FMLA Violated By Retroactive Termination of Medical Insurance

The Family Medical Leave Act (FMLA) prohibits an employer from interfering with or retaliating against an employee who asserts or exercises her rights to take leave from work under the FMLA. Both these prohibitions were violated by the employer's retroactive termination of an employee's medical insurance the Seventh Circuit has ruled in Ryl-Kuchar v. Care Centers, Inc., Nos. 08-2688, 08-2823 (May 11, 2009).

Kathleen Ryl-Kuchar had worked for Care Centers, Inc. for over 17 years when she became pregnant with triplets in late 2002. She worked all the way up to delivery on July 17, 2003, although during the later part of her pregnancy, she worked from home and in some weeks less than 35 hours per week. Ryl-Kuchar returned to work right after delivery but began FMLA leave a short time later. A few weeks later, she elected to terminate her employment effective October 1.

About six weeks after resigning, Ryl-Kuchar learned that her health insurance had been retroactively cancelled on June 15 -- just at the point where, as the court observed, she really began "piling up" the medical bills related to her pregnancy. The employer asserted that it had retroactively cancelled her medical insurance on the grounds that she had become ineligible for the coverage by having worked for less than 35 hours some weeks prior to delivery.

Ryl-Kuchar sued under the FMLA and claimed that the retroactive cancellation of her medical insurance was based on her decision to take FMLA leave. She presented evidence "that Care Centers was concerned with rising health care costs, as evidenced by an article in the company newsletter," and that the claim she had become a part-time employee was groundless, since she was a salaried employee and had kept, at all times, the same rate of pay. Only after she took FMLA leave, Ryl-Kuchar pointed out, was there an audit of her payroll records and a claim of "mistake" regarding her eligibility for medical insurance. This proof, the court ruled, was enough to show that Care Centers retaliated against Ryl-Kuchar for taking FMLA leave by retroactively cancelling her medical insurance.

The court also ruled that Ryl-Kuchar had easily show unlawful interference with her rights under the FMLA. The court explained that the FMLA requires that an employee on FMLA leave is "entitled to have health benefits maintained while on leave as if the employee had continued to work instead of taking the leave."