 100 nonprofits (regardless of size) will have an EPL claim this year
  • 97% of all claims against directors’ and officers’ policies are in the EPL category
  • The average cost to defend when a claim has some merit is $29,000 and the average loss on those claims is $44,000 — a combined average of $73,000
  • 40% of EPL claims have some merit and when they do, one in ten will cost more than $100,000
  • When claims do not have merit, the average cost to defend is only $5,000, thanks to early intervention by our experienced employment defense counsel
  • The two largest claims cost $1 million and $400,000 respectively

Did You Say Something About Insurance?
Unless you have tens or even hundreds of thousands of dollars just sitting around, you probably want to think about how your agency can protect itself in this vulnerable area and one other that directors and officers should be concerned about.

When Employment Practices Liability claims first came into vogue years ago, the insurance industry’s “knee jerk” reaction was to find a way to exclude the exposure. Smarter heads prevailed, fortunately, so that today EPL coverage is readily available. But like many things, it comes in different shapes and sizes, and not always where you think it is.

Let’s talk first about Employment Practices Liability as a stand-alone coverage. It’s available and commonly protects the nonprofit from damages claimed as a result of an adverse employment action. The defense component provides for payment of attorney fees and costs, and the indemnification component provides for payment of actual damages, if any. There are exclusions as discussed below.

It is more common, however, to find EPL coverage as either an attachment to, or embedded in, the nonprofit’s Directors and Officers (D&O) coverage. The components are generally the same as described above. Key issues to consider are detailed below, but look out for some tricky provisions such as the one that requires your consent before the carrier settles a claim, but makes you responsible for all the ongoing legal expenses if you don’t accept the carrier’s recommendation.

Typical exclusions include fines, penalties and sanctions (these are uninsurable risks), back wages, multiplied damages and plaintiff’s attorney’s fees. Wage and hour claims are one of the biggest uncovered liabilities that a nonprofit faces. Properly classifying an employee as exempt from the overtime requirements of the Fair Standards Labor Act (or similar state laws) can be tricky business and sometimes requires extra sensory powers of hindsight. To be properly classified as exempt, an employee must make a threshold salary as defined by federal and state law and pass the duties test of either the professional, executive or administrative exemptions. While most insurance policies do not cover payment of back wages and penalties, a few at least provide some defense costs to cover wage and hour claims.

So what are the key EPL components of a good D&O policy? At a minimum, expect the following:

Adequate policy limits

  • $1 million is generally adequate for small to mid-size nonprofits. Larger agencies should consider higher limits or an umbrella policy.

Broad definition of who is an insured

  • Is the nonprofit agency itself insured in addition to its directors and officers?
  • What about prior directors and officers?
  • Committee members?
  • Employees and volunteers? (Volunteers don’t have all the federal or state immunities you may think.)

Broad coverage for employment practices liability

  • Either by endorsement or imbedded in the D&O policy itself

Duty to defend

  • Does it extend to administrative proceedings (where most EPL claims start) or just to suits in civil courts?

Advancing of defense costs

  • The carrier should pay for defense costs as incurred, not after the nonprofit has paid for them and is seeking reimbursement

Anything Else?
Make sure that you understand your policy before you need to use it. For example, be sure that you understand when you need to report facts that may result in employment practices liability. For example, you may decide not to report to the insurer an employee grievance filed with your Human Resources Department pertaining to the employee’s termination, perhaps thinking that a legal claim may not develop from it. Unbeknownst to you, your policy may require you to report potential claims, including grievances filed with your HR Department. By the time the terminated employee files a legal complaint with the district court, the reporting period has passed and your insurer may deny coverage.

Don’t be disappointed if your insurance carrier insists on using defense counsel of its own choosing. It has the right to do so and generally has developed over time a panel of attorneys experienced in employment law defense who understand the nonprofit sector better than most.

While not directly EPL-related, make sure your Directors & Officers policy also protects you for fiduciary liability claims such as failure to properly account for grant funds.

If unsure about the nature and extent of your Employment Practices Liability coverage, by all means consult with your insurance agent or broker. They are usually paid commissions when they place your coverage, and providing appropriate advice is part of what they are paid for — and a service you have a right to expect.

Happy skiing!

Baseline Testing: Book End Solution – Does It Qualify as Business Necessity?

Congress enacted the Americans with Disabilities Act in 1990 which included the terms “job-related and consistent with business necessity” in Section 703(k) of Title VII as part of a Congressional compromise. The amendment to the act which went into effect in 2008 did not affect the business necessity provision.

Case law regarding business necessity is very limited; however, a recent case in point is Atkins v. Salazar, 2011 U.S. App. LEXIS 25238 (5th Cir., Dec. 12, 2011), in which the Fifth Circuit issued an instructive opinion analyzing the business necessity defense in the context of diabetes.

The Fifth Circuit described the business necessity standard as follows:

For a qualification to be “job-related,” “the employer must demonstrate that the qualification standard is necessary and related to 'the specific skills and physical requirements of the sought-after position.'” Similarly, for a qualification standard to be “consistent with business necessity,” the employer must show that it “substantially promote[s]” the business' needs.

The court further noted, based on an earlier ruling, that it must “take into account the magnitude of possible harm as well as the probability of occurrence … the probability of the occurrence is discounted by the magnitude of its consequences.”

Under the Americans with Disabilities Act, not only must a medical exam be job-related, it must also be consistent with business necessity. This means that the medical exam must relate to the essential functions of the job. The medical exam must test the ability to perform the primary functions of the job. For example, if you are a cashier at a grocery store, the essential functions of your job would be to ring people up and help them bag their items. Any medical exam your employer required would have to be related to how you perform those functions in order to be consistent with business necessity. It is important to note that as long as the medical exam evaluates some function of the job, it should satisfy the elements of business necessity.

Under the Americans with Disabilities Act, an employer may have the ability to make disability-related inquiries or require medical examination. After the applicant is given a conditional job offer, but before starting work, an employer may make disability-related inquiries and conduct medical examinations, regardless of whether they are related to the job, as long as it does so for all entering employees in the same job category (post-offer). After employment has commenced, an employer may make disability-related inquiries and require medical examinations only if they are job-related and consistent with business necessity.

The Americans with Disabilities Act requires that all medical information obtained during such inquiries or testing be treated as confidential medical information. While this provision covers all employees, only disability-related inquiries and medical examinations are subject to the Americans with Disabilities Act's restrictions. A disability-related inquiry is defined as asking questions or testing that is designed to elicit information about a person's disability. Therefore, questions or testing that is not designed to ask or evaluate information about an individual's disability are not prohibited under the ADA.

A medical test as defined under the Americans with Disabilities Act is a procedure or test that seeks information about an individual's physical or mental impairments or health. Factors that determine if it is a medical test include:

  • whether the test is administered by a health care professional;
  • whether the test is interpreted by a health care professional;
  • whether the test is designed to reveal an impairment or physical or mental health;
  • whether the test is invasive;
  • whether the test measures an employee's performance of a task or measures his/her physiological responses to performing the task;
  • whether the test normally is given in a medical setting; and,
  • whether medical equipment is used.

The topic of medical testing, especially functional testing, is a controversial subject. In the fall of 2009 two major case precedents brought to light these very issues — Indergard vs. Georgia Pacific and the class action lawsuit brought against Sears. On September 29, 2009, the U.S. Equal Employment Opportunity Commission (EEOC) announced a record-setting consent decree resolving a class lawsuit against Sears, Roebuck and Co. under the Americans with Disabilities Act for $6.2 million.

These recent rulings bear out that the Functional Capacity Evaluation (FCE) may be a medical exam. Even when classified as medical evaluations, Functional Capacity Evaluations don't physically correlate with true physiological function. The issue becomes whether or not these tests are able to accurately or objectively test for functionality. These rulings illustrate that Functional Capacity Evaluations that contain validity measurements that are subjective observations, do not correlate with effort and are not consistent with affected body parts are not legally defensible.

As we have seen with the Indergad and Sears cases, courts are examining these issues closely and unless there is an objective assessment, the employer or carrier is left virtually unprotected. For ADA compliance, the testing needs to be repeatable, objective, and address functionality.

Under the Americans with Disabilities Act, an employer may not require a current employee to undergo a medical examination unless the examination “is shown to be job-related and consistent with business necessity.” 42 U.S.C. § 12112(d) (4) (A). This section applies to all employees, whether or not they are disabled under the Americans with Disabilities Act. The Indergard decision clearly demonstrates the need for an objective measure of performance that must conform with business necessity.

In addition, recent case law — EEOC vs. Celadon Trucking — illustrates that if an individual does not meet the essential functions of the job, an employer needs to enter into the interactive process for the position for which they were applying or for any other open position for which the candidate is qualified.

Given all the legal mandates for the ADA and EEOC, coupled with state workers' compensation laws and Federal Mandatory reporting issues for work-related injuries, why do post-offer pre-placement tests? A better solution is baseline testing or a book end solution.

The Americans with Disabilities Act regulates testing that has the potential to evaluate a disability. So if a baseline test is non-invasive, captures the essential functions of the job with not only a reliable validity measurement but with an objective assessment of the muskuloskeltal system and is not read at the time of testing, it is not only acceptable under ADA but technically outside the scope. Why? Data is not evaluated at the time of the baseline test so no disability is identified and no medical questions are asked. It can be done at post-offer or with existing employees.

The book end solution is completed when there is a work-related incident, another test is performed under the workers' compensation pending case, and the results are compared. In the work-related case, the medical evaluation post loss test is allowed and not a violation of the Americans with Disabilities Act. Appropriate releases are signed prior to conducting the baseline testing, and the data is kept confidential. If no work-related injury occurs, the baseline data is never interpreted.

In summary, according to the Fifth Circuit ruling in the Atkins case, for a qualification standard to be “consistent with business necessity,” the employer must show that it “substantially promote[s]” the business' needs. The business needs in the case of baseline tests are to provide better and faster treatment for the injured worker and to accept claims that arise out of the course and scope of employment.