Pennsylvania Federal Court Rules on Important Grane Healthcare ADA Case

by Tucker Arensberg, P.C.
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In a recent decision that has been making headlines across the country, a Pennsylvania federal court held that a local Cambria County company conducted over 300 unlawful pre-offer medical exams in violation of the ADA.  Cambria Care Center (“CCC”) had purchased the former Cambria County owned nursing home and engaged Grane Healthcare (a separate, but related entity to CCC) to interview and hire employees for the new facility, which was set to open later in the year. All 300 of the former county nursing home employees were invited to apply for new employment.

As part of the hiring process, Grane conducted pre-offer drug tests and medical exams, which involved having the applicants provide documentation substantiating any medication the applicant was taking.  A third party nurse conducted the drug test and physical and provided a written determination as to whether the applicants could perform the essential functions of the position for which they were applying. Based upon the drug tests and medical exams, Grane offered future employment with CCC to only 225 of the 300 applicants.  A group of rejected applicants filed EEOC charges alleging Grane and CCC violated the ADA by conducting the pre-offer medical exams and/or rejected some applicants based upon perceived disabilities and the EEOC filed suit on the applicants’ behalves.

Pre-Offer Medical Exams Violate the ADA The District Court for the Western District of Pennsylvania heard the case and ruled against Grane and CCC, holding that, “Before an offer of employment is extended, an employer may not ask a job applicant to undergo a medical examination or inquire as to whether he or she is an individual with a disability.”  Only once an offer is made can an applicant be asked to undergo a medical exam. Grane challenged the fact that some of the employees who were not hired were not even disabled and, therefore, contended they were not protected under the ADA.  The Court held that an individual, even if non-disabled, can assert a claim when he/she is subjected to an unlawful medical exam or inquiry.  Further, the Court warned that post-offer medical exams can be used in making an employment decision, but only if “… all entering employees are subjected to such an examination regardless of disability, the applicable confidentiality requirements are adhered to, and the results of the examination are used consistent with the [ADA].”

Court Limits Use of Pre-Offer Drug Tests Employees who are currently engaging in the use of illegal drugs are not covered by the ADA and the ADA permits employers to conduct a pre-offer drug screen for detection of illegal drugs. In the Grane case, however, the “drug screen” was broader and detected the existence of both legal and illegal drugs and other medical indicia – such as glucose in the urine.  The Court cautioned that testing for the presence of both illegal and legal drugs or evidence of medical information is beyond the scope of the ADA’s narrow exception permitting tests for illegal drug use and Grane’s conduct violated the ADA.

Punitive Damages Recoverable for Employees Who Were Still Hired- and Suffered No Compensatory Damages “A violation of the [ADA] occurs as soon as the employer conducts an improper medical examination or asks an improper disability related question, regardless of the results or response,” explained Judge Kim R. Gibson.  The Court noted that the employees could recover punitive damages based upon the mere fact that they were subjected to an illegal pre-offer medical exam – even if they employees could not show they suffered actual damages. For example, an applicant who underwent an illegal pre-offer medical exam, and was ultimately hired, would still be eligible to receive punitive damages based upon the fact that the employee had to undergo the illegal pre-offer medical exam.

Grane is “Agent” of “Future” Employer Because Grane was only acting as the agent of the 300 applicants’ future employer, CCC (which was not yet open and was yet an employer), Grane argued it could not be held liable as an agent of a future employer. The Court rejected Grane’s argument and held that it did not matter if Grane was only the agent of the future employer at the time of the medical exams.  The Court held that the ADA does not make a distinction between whether an entity is a current or future employer and that Grane could be liable as the agent of CCC, which was destined to be covered by the ADA in the future.

In light of the Grane decision, employers or their temporary or placement agencies should not use pre-offer medical exams and should be cautious of drug tests that reveal overly broad results.  Damages for these types of violations can be severe even if the employer thinks no one was hurt, so “no harm, no foul.”  Finally, even if the company is not yet operational (and has no employees), ADA liability can still attach to the company’s agent and possibly the company.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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