Health-Care Cost Were Not Behind Firing

July 23, 2004 ( - A perceived burden on the company's health-care cost was not the motivation behind an employee's termination, a district court has determined.

>Granting summary judgment to the defendant, US District Judge Rebecca Pallmeyer of the United States District Court for the Northern District of Illinois found the plaintiff was fired for just cause due to the poor performance and inability to perform necessary job functions.   The plaintiff claimed his poor health, and subsequent health-care cost, were a motivating factor behind the company’s health-care cost spikes, and ultimately led to his termination.

“[The plaintiff] has not demonstrated that the motivating factor for his discharge was the denial of, or interference with, his [Employee Retirement Income Security Act]ERISA rights,” said Pallmeyer.

Case Background

Plaintiff Larry Chmiel filed suit against Opto Technology, Inc. and its president, Tom Hegberg, alleging that they terminated his employment in order to remove him from the company’s health insurance plan in violation of ERISA. Additionally, Chmiel claims that Opto discriminated against him on the basis of his age and a perceived disability in violation of the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA).

Chmiel had certain medical conditions, including cataracts, diabetes, small blood vessel disease in the brain, and meningioma, but according to the company’s testimony, he only discussed problems related to his cataracts at work.   Opto holds Chmiel never told anyone at the company about the other ailments. However, Chmiel held that Hegberg did in fact know about all of his medical conditions because Hegberg knew that Unum Provident Insurance and Mass Mutual Insurance had both declined his applications for long-term disability insurance around the time he was hired.

In August 2002, Hegberg decided the company did not need an employee to solely manage Opto’s quality assurance activities, a function that was being performed by Chmiel.   Rather, Hegberg believed that Opto needed a quality control and assurance employee who was actively involved with quality inspectors and production employees.   As a result, Hegberg decided to terminate Chmiel’s employment on September 30, 2002.   Chmiel claims he was fired due to his medical claims’ influence on the company’s rising health-care cost during the two years of his employment.

Court Ruling

The district court dismissed Chmiel’s age discrimination claim finding he presented no “evidence suggesting that his age was a motivating factor in Hegberg’s decision to discharge him.”   Similarly, the court found the plaintiff did not have a disability within the meaning of ADA in dismissing ADA violation claim.

In presenting his ERISA violation case, Chmiel claims he was terminated because “he was too great of an insurance risk and therefore too great of an insurance cost.” To support this contention, Chmiel says Hegberg knew that he had cataract surgery in the summer of 2002 and Hegberg knew that he was not able to secure long-term disability coverage and thus wanted to terminate him.

However, the court found justification in the Chmiel’s firing that were unrelated to health-care costs.   “There is ample evidence that Hegberg was dissatisfied with Chmiel’s performance and wanted an employee who would spend more time on the production floor and learn more about Opto’s products,” the court said.   “Hegberg’s mere knowledge of Chmiel’s cataract surgery and problems obtaining long-term disability coverage, standing alone, does not demonstrate that he fired Chmiel in order to reduce the company’s insurance costs.”

The case is Chmielv. Opto Technology Inc., Northern District of Illinois, No. 02 C 9123.