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Eighth Circuit Says That Considerations Of Health Care Cost Savings Could Be Proxy For Age In ADEA Suits

The Eighth Circuit recently concluded that an employer may violate the ADEA by terminating an older employee in order to reduce its health care premiums.  Tramp v. Associated Underwriters, Inc., 2014 WL 4977396 (8th Cir. 2014).  Plaintiff Marjorie Tramp brought claims of discrimination and retaliation under the ADEA, arguing that Defendant Associated Underwriters, Inc. terminated her to reduce its health care costs and in retaliation for her refusal to rely on Medicare benefits in lieu of employer-sponsored benefits. In support of her claims, Tramp produced evidence showing that:  (i) while negotiating insurance premiums, the Defendant repeatedly asked whether having younger employees would reduce its rates; and (ii) Tramp began receiving formal reprimands and was eventually terminated after she declined Defendant’s request to rely on Medicare rather than the company’s insurance plan. Defendant argued that her firing was part of a reduction-in-force and based on her poor performance.

The district court granted summary judgment in favor of Defendant. Relying on the Supreme Court’s opinion in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), the court found that, health care costs are not a proxy for age because the two are “analytically distinct,” meaning that Defendant could take health care costs into account without considering age. The Eighth Circuit reversed, concluding that considerations of health care costs could be a proxy for age and, regardless of whether age and health care costs actually are analytically distinct, there was an issue of fact as to whether Defendant believed that they were not analytically distinct and terminated Tramp for age-related reasons.   Further, as to the retaliation claim, the Court found that, though a gap between an employee’s protected activity and the employer’s adverse act usually weakens the presumption of retaliation, Defendant’s ongoing reprimands leading up to Tramp’s termination fill in that gap, allowing a reasonable jury to find that Tramp was terminated for refusing to decline employer-sponsored health care insurance.

This article was written with contributions from Lindsey Chopin.

© 2020 Proskauer Rose LLP. National Law Review, Volume IV, Number 293


About this Author

Russell L Hirschhorn ERISA Litigation, employee benefits attorney, Proskauer
Senior Counsel

Russell Hirschhorn is a Senior Counsel in the Labor & Employment Law Department, where he focuses on complex ERISA litigation and advises employers, fiduciaries and trustees on ERISA benefit and fiduciary issues. 

Russell represents employers, plan sponsors, plans, trustees, directed trustees and fiduciaries in all phases of litigation, arbitration and mediation involving employee benefits, including class action and individual claims relating to ERISA’s fiduciary duty and prohibited transaction provisions, denials of claims for benefits, severance plans, ERISA Section 510,...