The Family Medical Leave Act (“FMLA”) requires that covered employers provide twelve weeks of leave during a twelve month period to employees who among other things, have a serious health condition that renders them unable to perform the functions of their job. Employers can be found liable and employees awarded monetary relief where an employer wrongly denies leave to an eligible employee, retaliates against an employee for requesting and/or using the leave, or discharges or discriminates against an employee who opposes a practice made unlawful by the FMLA. To avoid liability, employers have hired third party administrators to determine when an employee is eligible for the leave and have successfully argued that they cannot incur penalty damages for wrongful denials of the leave or other FMLA violations because they acted in good faith in relying upon the determinations of a third party administrator. Until recently, third party administrators were also insulated from liability for violations of the FMLA based upon a “consultant’s privilege” and federal regulations. However, in Arango v. Work & Well, Inc. the federal court in Illinois determined that the employer’s 3rd party administrator could be held liable for violating the FMLA. In this case, the court held that the third party administrator may not be entitled to the consultant’s privilege where it clearly acted in its own interest rather than the interest of the client. Because there was evidence that the 3rd party administrator required a two-step medical certification process that clearly violated the FMLA and promised in its contract with the employer. In allowing the fired employee to go trial, the court stated:
Despite defendant's presumed knowledge of the law, it is undisputed that defendant simultaneously accepted the certification from plaintiff's doctor, which supported an eight-week leave, but gave plaintiff only four weeks of leave and told him he would have to submit additional medical documentation after that period to obtain the rest of the leave that his doctor said was required. Moreover, the record shows that this decision was not an aberration. Rather, it resulted from the execution of defendant's "complete, two-step certification" process — approving only four to six weeks of leave, regardless of the amount supported by the medical certification and requiring employees to submit additional medical evidence to obtain additional leave — that it said "typically reduces STD/FMLA usage and absenteeism due to intermittent FMLA leave by 30-50%."
These undisputed facts are sufficient to suggest, though they do not conclusively prove, that defendant intentionally denied meritorious FMLA leave requests to enhance its reputation as a benefits administrator and increase its book of business. Thus, the record raises a genuine issue of material fact as to whether defendant is entitled to the consultant's privilege.Employees need to be careful when dealing with 3rd party administrators for FMLA leave. The administrators may try to deprive employees of their FMLA rights. This recent federal court case hopefully will make 3rd party administrators more FMLA compliant.
