Employer Cleared of Retaliation Charges

February 1, 2007 (PLANSPONSOR.com) - The U.S. District Court for the District of Kansas ruled that Deluxe Financial Services , Inc. did not fire a machine operator at its imprint plant to strike back at her for appealing a decision by the company's disability benefit plan administrator to deny her benefits.

US District Judge Kathyrn Vratil found that the company fired Katrina Michaelis, who worked for the company for 12 years, because she was insubordinate, not to retaliate against her for appealing her short-term disability benefit denial.

Michaelis was approved for short-term disability benefits by The Hartford Comprehensive Employee Benefit Service Company  – the plan administrator – when she began experiencing a number of health problems. The administrator approved a series of benefits claims between June 30 and October 8, 2004, but then denied Michaelis’ subsequent claims from October 9 to November 28. She went back to work on November 29.

Michaelis’ supervisors reminded her that the denial of benefits by The Hartford meant that she would be responsible for paying the full amount of her medical insurance premiums during the unapproved, seven-week leave period, which totaled $1,700, and would also be penalized under Deluxe’s absenteeism policy. The company assured Michaelis that the attendance citations would be removed from her record if The Hartford reversed its decision to deny her claim.

When The Hartford granted the appeal, Michaelis began skipping through the atrium in the in her office building, flailing her arms in the air and exhibiting other signs of elation, according to the opinion. Her supervisors thought this behavior was “unusual, and met with her later that day to find out what was going on,” because they were not used to seeing employees act in such a way at work.

Her supervisors then planned to schedule a meeting with her to discuss her behavior. During the meeting, Michaelis refused to answer some questions, at which point her supervisors fired her for insubordination.

Michaelis then sued Deluxe, saying that her former employer violated the Employee Retirement Income Security Act (ERISA), which prohibits retaliation against an employee for exercising any right to which she is entitled to under the provisions of the employee benefit plan – in her case, a right to appeal the benefits denial.

The court said that in order to succeed in the ERISA claim, Michaelis had to prove that Deluxe had specific intent to interfere with her ERISA rights, but failed to do that. Michaelis had relied on the fact that the her appeal to The Hartford and her termination happened so close together and on her claims that her employer treated her poorly, both of which the court viewed as only circumstantial evidence.

The court further said that the decision to terminate Michaelis’ employment “might seem harsh because management effectively refused to continue the employment relationship unless she admitted that her conduct had been inappropriate.” However, because she refused to discuss her behavior during three coaching sessions, Deluxe could “reasonably determine that plaintiff was insubordinate and that she would not be a productive employee in the future.”

The case is Michaelis v. Deluxe Financial Services Inc., U.S. District Court for the District of Kansas No. 05-2351-KHV, January 23, 2007.