Opinion ID: 2995336
Heading Depth: 2
Heading Rank: 1

Heading: Health Insurance Gross-Up Program

Text: Bilow began working as a litigation associate at Much Shelist in 1982. Three years later, she became the first woman to be promoted to income partner at the firm. At that time, the firm provided health insurance for its employees and their dependents. But in 1989, the firm stopped paying the insurance premiums for the dependents of employees and started deducting the premium amounts from the partners’ paychecks. In order to make up the difference, the firm increased or grossed-up partners’ salaries in an amount equal to the premiums for the dependent coverage. At the time of the change, Bilow was affected, because she had purchased health insurance coverage for her husband and children. As it did for all others in her situation, the firm began to deduct the premiums from Bilow’s paycheck while increasing her salary in an equal amount. In 1992, while Bilow was on maternity leave, the firm announced that it would no longer provide a gross-up to partners whose spouses’ employers provided free dependent health insurance. For these partners, the gross-up would be phased out over the next two years. According to Bilow, she was never notified of the change, but her gross-up was phased out over the next two years and was completely eliminated by June 1, 1994. At the same time, the firm continued to deduct the dependent insurance premiums from her paycheck. In March 1998, four years after the gross-up was completely phased out, Bilow noticed that the compensation listed on her W-2 form was less than her salary. Bilow immediately relayed this problem to Steven Schwartz, a member of the firm’s Management and Accounting Committees. Schwartz responded that the firm did not pay for health insurance for those partners whose spouses received dependent health insurance from their own employers. According to Bilow, she told Schwartz that her spouse did not receive health insurance from his employer; Schwartz promised to investigate the situation and report back to Bilow. Bilow waited about six weeks for the problem to be remedied or for someone to discuss the matter with her. When nothing happened, she sent a memo on April 29, 1998, to the firm’s Management Committee requesting a response and an accounting: It has been approximately six weeks since the firm has acknowledged that my salary has never been grossed up for the medical insurance deducted from my salary. Given the criminal liability attached to this failure to pay, which dates back to 1986/1 and continues to the present, I do not understand the firm’s nonchalance. No one has even discussed the status of the matter with me. On May 18, 1998, the Management Committee responded to Bilow with a memo explaining that the gross-up had been phased out over the time period between 1992 and 1994. In 1993, her gross-up was $2,000 and thereafter she received no extra pay to compensate for her dependent care coverage. The firm admitted that it had only assumed that Bilow’s husband, a doctor, had dependent coverage through his employer. The memo concluded: Please advise for the period 1993 to date whether or not your spouse had dependent coverage at his place of employment. That same day, Bilow met with Michael Shelist, the head of the Management Committee, and told him that she had never been notified of the change in policy and that no one had ever asked her if her husband’s employer provided health insurance for their family. Bilow told Shelist that, in fact, her husband did not receive dependent health insurance coverage from his employer. Shelist demanded that Bilow confirm this in writing and provide him with information about any other health insurance covering Bilow and her family. Although Bilow complained that Shelist had no right to make such a demand, Bilow delivered the requested memo to Shelist on May 27.