With the fate of the Affordable Care Act resting in limbo as President-elect Donald Trump prepares to take the Oval Office, employers and advisers are already on edge over the uncertainty of future health reform and its impact on the workplace. To add to that unrest, litigation trends in the last year show the possibility of increased class action lawsuits over healthcare coverage.
Labor and employment law firm Seyfarth Shaw LLP released its 13th annual Workplace Class Action Litigation Report recently, analyzing 1,331 class action rulings on a circuit-by-circuit and state-by-state basis to capture key themes that companies could face in 2017.
“The U.S. Supreme Court decided several cases in 2016 that favored workers bringing class actions, which in turn portend significant challenges for employers facing these exposures in 2017,” says Gerald L. Maatman, Jr., co-chair of Seyfarth’s class action defense group. “While settlements were down for employment discrimination and ERISA class actions and government enforcement litigation, settlement numbers were up for wage and hour class actions and collective actions.”
Of the litigation developments in 2016, Seyfarth highlighted six key trends in its report:
1) Class action dynamics increasingly have been shaped and influences by recent rulings of the U.S. Supreme Court. Over the past several years, the Supreme Court has accepted more cases for review — and issued more rulings — than ever before that have impacted the prosecution and defense of class actions and government enforcement litigation. Plaintiffs’ lawyers scored several significant victories in 2016 that will make class actions easier to prosecute and result in more certification orders.
2) The monetary value of the top employment-related class action settlements declined significantly in 2016 after they reached all-time highs in 2014 and 2015. However, wage and hour settlements increased significantly.
3) Federal and state courts issued more favorable class certification rulings for the plaintiffs’ bar in 2016 than in the past year. However, employers did better in decertification motions than in past years.
4) Overall complex employment-related litigation filings were flat in 2016 after several years of increased filings. For the first time in over a decade, wage and hour filings declined.
5) Wage and hour certification decisions in 2016 increased geometrically as compared to 2015. This manifests the focus of the plaintiffs’ bar in wage and hour compliance issues.
6) Government enforcement lawsuits brought by the DOL and EEOC continued the aggressive litigation programs of both agencies, but by sheer numbers of cases, their enforcement activities were arguably limited in their effectiveness, at least when measured by lawsuit filings and recoveries compared to previous years.
“With the change-over from Democratic White House to a Republican one and the second most filings of wage and hour litigation over the past decade, 2017 is sure to present twists and turns for employers in dealing with these types of litigation issues,” Maatman says.
Class action suits
In the health and welfare space, plan sponsors can expect some additional confusion as Congress and the Trump administration take up the repeal of the ACA. This in turn could lead to an increase in class action litigation if plan participants remain unsure about their applicable coverage for various benefits, according to Seyfarth.
One example would be a continued surge in class actions regarding coverage by out-of-network providers. Last year, Seyfarth found, several network providers challenged reimbursement rates from insurers and plans, therefore entering both administrators and plans into numerous law suits.
Further, the report shows a fight in the courts is expected regarding the DOL’s recently issued final regulations on disability plan administration. These regulations change the landscape for the handling of disability claims through long-term disability benefits.
Seyfarth’s report advises insurers and plan sponsors to watch the litigation and its potential results closely.
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