Family Medical Leave Act
Bachman v. Laser Spine Institute LLC, 2016 WL 159950 (D. Ariz. January 14, 2016)
Facts and Procedural History
In January 2011, Laser Spine Institute (“LSI”) hired Bachman as a certified registered nurse anesthetist (“CRNA”). She was subject to the company’s attendance and absence policy including the requirement employees refrain from unscheduled absences, tardy arrivals or early departures except in cases of unexpected illnesses or other unavoidable situations. Even in these situations, employees are required to notify their supervisor of the absence and its expected length at least two hours before their scheduled start time. Failure to provide timely notice was treated as a no show. Bachman complied with this policy for a year and a half.
On November 13, 2012, at the beginning of her shift she had scheduled a medical appointment to address an increase in her blood pressure she had noticed the day before. Bachman sent a text message to her supervisor requesting permission to leave work for a few hours to attend the appointment. Her supervisor discussed her request with her and asked what time she needed to leave and whether she needed to take the day off. The supervisor left without explicitly approving or denying her request. When her supervisor had not made arrangements for another CRNA to take over for her, she asked the surgeon with whom she was working for permission to leave for the appointment. He did not object and made arrangements for another CRNA to replace Bachman. Bachman briefed her replacement then left for the appointment. She returned a few hours later and completed work for the day. Bachman was never written up over the incident, and at no time in 2012 did any of her supervisors indicate her actions were improper.
LSI approved FMLA leave for Bachman from November 28, 2012 until February 20, 2013. On January 1, 2013, the surgeon for whom Bachman worked recommended she be reappointed to active staff and granted privileges at LSI for two more years. On February 13, 2013, Bachman delivered a letter to LSI stating she was ready, willing, and able to return to work and perform all of her job responsibilities. The letter included an attachment from her doctor recommending certain limitations on Bachman’s activity during her first week back at work. When Bachman returned
to work on February 19, 2013, LSI provided her with notice that her employment was terminated based on incidents occurring in the workplace prior to her leave of absence. LSI asserted that it terminated Bachman due to her failure to follow company policy and her abandonment of her job duties on November 13, 2012.
The Family Medical Leave Act establishes the minimum labor standard for leave. Employees covered by FMLA are entitled to take up to twelve weeks of leave each year for family or medical reasons, and must be reinstated to their original position (or an equivalent) upon return. An employee will prevail on a claim for unlawful interference with FMLA rights if she shows that (1) she took FMLA protected leave, (2) she suffered an adverse employment action, and (3) her use of protected leave was a factor contributing to her employer’s decision.
LSI did not dispute Bachman took FMLA protected leave or that she suffered an adverse employment action immediately upon her return. It contends that it would have terminated her for failing to comply with company policy on November 13, 2012. However, it presented no evidence Bachman was written up for the November 13, 2012 incident or that any of her supervisors suggested it was improper until shortly before she was terminated. More than a month and half after the incident, she was reappointed to active staff and granted privileges. Moreover, LSI’s attendance policy provides any unscheduled absence constitutes an occurrence. Two occurrences in a 12-month period will result in verbal coaching, three will result in a written warning, four will result in a final written warning, and five will result in separation of employment. Even if Bachman’s departure from work on November 13, 2012 could somehow be characterized as a more serious “no call no show” the schedule states that the first such event will result in a final written warning and only the second will result in separation from employment.
The court of appeals found a reasonable jury could conclude: the prospect of immediate termination applied to more serious infractions; the detailed and precise schedule of corrective steps for absences from work applies to Bachman’s absence on November 13, 2012; LSI did not follow its own schedule of escalating corrective actions in her case; and LSI’s decision, therefore, was not made for policy reasons. The jury would be allowed to consider the timing of Bachman’s termination, which occurred immediately after her return from FMLA leave and immediately after she informed LSI that further leave would be required, when deciding whether her termination was related to FMLA leave. Summary judgment was denied.
Insurance Agent Negligence
Murray v. Farmers Insurance Company of Arizona, Foremost Insurance Company Grand Rapids, Michigan, Randy Jones Insurance Agency, Inc. and Randy and Deanna Jones, 2016 WL 229658 (Ariz. App. Div. 2 January 19, 2016)
Facts and Procedural History
Jones and Randy Jones Insurance Agency were authorized by Farmers to offer and sell insurance coverage to Jones’ clients. Robert and Marcia Murray purchased their automobile and homeowners insurance from Jones for twenty years. Before he became their agent, the Murrays purchased only minimum liability limits and matching minimum uninsured and underinsured motorist coverage. With Jones, they added a one-million dollar personal umbrella policy, increased each auto policy’s liability limits to 250/500K and added a Foremost Insurance policy for their off-road vehicle with liability limits of 250/500K. Jones did not recommend they increase their UM/UIM coverage above the minimum limits of 30/60K for their auto policy or 25/50K for their off-rod vehicle, nor they buy UM/UIM in limits corresponding to their liability coverage.
In November 2010, Jessyka Murray, then seventeen, was a passenger in a two-vehicle accident involving both uninsured and underinsured motorists. She sustained a traumatic brain injury that permanently incapacitated her. Robert and Marcia were appointed her guardians. The Murrays filed a lawsuit against Jones in August 2012 alleging professional negligence, consumer fraud under A.R.S. §44-1522 and insurance fraud under A.R.S. §20-443. In July 2013, Jones moved for summary judgment on all claims which the trial court denied. After a trial, and post-trial filings, the Murrays appealed and Jones cross-appealed on, among other things, summary judgment rulings.
The trial court granted summary judgment on the Murrays’ claims for emotional distress because it arose out of purely economic interests. The court of appeals noted a party can recover damages for emotional distress arising out of the tortious loss of property where the tortious act directly harmed the plaintiff and affected or burdened a personal as opposed to an economic or other interest belonging to the plaintiff. The Arizona Supreme Court previously recognized an insured’s relationship with an insurer is not a strictly financial one. The insured receives intangible benefits from the relationship, such as peace of mind, and an expectation of security and protection before, and at the time of, a catastrophe. The Murrays testified as to how they were distressed by not being able to care for their daughter after her accident because they did not have adequate insurance coverage for same. The court of appeals reversed and remanded for further proceedings holding that a factfinder could conclude that the Murrays suffered direct emotional distress from Jones’ negligence in the loss of peace of mind that they and their children were insured against economic catastrophe.
The Murrays also appealed the award of summary judgment on their claims under Arizona’s Consumer Fraud Act and the insurance fraud statute. The trial court found that Jessyka lacked standing to bring the claims. The court of appeals noted the purpose of the Consumer Fraud Act is to provide injured consumers with a remedy to counteract the disproportionate bargaining power often present in consumer transactions. It provides in relevant part:
The act, use or employment by any person of any deception, deceptive or unfair act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely on such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice.
A.R.S. §44-1522. The broad language of the Act would appear only to require a consumer have a relationship to the transaction. The Act requires a misrepresentation or deceptive act be made with intent that “others” rely on it without specifying the relationship of those “others” to the transaction. Further, the language, “whether or not any person has in fact been misled, deceived or damaged thereby,” suggests third parties are not excluded. The court of appeals concluded, in light of the broad language and remedial purpose of the Act, Jessyka’s status as a third-party beneficiary to the transaction, and the persuasive reasoning of other courts who previously addressed this or similar issues, Jessyka ultimately had standing to bring a claim under the statute.
The Murrays also appealed the trial court’s ruling that their $1,000,000 umbrella policy would have provided $1,000,000 of combined UM/UIM coverage rather than $2,000,000 ($1,000,000 for each type of coverage) but for Jones’ negligence. The court of appeals noted that A.R.S. §20-259.01(L) specifies “An insurer is not required to offer, provide or make available coverage conforming to this section [UM and UIM coverage] in connection with any . . . umbrella policy. . . .” Umbrella policies, therefore, are expressly excluded from the requirements of §20-259.01 and the Murrays did not provide any authority indicating that principles derived from primary auto policy cases regarding UM/UIM setoffs or reductions apply equally to umbrella policies. Because of the plain language of the umbrella policy endorsement and the lack of support for the Murrays’ position, the court of appeals found the trial court correctly ruled that had the Murrays purchased UM/UIM coverage under their umbrella policy, they would have been limited to a combined total of $1,000,000 for both UM and UIM.
Jones cross-appealed the denial of his summary judgment on all claims based on his compliance with Arizona’s UM/UIM Act §20-259.01 (“UMA”). The UMA requires insurers to offer UM and UIM coverage to their insureds and creates a safe harbor if the insured signs a Department of Insurance approved form rejecting UM or UIM coverage. The Arizona Supreme Court previously held an insurance company’s compliance with the statute, by having its insured sign the approved form, does not bar a claim against the insurance agent for negligently failing to procure UIM coverage requested by the insured. The court of appeals found there was no dispute the Murrays were offered UM and UIM coverage on the approved form, which they signed. The issue is whether they were affirmatively misled into signing it. “The statute would work an inequity if the approved form could shield an agent from liability for having misled an insured to sign it, assuming arguendo that the statute applies to agents under the facts here.” The issue is not whether the offer of UM and UIM insurance was made and sufficiently so, but whether Jones violated the applicable standard of care by providing the Murrays with misleading information about the coverage which induced them to reject a higher level of UM and UIM coverage. Ultimately, the court of appeals concluded the trial court did not err in denying Jones’ summary judgment motion.
Watts v. Medicis Pharmaceutical Corporation, Supreme Court of Arizona 2016 WL 237777 (Arizona Supreme Court Jan. 21, 2016)
Facts and Procedural History
In April 2008, a minor, Watts, sought medical treatment for acne and received a prescription for Solodyn from her medical provider. In the full prescribing information materials, Medicis warns: “The long term use of minocycline in the treatment of acne has been associated with drug-induced lupus-like syndrome, autoimmune hepatitis and vasculitis.” At the time she received her prescription she received a “MediSAVE” card from her healthcare provider outlining a discount-purchasing program for the medication. It stated “the safety of using [Solodyn] longer than 12 weeks has not been studied and is not known.” From her pharmacist, she received an informational insert about Solodyn. It warned patients should consult a doctor if symptoms did not improve within 12 weeks. She used Solodyn for twenty weeks. Two years later, she received another prescription for Solodyn and took it for twenty weeks. She was later hospitalized and diagnosed with drug induced lupus and hepatitis, both allegedly side effects from using Solodyn. She recovered from the hepatitis, but doctors expected her to have lupus for the rest of her life.
Watts sued Medicis alleging consumer fraud and product liability. She alleged Medicis knowingly misrepresented and omitted material facts on MediSAVE cards and that the drug was defective and unreasonably dangerous because Medicis failed to warn her of the consequences of long-term use. The superior court granted Medicis’ motion to dismiss. The court of appeals vacated the judgment of dismissal and remanded the case for further proceedings. The Supreme Court of Arizona granted review.
In a claim for strict products liability, a plaintiff must prove, among other things, the manufacturer had a duty to warn of the product’s dangerous propensities and the lack of an adequate warning made the product defective and unreasonably dangerous. In certain contexts, the manufacturer’s or the supplier’s duty to warn end users of the dangerous propensities of its product is limited to providing an adequate warning to an intermediary, who then assumes the duty to pass the necessary warnings on to the end users. The Arizona Supreme Court adopted the Third Restatement of Torts§6d which provides:
A prescription drug or medical device is not reasonably safe due to inadequate instructions or warnings if reasonable instructions or warnings regarding foreseeable risks of harm are not provided to:
- Prescribing and other health-care providers who are in a position to reduce risks of harm in accordance with the instructions or warnings; or
- The patient when the manufacturer knows or has reason to know that health-care providers will not be in a position to reduce the risks of harm in accordance with the instructions or warnings.
This is referred to as the learned intermediary doctrine (“LID”). It does not provide blanket immunity for pharmaceutical manufacturers. It does not apply if the manufacturer fails to provide adequate warnings to the learned intermediary.
The Supreme Court of Arizona rejected a direct to consumer marketing exception to the LID because the Third Restatement provided a different exception to the LID that sufficiently protects consumers. Third Restatement §6(d)(2).
The Supreme Court of Arizona also held the Uniform Contribution Among Tortfeasors Act (“UCATA”) did not undermine the LID. UCATA requires the apportionment of damages based on degrees of fault. Fault is defined as “an actionable breach of a legal duty, act, or omission.” UCATA’s scheme is premised on notions of fault which necessarily presupposes a breach of duty. Under the LID, however, a manufacturer satisfies its duty to warn the end user by adequately warning the learned intermediary. Because the LID and UCATA address two distinct subjects, they are not mutually exclusive. The LID identifies circumstances when a manufacturer has met its duty to warn and thus is not at fault. UCATA does not identify the scope of duties or when parties are at fault; instead, given a determination that multiple parties are at fault, it specifies how liability is apportioned among them. The LID neither insulates a manufacturer from liability in proportion to its share of fault nor shifts a disproportionate share of liability to someone else. Rather, the doctrine provides a means by which a manufacturer may satisfy its duty to warn the end user. A manufacturer that properly warns the learned intermediary fulfills its duty, a result that comports with UCATA because the drug manufacturer in that circumstance has not breached its duty and therefore is not at fault.
The Supreme Court of Arizona held that viewing the facts in a light most favorable to Watts, her complaint implies Medicis failed to give appropriate warnings to her or the pertinent health care provider. An issue of fact remains as to the product liability case.
The Supreme Court also held Watts alleged an actionable claim under the Consumer Fraud Act. She alleged Medicis affirmatively misrepresented Solodyn by stating that “[t]he safety of using [Solodyn] longer than 12 weeks has not been studied and is not known,” even though it knew (as Medicis’ full prescribing informational material states) that taking the drug for longer than twelve weeks can cause drug-induced lupus.
Arbitration Agreements in Nursing Home Litigation
Escareno v. Kindred Nursing Centers West, LLC, 2016 WL 314161 (Ariz. Court of Appeals Div. 2 January 26, 2016)
Facts and Procedural History
Maria Escareno moved from Oklahoma to Arizona with her adult son, Aristeo, in 2006 or 2007. While in Arizona, Maria suffered a stroke and began to develop cognitive disabilities. Aristeo then assumed some of her responsibilities, paying her bills and signing medical documents on her behalf. Maria’s condition continued to deteriorate. She was coherent at times but had difficulty remembering who Aristeo was, could not participate in conversation, and was childlike. Aristeo brought her to Kindred and signed her admission documents, including an alternative dispute resolution agreement which sought to have any and all claims arising out of the resident’s stay at Kindred to be submitted to alternative dispute resolution. Maria died in April 2011 and Aristeo brought an action against Kindred for wrongful death and violations of the Adult Protective Services Act. Kindred filed a motion to dismiss and to compel arbitration pursuant to the signed ADR agreement. Aristeo argued he lacked authority to sign the agreement for Maria or the wrongful death claim beneficiaries (none of whom signed the ADR). Kindred argued Aristeo’s custom of signing documents on Maria’s behalf was enough to prove agency as a matter of law.
In order to arbitrate there must be an actual agreement or contract to arbitrate. A defendant seeking to compel arbitration must show the plaintiff accepted the arbitration agreement. If the defendant asserts an agent of the plaintiff signed the agreement, the defendant bears the burden to show the person was in fact the plaintiff’s agent, and thus had authority to do so. Authority can be actual or apparent. Actual authority can be proved by direct evidence of express contract of agency between the principal and agent or by proof of facts implying such contract or the ratification thereof. Apparent authority arises when the principal has intentionally or inadvertently induced third persons to believe that such a person was his agent although no actual or express authority was conferred on him as agent.
Kindred conceded Maria did not have the capacity to intentionally or inadvertently induce the staff into believing Aristeo was her agent. Apparent authority cannot apply. Aristeo testified he signed documents on his mother’s behalf before her admission to Kindred. However, declarations of an agent are insufficient to establish the fact or extent of his authority. A pattern of care-giving alone is insufficient to create an agency relationship, particularly in the absence of any evidence showing a manifestation of assent on the part of the elderly person. The court found the record in this case did not show Aristeo had authority to sign the ADR agreement on behalf of Maria when she was admitted to Kindred. Accordingly, Maria’s estate was not bound by the ADR agreement.
ABOUT THE AUTHOR
J.P. Harrington Bisceglia is senior counsel at Tyson & Mendes, LLP. She specializes in general liability defense, insurance coverage and bad faith litigation. Contact J.P. at 602.386.5644 or firstname.lastname@example.org.
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