The Acme chemical plant was concerned about two things. The first was terrorism. The production crew routinely handled dangerous, flammable and toxic materials feeding the reactors that maintained a steady flow of finished product going out the door and revenue coming into the till. The second concern was health care costs. Regardless of which insurance carrier Acme used, the premiums seemed to rise faster than the nation’s inflation rate and the consumer price index.
Addressing the first concern was relatively easy. A security guard opened the gate only after inspecting a driver’s identification and copying the details to a form carried on a clipboard. Few of the 600 employees on either shift drove into the plant. Most walked in, and the guard wrote down as many serial numbers from employee ID cards as he could during shift changes. The second concern was more problematic.
Medical care was important to Petey and Geri Atrique, a couple who worked in the Acme plant. Petey had been working there for nearly 25 years and Geri had been on the staff for about eight years. They chose to work for Acme for one reason. The company’s benefit package provided medical coverage for Barry, their preteen son, a cancer patient who was dealing with a metastasized tumor but was holding his own against the disease.
Medical care also was important to Acme. Every year, Acme and its employees’ union met to discuss the details, cost and performance of the health care plan. The outcome was an agreement about employee cost-sharing. Participants contributed to the plan through payroll deductions in an amount that was a function of the number of family members enrolled in the plan.
Nevertheless, medical care costs spiraled out of control. In an attempt to minimize its own costs and employee premiums, Acme had been changing insurance nearly every year. But this year, the company couldn’t find coverage at a reasonable cost. The HR department conducted a study and found that fewer than 20% of the employees accounted for more than 80% of the medical claims. So, Acme elected to eliminate the middleman and become self-insured, which meant the company would pay any claims the employees filed. HR also noted that only two people enrolled in the plan were being treated for a terminal illness: Barry Atrique and Terry Hote, the wife of Acme’s CEO.
If this money-saving initiative was to be a success, Acme would need to influence employee behavior. This initiative started with Acme’s management conducting a series of employee meetings to explain the newest health care plan. Executives displayed historical charts showing most medical claims were relatively small. In fact, many employees never filed a claim. Acme warned that having to pay large medical claims would only increase the overall cost of health care coverage, which would result in larger deductions from their weekly paychecks.
Soon after the meetings, Barry suffered a relapse and his parents were advised that the child probably had entered the final stages of cancer. The oncologist recommended an aggressive six-week experimental treatment regimen to begin immediately. Petey and Geri agreed to the program at a cost of nearly $10,000 per week.
About halfway through the treatment schedule, Acme felt obligated to open an investigation into Petey’s time cards because management believed he falsely reported the hours he was in the plant during a recent chaotic plant shutdown. This was motivated by an apparent discrepancy between the number of hours Petey listed on his time cards and the in/out time the security guard logged at the gate.
When his supervisor confronted Petey about several differences going back about one year, Petey replied that he couldn’t recall the details and wasn’t sure about the times shown on either set of records. He said that having an only child in the cancer ward fighting for his life was stressful. In addition, Petey admitted to taking antidepressants for some time. One week later, Acme fired Petey, citing a dozen instances of falsified time cards, equivalent to about 20 regular hours and half a dozen overtime hours, during the previous month.
After hours one night, HR called Geri at her son’s hospital room to ask about apparent discrepancies in her time cards. Geri was adamant that the security guard’s logs weren’t necessarily accurate because she often went to her car to retrieve belongings. The guard knew who she was and many times didn’t require her to display a gate pass when she reentered the plant.
During a second call to her son’s hospital room, Geri couldn’t convince the investigator that she had done nothing wrong. The next day, Acme terminated Geri, citing intentional falsification of time cards amounting to about eight hours of straight time and six hours of overtime.
This left them, and Barry, without medical coverage. Petey and Geri sued, claiming Acme terminated them in violation of the Americans with Disabilities Act of 1974. Their son died six months after they were terminated.
How could this situation have been avoided? How should Acme have handled its transition to health care self-insurance? Should employees be obligated to use time cards? Is becoming self-insured a risky proposition? Does a self-insured company have an inherent conflict of interest? How does the Americans with Disabilities Act of 1974 (ADA) apply in this case?
An academician says:
There really are two issues here, which might be related. The first is the falsifying of time cards. The second is the loss of medical benefits. The Atriques think the two are related, with the medical cost their son incurred as being the cause of the firing. The company probably will argue that falsifying time cards was the cause of the firing and their son’s medical condition wasn’t a factor.
Let’s take the falsification issue first. The question concerns the most accurate indication of the Atriques’ time — the time cards the Artiques submitted or the security guard’s records. I was recently involved in a case of a police officer who had applied for a lot of overtime pay because of numerous court appearances on arrests he had made. To go to court, a police officer had to notify a sergeant, who had the officer dispatched to court in a patrol car, and picked up again. The police department said that the officer had falsified much of the overtime and hadn’t been in court on many of the days that appeared on his time sheet. The department filed a motion to have him dismissed.