Employers beware: Avoiding Affordable Care Act can lead to litigation claims

ACA could expose companies to litigation claims under state or federal law

Employers may be put on the naughty list this year if they aren’t careful with how they manage their employees and issues related to the Affordable Care Act. Businesses implementing or trying to avoid being covered by the ACA could wind up exposing themselves to new litigation claims under the ACA and other related federal and state laws. 

James Napoli of Proskauer Rose LLP spoke during a webcast titled “Litigation Risks Related to the Patient Protection and ACA” and broke down exactly what employers should look out for and how they can avoid being charged with litigation claims. 

According to recent Bloomberg BNA report, Napoli reviewed potential ACA litigation risks to look out for such as claims under the ACA itself, benefits and breach of fiduciary duty claims under the Employee Retirement Income Security Act, claims under federal labor and employment laws and claims under state laws.

The biggest red flags employers should be cognizant of include communications to employees and plan participants, workforce realignment to avoid the employer mandate and ACA whistleblowing. Here are some key points Napoli shared in the webcast.

How to communicate/issue notices to employees

  • Determine what needs to be in the notice by statue and guidance standards.
  • Decide who will be issuing the communication and use the proper voice to communicate your message.
  • Highlight the issue that is being addressed so that it is clear to all employees.
  • Don’t over-communicate more than is necessary.
  • Identify who is receiving the communication and speak directly to them.
  • Note if the communication plays more than one role to eliminate confusion down the line. 

ACA employer’s must haves

  • 50 or more full-time employees working 30 or more hours per week
  • Cannot offer health coverage to at least 95 percent of employees and dependents.
  • Must provide affordable coverage and prepare to pay a penalty for each full-time employee who declines coverage and receives support in the exchange.
  • Discrimination claims for interference with attainment of benefits.
  • Employees looking to reduce hours, or claim their employer reduced their hours, to avoid paying ACA penalties.
  • Taking adverse action against employees who receive a premium tax credit or subsidy through a public marketplace.
  • Cutbacks in hours that can impact a protected class of employees

Risks to watch out for

  • Discrimination claims for interference with attainment of benefits.
  • Employees looking to reduce hours, or claim their employer reduced their hours, to avoid paying ACA penalties.
  • Taking adverse action against employees who receive a premium tax credit or subsidy through a public marketplace.
  • Cutbacks in hours that can impact a protected class of employees

If you are an employer and in danger of being audited, Napoli suggests you first develop a strategy to look at what is being audited carefully as to not inadvertently raise any other issues. And most importantly, do not admit to a breach of fiduciary duty. Luckily, he added that auditors understand that employers don't have enough information on the ACA, so they are trying to assist in compliance instead of leveling penalties.

 

For more news on recent litigation claims check out these related articles:

Supreme Court case could offer employees grounds to sue for 401(k) mismanagement

Start-up founder victorious in patent lawsuit

Google asks to have U.K. breach of privacy suit dismissed

Contributing Author

Stefanie Mosca

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