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Before canceling health insurance, beware FMLA trap that could cost big bucks

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in Employee Benefits Program,FMLA Guidelines,Human Resources

If, like many employers, you provide health insurance benefits to full-time employees but not part-time ones, you may be tempted to cancel coverage as soon as an employee falls to part-time status. But what if the employee is eligible for FMLA leave? Canceling may not be an option.

In fact, it can lead to a big jury award if the cancelation means the employee’s medical bills go unpaid. That’s what happened in one recent case.

Recent case: Kathleen Ryl-Kuchar worked full time as a dietary consultant for Care Centers. Then she became pregnant with triplets and asked for FMLA leave to care for the infants after they were born. Meanwhile, she began working from home because she couldn’t fit behind the steering wheel of her car. She then gave birth, used up her FMLA leave and decided not to return to work.

Meanwhile, the company president’s wife, who handled benefits, began asking questions about Ryl-Kuchar’s work and leave. Then she pulled the timecards and noticed that the new mother hadn’t been working full time for months. She then retroactively canceled Ryl-Kuchar’s health insurance, leaving unpaid, birth-related and pediatric bills totaling over $31,000.

Ryl-Kuchar sued, alleging interference with her FMLA leave. She said she was entitled to continued health insurance. She also pointed out that no one had challenged her status before she took leave, and the company had deducted her share of the premiums.

A jury concluded Care Centers owed the unpaid bills, and the judge concluded the company hadn’t acted in good faith. He added $11,000 in interest and doubled the award, ordering the company to pay $85,000 plus attorneys’ fees. (Ryl-Kuchar v. Care Centers, No. 05-C-3223, ND IL, 2008)

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