Law360 (September 8, 2020, 8:59 PM EDT) -- Benefits attorneys will be keeping an eye on suits over coronavirus leave, paid sick time, benefit plan participation requirements and notices to laid-off workers in 2020's final months — and they warn that if these lawsuits gain traction, a flood of similar cases could follow.
Such suits are part of litigation trends that could arise or worsen because of the pandemic, which heightened the need for benefits like health insurance and paid sick time, as well as the risk of lawsuits when those benefits aren't dispensed.
"If the circumstances are dire enough, and the plaintiffs are affected adversely, you may get a lawsuit, because the impact is so severe," said Philip Gutwein, a partner at Faegre Drinker Biddle & Reath LLP who specializes in employee benefits law. "With respect to health insurance coverage, with lots of people who lose coverage, you can expect a lot of suits over whether the circumstances were appropriate that led to their loss of eligibility."
Here, Law360 looks at four COVID-19-related benefits suits lawyers ought to have on their radar.
This summer, two cameramen who lost health insurance in the pandemic sued their benefit plan's board of directors, alleging they didn't treat all participants fairly when modifying the plan's eligibility requirements to account for the lack of work available when COVID-19 shut down film production sets.
Greg Endries, a New York-based still photographer on television shoots, and Dee Nichols, a Los Angeles-based camera operator, accuse the Motion Picture Industry Health Plan of arbitrarily favoring the interests of one group of plan participants over another when adjusting the eligibility requirements, leading many to lose health care.
Endries and Nichols filed the proposed class action in July on behalf of every worker who was denied the relief offered to others: deadline extensions, premium waivers and premium subsidies. They alleged that the board's actions constituted a breach of its fiduciary duty under the Employee Retirement Income Security Act.
The board responded in August by asking a California federal judge to toss the suit. The board's members argued that they acted appropriately and that their amendments to the plan's eligibility requirements were not fiduciary decisions.
Attorneys said the board's argument poses a real challenge to the suit, representing the primary obstacle workers face when bringing suits of this nature.
"Usually the people who design plans are free to design plans in any way they want," said R. Joseph Barton, a partner at Block & Leviton LLP who chairs the firm's employee benefits group. "If I wanted to have a plan that only covered employees who had the last names A through Y and wanted to exclude people whose names start with Z, I'm allowed to do that."
Barton said that suits concerning plan interpretation — not plan eligibility — face a clearer path to the finish line, as determining the meaning of plan language has been well-established as a fiduciary function.
The case is Endries et al. v. Board of Directors of the Motion Picture Industry Health Plan et al., case number 2:20-cv-06347, in the U.S. District Court for the Central District of California.
Notices to Laid-Off Workers
A wave of suits over Consolidated Omnibus Budget Reconciliation Act notices, which tell laid-off workers how to extend their job-provided health insurance coverage, arrived before the pandemic, but attorneys anticipate more of this litigation amid the mass job losses related to COVID-19.
A pandemic-related wave hasn't arrived yet, possibly because the U.S. Department of Labor extended the deadline for signing up for COBRA coverage in May, said Elizabeth Hopkins, a partner at Kantor & Kantor LLP.
But that wave may come, considering COBRA notice lawsuits arise after layoffs, and about 22 million Americans lost their jobs in the pandemic, according to U.S. Department of Labor data.
The silver lining for employers is that COBRA notice suits are often resolved early, because the suits are much more straightforward than class actions alleging breaches of fiduciary duty under ERISA, attorneys said.
"The COBRA suits are more likely to get resolved early because the law is not as complicated," Barton said. "You either have a violation or you don't have a violation."
Though many recently brought COBRA suits have been settled or withdrawn, some are still in their early stages, like Travis Mendiola's suit against Home Depot U.S.A. Inc.
Mendiola's proposed class action — arising from Florida, like many COBRA notice suits — accuses Home Depot of failing to use the U.S. Department of Labor's model notice and instead using a confusing, misleading document that left him unsure how to keep health insurance after losing his job.
Attorneys recommend hewing as close as possible to the DOL's model COBRA notice when informing laid-off workers of their health care rights, to avoid landing in Home Depot's boat. The DOL updated its model notice during the pandemic, releasing the latest version May 1.
The case is Mendiola v. Home Depot U.S.A. Inc. et al., case number 8:20-cv-01561, in the U.S. District Court for the Middle District of Florida.
The federal government's first coronavirus relief law, the Families First Coronavirus Response Act, required companies with fewer than 500 employees to make two weeks of paid leave available to workers affected by the pandemic.
If companies do not comply, they could face DOL penalties or lawsuits by their workers, like the suit Deborah Kofler filed against Sayde Stevens Cleaning Service Inc. in June.
Kofler accuses Sayde Stevens of denying her coronavirus-related paid leave to care for children who were at home due to school closures, then firing her, violating both FFCRA and the Fair Labor Standards Act.
Kofler beat the company's motion to dismiss the case in August, and the parties began working with a mediator shortly after.
More FFCRA violation cases are likely, though they will probably remain individual suits, not class actions, Barton said.
"The FFCRA got rolled out in a hurry, and employers were under an obligation to respond to it in a hurry, so you can imagine some did a good job with it and some didn't," Faegre Drinker's Gutwein said. "If these employees are now finding themselves in dire situations, they may feel like suing is their only hope."
The DOL has also been enforcing the FFCRA. As of Aug. 29, it had closed more than 2,000 investigations it opened under the law, recovering nearly $2 million in back wages for workers, according to DOL data provided to Law360 by a spokesman.
The case is Kofler v. Sayde Steeves Cleaning Service Inc., case number 8:20-cv-01460, in the U.S. District Court for the Middle District of Florida.
Sick Leave Law Compliance
In D.C. district court, a former Lyft Inc. driver is alleging in a new lawsuit that the company's refusal to provide paid sick leave for workers violates the city's 2008 Accrued Safe and Sick Leave Act.
Cassandra Osvatics sued Lyft on behalf of a proposed class of drivers in May, saying Lyft's alleged noncompliance with the law needs to end now.
"Given the current COVID-19 pandemic, which some experts predict could last for years, the need for paid sick leave is vitally important," she says in the complaint, adding that Lyft was forcing its drivers to choose between risking their lives and the lives of their passengers, and risking their ability to pay the bills.
In July, the District of Columbia attorney general filed an amicus brief in support of the drivers. Lyft has tried to force the suit into arbitration, a move Osvatics opposes.
Attorneys say they could see suits like this cropping up in other regions with unevenly applied paid sick leave laws.
"If that suit is successful, I wouldn't be surprised if there were similar suits," Kantor & Kantor's Hopkins said, naming California as a potential place for such litigation.
Block & Leviton's Barton also said similar suits could arise, adding that the pandemic has certainly emphasized the importance of paid sick leave for workers who interface with the public.
"You think about the employment in which people who are without employer-provided sick leave work, and they overwhelmingly fall into categories where they have significant contact with the public," Barton said. "Why Lyft or anyone else would not go to steps to encourage their employees to take time off in the event that they are sick, I do not understand."
The case is Cassandra Osvatics v. Lyft Inc., case number 1:20-cv-01426, in U.S. District Court for the District of Columbia.
--Additional reporting by Anne Cullen and Lauren Berg. Editing by Brian Baresch and Kelly Duncan.
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