When most employers think of the Patient Protection and Affordable Care Act (ACA), the focus is on the countdown to January 1, 2014, when the employer mandate kicks in. However, the ACA has been law since March 23, 2010. One aspect of the ACA that employers cannot lose sight of is its broad whistleblower protections. Section 1558 of the ACA added Section 18C to the Fair Labor Standards Act to provide protections to employees who are subject to retaliation for reporting potential violations of the law’s consumer protections (e.g., the prohibition on denials of insurance due to pre-existing conditions) or affordability assistance provisions (e.g., access to health insurance premium tax credits).
Indeed, it was only earlier this year that OSHA, the agency to which the Secretary of Labor has delegated ACA whistleblower complaints investigative powers, issued an interim final rule governing whistleblower complaints. The comment period on this interim final rule recently closed. The interim final rule establishes procedures and time frames for the handling of retaliation complaints under Section 18C, from the filing of the employee’s complaint with OSHA to judicial review of the Secretary’s final decision. This interim final rule can be viewed here.
The reach of the ACA’s whistleblower protections is quite broad. It applies to almost all public and private employees, and the protections afforded by the Act and the regulations are sweeping. As a result, as the countdown to the employer mandate continues, employers need to be aware of this aspect of the ACA and prepare accordingly.
To get there, here is a quick hitting summary of facts about the statute and the final interim rule that every employer should know:
What Does Section 18C Prohibit?
The Act provides that “[n]o employer shall discharge or in any manner discriminate against any employee with respect to his or her compensation, terms, conditions, or other privileges of employment because the employee (or an individual acting at the request of the employee) has”:
- received tax credits or cost-sharing reductions while enrolled in a qualified health plan through an exchange;
- provided, caused to be provided, or is about to provide or cause to be provided to the employer, the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of, any provision of Title I of the Act;
- testified or is about to testify in a proceeding concerning such violation;
- assisted or participated, or is about to assist or participate, in such a proceeding; or
- objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of Title I, or any order, rule, regulation, standard, or ban under Title I of the Act.
By its terms, an employee engaging in any of the foregoing broadly phrased protected activity can challenge subsequent adverse employment action. So, when employees start becoming eligible for tax credits and cost-sharing reductions through the health care exchanges in 2014, any resulting adverse employment action that follows may be deemed retaliation.
Likewise, Title I includes most of the fundamental aspects of the ACA, including a range of insurance company accountability policies such as the prohibition of lifetime dollar limits on coverage; the requirement for most plans to cover recommended preventive services with no cost sharing; and, starting in 2014, guaranteed availability protections so that individuals and employers will be able to obtain coverage that currently can be denied due to a pre-existing condition; and the prohibition on the use of factors such as health status, medical history, gender, and industry of employment to set premium rates. Thus, the potential scope of protected conduct is very broad.
Finally, OSHA’s rule states that the term “employee” covers current and past employees, as well as applicants.
What Is the Time Limit For Filing A Complaint With OSHA?
Complaints of retaliation must be filed with OSHA within 180 days after an alleged violation occurs. A complaint can be verbal or written, and no particular format is required. Further, OSHA has indicated that complaints can be submitted in any language.
What Does An Employee Have To Show To Establish Retaliation?
OSHA’s rule provides that an employer may be found to have violated the ACA if the employee’s protected activity was a “contributing factor” in the employer’s decision to take unfavorable employment action against the employee. To establish a prima facie case sufficient to withstand dismissal by OSHA, the complaint’s allegations augmented by the facts gathered in the investigation must show that the (1) employee engaged in protected activity; (2) employer knew or suspected that the employee engaged in the protected activity; (3) employee suffered an adverse action; and (4) circumstances were sufficient to raise the inference that the protected activity was a contributing factor in the adverse action.
Notwithstanding a finding that a complainant has made a prima facie showing, an employer still can obtain dismissal by demonstrating by clear and convincing evidence that it would have taken the same adverse action in the absence of the complainant’s protected activity.
Section 18C also vests OSHA with the authority to issue subpoenas in the course of its investigations.
How Does The Investigation Proceed?
Within 60 days of receipt of the complaint, OSHA must investigate and issue written findings. If, as a result of the investigation, there is reasonable cause to believe that retaliation has occurred, OSHA must notify the employer of those findings, and it will issue a preliminary order that requires the employer to take such action as abating the violation, reinstating the complainant, ordering back pay with interest, awarding compensatory damages, and if the complainant requests it, awarding attorneys’ fees and costs. Before issuing a finding of reasonable cause and a preliminary award, OSHA will contact the employer, review the relevant evidence, and provide the employer with 10 business days in which to provide a written response, meet with investigators, or present legal and factual arguments against the issuance of the reasonable cause finding.
Once a finding is made, either the complainant or the employer can make objections and request a hearing with an Administrative Law Judge (ALJ) within 30 days. If no objections are raised, the findings become final and are not subject to judicial review. An employer’s filing of objections will automatically stay all provisions of the preliminary order except for an order of preliminary reinstatement. Employers may file a motion to stay the order of reinstatement with the Office of Administrative Law Judges, but such motions will be granted only in exceptional circumstances.
If objections are made, a de novo hearing before an ALJ will ensue. After an evidentiary hearing, if the ALJ concludes the employer has violated the Act, the ALJ will fashion appropriate relief including reinstatement together with back pay and interest and compensatory damages and all other remedies available under the Act. If the ALJ rules in favor of the employer, the complaint will be dismissed. Further, upon request of the employer, if the ALJ finds that the complaint was frivolous or brought in bad faith, the ALJ may award the employer reasonable attorneys’ fees not exceeding $1,000.
Any party seeking review of the ALJ’s decision must file a petition for review with the Administrative Review Board (ARB) of the Department of Labor. If no petition for review is filed, the decision of the ALJ becomes final and not subject to judicial review. If a petition is filed, the decision of the ALJ will become the final order of the Secretary unless the ARB accepts the petition for review within 30 days. If accepted for review, the decision of the ALJ will be inoperative except that any order of reinstatement will be effective while the ARB’s review is conducted. The final decision of the ARB must be issued within 120 days of the conclusion of the ALJ hearing. Like the ALJ, the ARB is empowered to issue orders awarding relief and damages or dismissing the complaint. Once issued, the order of the ARB becomes the final order of the Secretary.
Within 60 days of the issuance of a final order by the Secretary through an ALJ or the ARB, an appeal may be filed with the United States Court of Appeals for the circuit in which the violation occurred or the circuit where the complainant resided on the date of the violation.
Do Employees Have The Right To Initiate A Federal Lawsuit Before A Final Order Is Issued?
An employee may file a complaint for de novo review and jury trial in an appropriate United States District Court only (1) if a final order of the Secretary has not been issued within 210 days from the date the employee’s complaint is filed, or (2) within 90 days after the employee receives OSHA’s written findings, provided that there is no final order of the Secretary.
Employer Take Aways
The ACA’s whistleblower protections doubtlessly will be fruitful ground for agency and court litigation as employees begin enrolling in qualified healthcare exchanges and become more familiar with their Title I rights. As a result, employers should consider the following:
- Train management and human resources personnel regarding the whistleblower protections of the ACA so that they know what the law provides and to ensure that employment actions do not run afoul of the prohibitions of the Act
- As employees begin to receive tax credits or cost-sharing reductions while enrolled in qualified health plan exchanges, be aware that changes in terms and conditions of employment that are taken as a result of this may be challenged as retaliation
- Update employment policies and Codes of Conduct to include an express prohibition on retaliation under the ACA
- Since 18C provides that the “rights and remedies in this section may not be waived by any agreement, policy, form, or condition of employment,” it appears that employee rights cannot be waived through the signing of a general release upon termination of employment. Consequently, just as employers have addressed similar prohibitions in the Dodd-Frank and Sarbanes-Oxley context, consider having employees provide a written verification at the conclusion of their employment that they are unaware of any conduct by the employer that violated the provisions of the ACA.