The 8th U.S. Circuit Court of Appeals reversed a district court’s decision in Marjorie Tramp’s Age Discrimination in Employment Act (ADEA) claim. The district court granted summary judgment in favor of Tramp’s former employer, Associated Underwriters, saying Tramp’s evidence demonstrated that age and health care costs were analytically distinct in the case. However, the appellate court found that correspondence between Associated Underwriters and its insurance carrier before Tramp’s termination showed it was apparent to company management that its health care premiums were affected by the demographics of its employees.
The court said it is possible that certain considerations such as health care costs could be a proxy for age in the sense that if the employer supposes a correlation between the two and acts accordingly, it may have engaged in age discrimination. “Here, it is possible that a reasonable jury could conclude from the evidence that Associated Underwriters believed the two considerations were not analytically distinct,” the 8th Circuit wrote in its opinion. The court said summary judgment prematurely disposed of the issue.
In 2008, Associated Underwriters faced economic difficulty and management decided to pursue cost-saving measures for its health benefits. It sought quotes from different providers, and one came back much lower than the others. Management investigated and found out that insurer had not included Tramp and another employee because they were older than 65. The insurance company said people older than 65 “usually don’t get quoted” because they are Medicare eligible. Management asked the insurer to provide a quote including the two employees, and hired that company as its health benefits provider.
Correspondence between management and the insurance company over time showed that each time an employee who was older or “sicker” left employment, United Underwriters would ask the insurance company to reconsider its rates. According to the court, it was clear that Associated Underwriters was seeking other bids for insurance when management said in one correspondence, “We have lost several of the older, sicker employees and should have some consideration on this.”
In addition, management met with Tramp and the other employee who was older than 65 and suggested they utilize Medicare instead of the company’s health plan. Both refused.
The employer showed evidence that during the same time frame, Tramp was formally reprimanded for poor performance. In February 2009, Associated Underwriters underwent a reduction in force, and Tramp as well as the other employee older than 65, and other employees, were laid off. Management said its decision about who to lay off was made based on performance.
In July 2009, email correspondence between management and the company’s health insurance provider showed the company was disappointed in its receipt of a higher renewal rate. In an email, management said, “Since last year we have lost our oldest and sickest employees, [names, including Tramp’s, were shared]. Please let me know if this is the best we can do… we were expecting a rate decrease from the group becoming younger and healthier, not an increase.”
The 8th Circuit said, at the very least, the email language was a crude and insensitive way to describe employees, but also, there remains a possibility that the statements could be a manifestation of intent in the process used to lay off its oldest workers.
The appellate court’s opinion is here.