Tag Archives: lawsuits

What if Your Insurer Won’t Pay?

Disclaimer: If you have problems with insurance payouts, the following information only works as general guidance as to the legal process. It does not, however, function as actual legal advice about the matter. To further understand the legal aspect of insurance payouts, it’s best that you approach a licensed attorney who has experience in insurance claims lawsuits similar to yours.

When you’ve been in an accident, the next big thing to do is to file your insurance claims with your insurance company. In fact, you’re somehow relieved because you are hoping that you’ll be paid for all your financial losses as a result of the accident. You’ve submitted your claim on time — only to find out that you’re having a difficult time getting your insurance claims paid by your insurer. You’re now behind on your bills and don’t want to ruin your credit score or, worse, need to file for bankruptcy. So, here are the things to do legally if you’re having problems with your insurance company paying out.

Reasons Why You’re Having Trouble Getting Your Insurance Claims

It’s difficult to think that your insurance company can deny your claim or decline to pay the amount you’re expecting for. Below are some of the reasons why your insurance provider can refuse or does not pay the whole amount you’re asking for:

  • Check if you’ve stated the facts in your documentation properly. Remember, insurance companies may conduct their own investigation on your application, so it’s best that you provide them with documents that are valid and up to date.
  • Make sure you follow the right processes in terms of filing your claims. If you’ve skipped a step or missed a requirement, you may end up going back to square one.
  • It’s important to see if you’re up to date with your payments for your insurance. Sometimes, insurance companies disregard applications for claims because applicants have failed to complete their payments.

See also: Distribution: About To Get Personal  

Things to Do Legally When You Have Problems With Your Insurer Paying Out

These are the things to do legally when you have problems with your insurer paying out:

1. Know What Insurance Claims Your Policy Covers

  • Make sure that what you’re asking for applies to your active and existing insurance policy.
  • Ensure that your insurance claims are not included in the exclusion clause of your policy

2. Keep All Your Communications and Documents Intact

  • Note the procedures you have to go through to file an insurance claim. If you can get information as to how long a particular process can take and if there are specific deadlines, do so to get a general idea on the timetable of your claim.
  • Remember that keeping documents can save you from any accusations your insurance company may throw at you.
  • Note the requirements and other documentation you need to comply with. If you have these documents, make sure you have copies and don’t lose the original versions. These can be useful if ever you have to present these to experts, or if you have to take your claim to the court.

When you’re beginning to experience problems with your insurance applications, take a deep breath and try to be more persistent regarding your follow-ups and inquiries. If you think you need to learn more about your particular issue, you may want to consider hiring an experienced lawyer.

3. Get a State Insurance Regulator or a Lawyer: When problems arise with your insurance provider, it’s essential that you settle the dispute among yourselves in a calm and patient manner. However, if you still end up having difficulties, you may ask the assistance of a state insurance regulator or a lawyer.

  • When hiring a state insurance regulator or a lawyer, note their particular specialization and make sure they’re appropriate for the kind of issue you’re tackling. Try to inquire if they are aware of certain policies in your state, as some laws vary depending on where you reside.
  • If you get a state insurance regulator or a lawyer, use this opportunity to get to learn everything you can about your particular issue, to avoid encountering the same problems in the future.

4. File a Lawsuit: Your last remedy could be the filing of a lawsuit. The things to keep in mind are:

  • Hire a licensed lawyer who has experience in insurance lawsuits.
  • Prepare for the deposition (under oath) and trial, where you have to present documentation to validate your claim.
  • Wait for the final judgment – The jury will resolve the case in one party’s favor. If the result does not favor your side, speak to your lawyer for a possible appeal. Remember, just because the decision doesn’t favor your side, it doesn’t mean it’s too late for your insurance payment.

See also: ‘It’s Life, Jim, but Not as We Know It’  

If you feel that your legal rights have been violated by your insurer, don’t hesitate to practice your rights under the law. Check your state laws and initiate the appropriate course of action.

Whistleblower Suits: Emerging Risk on MSP

There is an emerging area of risk associated with Medicare Secondary Payer 1 (MSP) compliance. Workers’ compensation, liability, and no-fault insurance, including self-insurance plans, are exposed to penalties and conditional payments, and there may be violations of the False Claims Act (31 U.S.C. §§3729 – 3733) (FCA) that could lead to fines plus treble damages.

The risk stems from lawsuits commonly known as qui tam actions that are being brought by private citizens known as relators, who are bringing these lawsuits. Relators could recover anywhere from 15% to 30% of the damages in the suits, plus attorney’s fees and costs.

The success of such lawsuits largely depends on whether the U.S. intervenes as plaintiff. Companies and insurance carriers that are responsible reporting entities (RREs) must exercise caution on what data on settlements, judgments, awards and other payments is sent to the U.S. and ensure the data is consistent with the Centers for Medicare & Medicaid Services (CMS) guidelines, policies and regulations. A solid reporting solution is a critical step for protection, but must also integrate business intelligence to eliminate the submission of false claims and allow the appropriate reporting of claims.

Background

The FCA was enacted in 1863 by a Congress concerned over the quality of goods being supplied to the Union Army during the Civil War.  Commonly referred to as “Lincoln’s Law,” the rule depended on the private citizen to help the government identify fraud against it. This private citizen, or relator, was rewarded if the government won a judgment. During World War II, the law changed and made it harder for private citizens to assist. When their incentive disappeared, the government’s ability to identify fraud slowed to a trickle even as government contracts surged because of the war. After decades of defense contractor abuse, President Reagan, working with a bipartisan Congress, changed the law in 1986. Fines rose  from a minimum penalty of $2,000 to a range of $5,000 to $10,0002 per violation; recoverable damages went from double to treble; and, most importantly, private citizens again had incentives to coordinate with government to prosecute fraud.

Today, more than 80% of FCA actions are qui tam driven, and recoveries exceeded $4.9 billion in the fiscal year that ended Sept. 30, 2012.  Such actions are predicted to increase into the foreseeable future.

A qui tam, or whistleblower, claim starts with an individual being aware of a possible fraud being perpetuated against the U.S. Typically, a whistleblower works for the organization that is alleged to be perpetuating the fraud, raises a concern and then suffers an adverse employment action for doing so. The results can be costly to the organization.

Consider a quality-control expert at Hunt Valve in Ohio3. Her company made valves for nuclear attack submarines and reactors. The valves were never inspected, and paperwork was fabricated. When she raised concerns, she was fired and forced to move out of town. The responsible parties, Northrup Grumman Newport News, General Dynamics Electric Boat and three other defendants, paid a $13.2 million settlement to the U.S.

Also consider a pharmacist who was treated similarly by his new employer, Omnicare4. He had previously owned a “mom and pop” drugstore outside of Chicago and was a seasoned pharmacist. He discovered widespread drug switching for profit, and, when he notified his bosses, he was fired and forced to work as a temp at other pharmacies that engaged in the same bad practices. He then brought an action and secured a $120 million settlement.

A third example is rare in that the relator was the CEO of a laboratory company5. He realized that a competitor was producing a particular testing product that was defective and caused dialysis patients to be overdosed with expensive and harmful drugs that Medicare paid for. He brought the test results to the competitor’s attention but was rebuffed. He filed under FCA and recovered $302 million for the government.

Certain private citizens are barred from being a relator. If someone was convicted of criminal conduct arising from his or her role, the citizen is not allowed to sue6. If another qui tam concerning the same conduct has already been filed, known as the first bar rule, no suit is allowed7. Where the government is already a party to a civil or administrative money proceeding concerning the same conduct, the action is also barred8. Finally, if the information was already disclosed to the public (and the relator is not the source), the matter is barred under the “public disclosure” rule9.

If allowed, a qui tam complaint is filed under seal for 60 days. During this period, the government is required to investigate the allegations to determine if it will intervene. The government can extend this period under seal if it needs further time to investigate, and typically does so. Sometimes, the government may take a year or more to decide. If the government does intervene, it has primary responsibility to prosecute and pay for it10. When the government declines to intervene, the relator can proceed on his or her own, paying the costs, and the seal is lifted. The cost to prosecute can be prohibitive, and many FCA actions fail if the government declines to intervene. However, the law does increase the relator’s share of the damages from a floor of 15% of the damages to a minimum of 25% as compensation for the additional risk.

To win, the relator must prove that the defendant’s conduct, or lack of conduct, meets one of the statutory requirements under 31 U.S.C. §3729(a). The areas where most of the conduct or lack of conduct fall are: 1) knowingly submitting a false claim or record to the government for payment11; 2) knowingly avoiding the submission of a claim or record to the government to avoid the payment of money to the government12; and 3) liability for those who conspire to violate the FCA13.

A prima facie case of prosecutable FCA conduct in any of the three areas would require the relator to establish: 1) the submission of a false claim/record, or avoiding the filing of a required claim/record to the government; and 2)  knowledge of the falsity itself.  31 U.S.C. §3729(b)(1) sets forth how knowledge of the false information for the claim or record can be defined. It can be (1) actual knowledge; (2) deliberate ignorance of the truth or falsity of the information; or (3) reckless disregard of the truth or falsity of the information. The fact finder will require concrete evidence to uphold the FCA violation. The relator will also be focused on the applicable regulations, rules and policy memoranda from the government.

The Trends

After 1986, contractors for the Department of Defense were the primary focus of the government concerning FCA because of unbridled fraud. When the law changed, both government and private citizens unleashed prosecutions against contractors such as United Technologies ($150 million), Boeing ($75 million), Teledyne ($85 million) and Litton ($82 million). As lawsuits were filed, and the substantial recoveries publicized, the industry responded with increased compliance and vigilance to the point that FCA actions are rare in this area today.

Next FCA were lawsuits involving the big pharmaceutical companies. Glaxo Smith Kline paid $1.2 billion for the unlawful promotion of Paxill, Wellburtin, Advair, Lamictal and Zofran for uses not approved by the Food and Drug Administration. Johnson & Johnson paid $2.2 billion for similar off-label use promotion. These highly publicized settlements, and changes in how drug companies may interact with providers, has seen a tapering of such cases and left the FCA qui tam industry on the search for the next area of fraud, waste and abuse against the government.

One method to determine the next industry trend for FCA actions is to follow the focus of certain government enforcement agencies.  The Office of Inspector General (OIG) is one such Agency to monitor enforcement actions.   The OIG has focused recovery efforts on big pharmaceutical companies, and recent focus has been on Providers for Medicare & Medicaid items and services.    FCAs have been equally as active against these Providers.  As a result, the OIG had a particularly effective year in recovering over $4.3 billion in 2013 against Providers, returning $8 for every $1 spent by the Agency.

The OIG is also responsible for MSP compliance enforcement.  An example of OIG activity is the recent settlement late last year by a Texas health system for $3.67 million14.   In that situation, the Relator alleged that Baptist Health Care billed Medicare for items and services it provided to beneficiaries that were covered by other payers such as workers’ compensation, liability and no-fault insurance (Plans).  Under MSP law Medicare is allowed to pay for such items and services, when no payment has been made, or payment is not reasonably expected to be made.  If that is the situation then Medicare pays, but on the condition it be reimbursed for items and services if payment is ever made by the Plan.   That is what happened here.  The Plans made payment to the Provider, but no reimbursement occurred, and when the oversight was brought to the attention by the Relator, he was ignored.  Correction to the Program was made, but past errors were not corrected.  The Provider therefore recognized the falsity of its information, and easily satisfied the criteria for the Relator when it did not reimburse for historical errors after it was brought to their attention.  The FCA community is therefore aware of MSP violations and how it can implicate the FCA.

An area that may be subject to FCA is the Medicare & Medicaid SCHIP Extension Act of 2007 (MMSEA).  This law modified the MSP to require data reporting by RREs.  To encourage participation, the government included a penalty provision for non-compliance of up to $1,000 per day, per claim for failure to report15.  The OIG has adjusted its work plan for 2013 and 2014 to look at the MMSEA and the associated penalties that arise from non-reporting of data.  OIG involvement typically precedes FCA qui tam actions.  It is this area where the greatest potential for FCA actions are likely to begin to take root.

An example of a matter that nearly received government backing was the recent seal that was lifted on March 20, 2014 with respect to a U.S. District Court case filed in the Western District of New York.  The government did not choose to intervene, and the Relator is a personal injury attorney who has filed against well over 50 insurance carriers and a few trucking companies that self-insure.  The main cause of action alleged was that these companies shifted MSP risk to the United States government through the use of a general release16.  Whether there will be success under the FCA remains to be seen as the root cause appears to be brought under a FCA conspiracy theory.  The Relator will have to prove a false claim, or avoidance of filing a claim, knowledge thereof the falsity, and the impact to the government.  It is unclear, based on present allegations, if the lawsuit will pass the procedural stages, but it does demonstrate that the FCA qui tam industry is taking a serious look at the MSP area for recovery.

Concerns for the RRE in this area are potentially significant.  Only recently has MMSEA data been accepted by CMS for reporting by the RRE.   As of 1/1/2010, CMS received quarterly downloads from RREs’ workers’ compensation and no-fault plans that involve cases where Ongoing Responsibility for Medical (ORM) was determined.  Pursuant to the CMS User Guides, Regulations, and Memoranda, these RREs must monitor all claims, no matter the case status that were open on 1/1/2010, re-opened or newly reported after that date.  Once identified, ORM status is to be reported, but it can be immediately terminated if certain established CMS criteria is met.

On October 1, 2010, CMS started to accept the second MMSEA data element from RREs’ workers’ compensation and liability plans regarding the Total Payment Obligation to Claimant (TPOC) meeting certain value thresholds.  These TPOCS, or settlements with Medicare beneficiaries, were collected typically the quarter before reporting, and then submitted during an assigned window period set up by CMS for the RRE.

The reporting requirement under the MMSEA provides a relatively straightforward way to establish a claim/record being submitted to the government under the FCA.   Whether or not it is false would depend on the Regulations, Rules, Policies (User Guides) and Memoranda from the government about what and when to report.    FCA criteria can be easily met, as it is simple to determine from the data when a claim/record was submitted or if it was missed.  Determining whether it is false would be harder, but how claim systems manage information based upon the regulations, rules, and policies could be probative on that point.  This exact issue came up in an older FCA case involving a Medicare fiscal intermediary, known as Highmark17.  This entity served two roles with Medicare, one as a Medicare contractor processing payment claims, and the other as a private provider of services.    An FCA action was brought against Highmark for inconsistent claim processes and the court found basis to sustain the FCA complaint based on the fact that the claims processing system did not properly line up with Medicare requirements.  Consistent with that ruling, the CMS User Guides and related policy memoranda would be similarly construed and therefore whether an RRE had a case to report as a TPOC or ORM would be based on how those rules would apply.

An RRE’s exposure to an FCA action is mitigated if the RRE utilizes an MMSEA reporting system that is tested.  Most MMSEA reporting systems are compliant with the technical aspects of the CMS User Guides; however, they lack the processes that integrate the CMS regulations, policies and user guide rules to allow the end-user to enter the appropriate data.  Most reporting systems lack a MMSEA solution with built-in business intelligence to allow the right information to be entered at the right time.  The adjuster responsible to enter the data at the critical points needs to be guided to ensure correct submission of data to the government.

Franco Signor LLC processes over 2M records each month to the government for RREs.  We have audited over 1,900 RREs and have drawn the conclusion that the MMSEA reporting systems are sound, but the data being populated by the front-lines is not consistent with known rules, regulations and policies of Medicare.  We have recommended business intelligence methodology to guide the adjuster to avoid the potential MSP exposure, as well as the emerging risk of associated FCA exposure.  The cost is minimal to secure a base line on MSP compliance performance.  Integration of business intelligence takes time, but must be accomplished before MSP penalties become fully enforceable.  Do not be the RRE whose MMSEA reporting system and methodology is tested by an FCA or qui tam action.

[1] 42 U.S.C. §1395y(b)

[2] Today the FCA penalty range is set at $5,500 to $11,000 based on auto triggers within the legislation

[3] Gonter v. Hunt Valve Co. 510 F.3d 610 (2007)

[4] http://www.quarles.com/omnicare-settles-more-allegations-2013

[5] http://www.phillipsandcohen.com/Success-for-Clients/P-C-s-Successful-Whistleblower-Cases.shtml[6] 31 U.S.C. §3730(d)(3)

[7] 31 U.S.C. §3730(b)(5)

[8] 31 U.S.C. §3730(e)(3)

[9] 31 U.S.C. §3730(e)(4)(A)

[10] 31 U.S.C. §3730(c)(1)

[11] 31 U.S.C. §§3729(a)(1)(A) and (B)

[12] 31 U.S.C. §3729(a)(1)(G)

[13] 31 U.S.C. §3729(a)(1)(C)

[14] http://www.francosignor.com/blog/medicare-jurisdiction/medicare-secondary-payer-act-implicated-in-false-act-claim-against-hospital

[15] 42 U.S.C §1395y(b)(8)

[16] U.S. v. Allstate Insurance Company, et al., Case #cv-01015-WMS, U.S. Dist. Court for the Western District of New York.

[17] http://www.paed.uscourts.gov/documents/opinions/04D0039P.pdf

Risky Spots for EPL Suits by Employees

A new study of employment practices litigation (EPL) data by Hiscox found four states — California, Illinois, Alabama and Mississippi — along with the District of Columbia, to be the riskiest areas of the U.S. for employee lawsuits. Businesses in these five jurisdictions face a risk that is substantially higher than the national average for being sued by their employees.

According to the study, a U.S.-based business with at least 10 employees has a 12.5% chance each year of having an employment liability charge filed against it. California has the most frequent incidences of EPL charges in the country, with a 42% higher-than-average chance of being sued by an employee. Other high-risk jurisdictions include the District of Columbia (32% above the national average), Illinois (26%), Alabama (25%), Mississippi (19%), Arizona (19%) and Georgia (18%). Lower-risk states for EPL charges include West Virginia, Massachusetts, Michigan, Kentucky and Washington.

Bert Spunberg, a colleague at Hiscox who is a senior vice president and the practice leader for executive risk, says: “Federal level information on employee charges is generally available, but state specific information is more difficult to aggregate. Understanding employee litigation risk at a state level is a crucial step for an organization to establish the processes and protections to effectively manage their risk in this changing legal environment.”

State laws can have a significant impact on risk. For example, the employee-friendly nature of California law in the area of disability discrimination may contribute to the high charge frequency in the state. Discrimination cases filed at the state level in California are brought under the Fair Employment and Housing Act (FEHA). FEHA applies to a broader swath of businesses, covering any company with five employees, vs. a 15-employee minimum for cases brought under federal law as outlined in Title VII of the Civil Rights Act.

Mark Ogden, managing partner of Littler Mendelson, the largest employment and labor law firm in the world, says: “Not only are employment lawsuits more likely in those states, but the likelihood of catastrophic verdicts is also significantly higher. Unlike their federal counterparts, where compensatory and punitive damages combined are capped at $300,000, most state employment statutes impose no damages ceilings. Consequently, employers in high-risk states must ensure that their workforces are adequately trained regarding workplace discrimination, harassment and retaliation and that policies forbidding such conduct are strictly enforced.”

For more on the study, click here.

Four Risk Management Tips For Medical Malpractice Lawsuit Prevention

A wealth of tips can be found for the prevention of medical malpractice lawsuits, but the truth is, there is no way to prevent someone from filing a lawsuit for malpractice. However, there are many things that can be done which can lessen the risks of a patient wanting to sue, as well as greatly reducing the likelihood of losing such a lawsuit, should one be filed.

The following tips can be part of an effective risk management program. If you don’t already have an aggressive risk management program in place at your practice or healthcare facility, you are statistically more likely to be the target of such a suit and more at risk of being unable to successfully defend against one.

The potential for being named in a malpractice lawsuit has nothing to do with your level of expertise, previous success rate or where you studied medicine. The fact is that a lawsuit may be brought against you even though no error was made or as a result of a situation which no physician could reasonably foresee. And there is certainly no shortage of cases in which the named physician was blameless, but actions (or inactions) by others created an issue. As a medical practitioner, you can still find yourself named in a malpractice lawsuit despite your best efforts to protect your patients and yourself.

So the ultimate tip would be: simply ensure that no mistakes are made. While you may say, “more easily said than done,” this is where a comprehensive risk management program can literally save your future and that of your practice.

Risk management programs actually help in two distinct fashions:

  1. They afford you and your staff the opportunity to proactively avoid mistakes that could lead to a medical malpractice claim.
  2. When properly implemented and enforced, they demonstrate a proactive effort to ensure high quality of patient care. This can greatly reduce, or even eliminate, your liability in the event of litigation.

If you have ever had to endure a malpractice claim, you were probably inundated with advice, after the fact. You may have heeded that advice going forward. But as hindsight, it did you no good at the time.

A risk management specialist can offer you that advice now, before you are faced with the ugly realities of a malpractice lawsuit. Find one that specializes in helping his clients avoid, rather than settle.

Meanwhile, here are four tips describing measures that you can implement to lessen your risk:

1. Audit
Review the standards and practices employed by yourself and your staff. Ideally, this is best undertaken by a disinterested third party service, specializing in med-mal risk management. It should involve a meticulous analysis of all potential risks, such as patient care, equipment certification and maintenance, procedures, checks and verifications, records … virtually any other aspect which has the potential of contributing to a breakdown in the quality of care provided.

Understandably, there are a great many aspects of your practice that can fall into this category. They should all be examined, and the audit team will evaluate the risk of each, making specific recommendations to mitigate those risks and assist you in establishing procedures to ensure ongoing implementation of corrective measures.

2. Training
Training is the heart of risk management. Regardless of whether all your staff carries their own med-mal insurance coverage, the buck will stop with the physician that owns the practice, regardless of who might be found at fault. Your staff must be thoroughly familiar with your risk management measures, understand their importance and know that total compliance is essential. You, as the responsible physician, must enforce that compliance.

3. Stress Test
This refers to performing an analysis of past small claims that may have been settled out of court, or hypothetical issues that seem possible, after viewing vulnerabilities in a practice’s procedures. The process helps identify areas that are weak, either procedurally or in compliance, and can provide valuable assistance in strengthening your practice’s risk management posture.

4. Accreditation
Achieving accreditation by an independent organization such as JCAHO (Joint Commission on the Accreditation of Healthcare Organizations), which performs periodic on-site surveys of procedures and compliance, can be very helpful in maintaining both awareness of and compliance with established risk management measures.

The Benefits
Adding these four measures to your practice’s toolset can prevent mishaps, while strengthening your position in the event of a formal lawsuit. It also offers the obvious benefit of helping you maintain high standards of patient care, and can be instrumental in lowering insurance premiums, due to the attendant reduction in claims.

Some claims can result in litigation, of course, in spite of your best efforts to avoid them. But having an exacting risk management program in practice will reduce your vulnerability a great deal and facilitate a successful defense. It will also offer the additional benefit of helping you find ways to improve the quality of care your practice provides.

Performance Evaluations Without Pain … And Without Lawsuits

As the current business culture evolves into one riddled with legal battles and threats of lawsuits coming from discharged employees, many managers and supervisors feel cornered when addressing employee performance evaluations. Even those employers who follow stringent documentation guidelines often feel pressured into keeping unproductive employees in their positions or giving ambiguous performance feedback, due to their fear of employees taking legal action against the company.

Lawsuits charging discrimination typically are a result of negative evaluations or adverse employment actions. Much to their leaders’ dismay, the employees they fired for valid reasons can win such cases thanks in part to their very own performance evaluation procedures. Using subjective performance standards, failing to effectively address performance problems and not clearly warning employees about the consequences of unsatisfactory performance are the three most common reasons why jurors award damages and appeals courts uphold those judgments. While employers do have the right to insist on quality and productivity from every employee, they must also make legally defensible decisions when it’s time to reprimand or terminate an employee.

For any viable evaluation and disciplinary system to work fairly, evaluators must have proper qualifications and training. The more specific their evaluation procedure, the less likely supervisors are to make a costly legal error. Therefore, employers should supply managers with specific guidelines for acceptable supervisory actions. Additionally, companies should build in a level of higher authority for senior management when they must make close judgment calls, analyze unique problems, or terminate an employee for which the prior documentation is less complete.

Good documentation of evaluations and disciplinary action is critically important, as it provides credible evidence to help verify whether an employee has received prior notice concerning a particular rule or deviation from acceptable job performance. It also provides a record of whether an employee has previously been disciplined and, if so, the appropriate form of discipline for subsequent misconduct. In addition, it creates a vehicle for examining precedents when one employee engages in the same or similar conduct that has resulted in discipline of other employees.

When designing a performance appraisal process, managers must be careful to appraise employees based on job-related criteria and maintain adequate documentation. Develop a consistent appraisal process for all company employees. Any deviation from these objectives could result in costly legal battles.

Managers and supervisors can take several concrete steps to ensure consistency, objectivity, accuracy, and fairness throughout the performance appraisal process. Use the following guidelines to manage employees within legal limits, without paralysis.

1. Clearly Communicate Expectations. Managers must consistently communicate standards or expectations to employees and clearly identify each aspect of the required performance. If an employee fails to meet expectations, address the deficiency immediately (or as soon as reasonably practical) and specify where the employee’s performance requires improvement. When employees don’t know their assessment criteria, they can win a legal battle by simply stating, “I didn’t know what was expected of me.” Be sure to specify objectively measurable performance, such as quality, quantity, and timeliness of work, as well as important soft skills, such as teamwork, initiative, judgment, integrity, and leadership.

2. Perform Candid Appraisals. Rather than let a fear of lawsuits affect your ability to conduct performance ratings, address performance issues consistently for all employees on a timely basis. Be accurate and objective in your performance ratings, and remember to always rate poor performance as well as good performance. When you fail to point out poor performance, the problem continues, as employees cannot correct problems they are unaware of. Additionally, failure to document poor performance is legally risky should the employee later be discharged and sue for wrongful (or retaliatory) termination. Consistently addressing issues of concern with employees defends against the “I didn’t know I wasn’t meeting performance expectations” claim.

3. Maintain Objectivity At All Times. Focus the performance evaluations on objective job-related criteria. Examples of objective criteria that courts have upheld include quantity, quality, or timeliness of work and specifically articulated expectations for interpersonal skills, teamwork, exercise of judgment, and displays of initiative. You can establish objective expectations even with subjective standards when you articulate what you consider acceptable behavior. For example, you may say, “You will exercise better judgment if you come to me early and let me know you can’t meet a deadline so that I can help you prioritize your workload.”

4. Stick To Job-Based Criteria. Always relate the appraisal to the employee’s particular job. If an item on the evaluation form is not relevant to an employee, indicate “not applicable” in the appropriate space. Also be sure to consider the full rating period. Avoid the tendency to let recent performance events cloud what may have happened months earlier. Finally, compare the employee’s performance to a norm or performance standard rather than the performance of other employees.

5. Record And Memorialize. Put all evaluations in writing and document any verbal feedback made during the meeting. Keep the language in written proposals simple and as easy to understand as possible.

6. Be Specific. Review appraisals to ensure that both high and low ratings have sufficient documentation and anecdotal information that details what the employee did or did not do to earn the rating. Avoid vague or descriptive personal criteria that others could misinterpret.

7. Address Performance Problems Promptly. Discuss and/or deal with performance problems at the time they occur. If the employee’s performance is unsatisfactory, immediately counsel the employee on deficiencies and suggest concrete ways to improve performance. The courts may question your motive in a poor performance discharge if the incident prompting the discharge occurred substantially prior to the time of the discharge.

8. Specify the Consequences Of Non-Performance. Clearly specify a final warning on the performance appraisal if the employee’s performance is so poor that a demotion, change in assignment, or discharge may occur. This will help defend against the single most common legal deficiency in the performance management process: the employee’s truthful claim that “I didn’t know this adverse action would occur if I didn’t improve or correct my performance.” Employees routinely win lawsuits with such a claim because supervisors often don’t like to give negative feedback due to concerns about defensive confrontations, a desire not to hurt a likeable employee’s feelings, or worst of all, the fear of drawing a lawsuit that alleges discrimination or harassment.

9. Maintain Consistency. Be consistent with performance appraisals and any corresponding pay adjustments. Document poor performance if it is a basis to delay or deny a pay adjustment just as you would document good performance to substantiate a pay raise. Inconsistency will reflect poorly in any subsequent legal proceeding, especially when the employee claims that he or she was singled out for negative action. Consistency further enhances your ability to defend against discrimination claims, as it demonstrates that the needs of the particular job consistently required adherence to concrete, well-articulated performance expectations, and that all similarly situated employees are held to the same standards.

10. Plan Your Documentation. Contrary to popular belief, poor documentation techniques actually increase your chances of liability in a lawsuit. Avoid making any notes on appraisal forms that the courts could view as discriminatory or that reflect a “mixed motive.” Avoid contrived or pre-textual statements such as “the chemistry isn’t right.” Also, minimize your use of labels, such as “self starter,” unless you tie it to a measurable performance standard, in this case “initiative.” When in doubt, have a jury who doesn’t know you or the employee review the appraisal. Can they misinterpret it? Above all else, never backdate appraisals and never attempt to document something that did not occur. Always document events as they occur to assure that your memory is fresh and your examples are relevant.

11. Be Careful When Referring To Job Protected Leave In Performance Evaluations. Front-line leaders often don’t realize that comments they make on performance evaluations can come back to haunt them. That’s especially true when those comments relate to absences that are covered by job-protected leave, such as the Family & Medical Leave Act (FMLA). Several recent FMLA cases have concluded that commenting upon an employee’s absence due to authorized FMLA leave is the legal equivalent of interfering with the right to take such leave, giving rise to substantial damages against the employers.

In Goelzer v. Sheboygan County, An Administrative Assistant got consistently good performance evaluations for 20 years. She took FMLA leave for her own serious health condition and to care for her ill mother. On her performance appraisal, her supervisor wrote, “[Y]ou were out of the office having eye surgery. In the past two years, using sick leave and vacation, you were out of the office 113 days. As the only support person in the office, this has presented challenges in the functionality and duties associated with the office.” When she was terminated on performance grounds, she sued. A Federal Appeals Court concluded that Goelzer presented compelling evidence for a jury to believe that she was fired for taking FMLA leave. The Court emphasized the supervisor’s evaluation language, which expressed frustration with her use of FMLA leave, the total absence of documentation supporting any concern with her deficient skill set, and her consistent good performance ratings prior to her FMLA leave.

Employers cannot interfere with or discriminate against an employee who exercises FMLA rights. Taking FMLA or other job-protected leave does not insulate an employee from performance-based adverse actions. But, in order to effectively establish that the adverse action is due to performance deficiencies and not the exercise of FMLA rights, the facts must support and document an appropriate, job-related and non-discriminatory explanation.

When you know, understand, and implement the criteria for lawful performance management, you enable your company to operate at peak efficiency while you stay within specific legal parameters. The more proactive steps you take to reduce your chances of a wrongful termination lawsuit, the more successful and lawful your company becomes.