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...