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BMD Obtains Supreme Court Victory on Behalf of Sterilite of Ohio, LLC

Client Alert

Columbus, Ohio – On August 26, 2020, the Supreme Court of Ohio issued its opinion in Lunsford v. Sterilite of Ohio, LLC, Slip Op. No. 2020-Ohio-4193. The Supreme Court’s 4-3 decision reversed an Ohio Court of Appeals ruling that had reinstated a putative class action against Sterilite brought by a group of current and former employees claiming that Sterilite’s use of “direct observation” urinalysis screening violated their common law right to privacy.

BMD originally obtained dismissal of the case in the Stark County Court of Common Pleas, which was reversed by a decision of the Ohio Fifth District Court of Appeals in August 2018. Following the Fifth District’s adverse ruling, BMD successfully petitioned the Supreme Court of Ohio to accept jurisdiction and hear the case. BMD partner Daniel Rudary argued Sterilite’s appeal to the Supreme Court on January 28, 2020.

In its decision reversing the appellate court, the Supreme Court majority adopted BMD’s argument that the plaintiff employees consented to drug testing under the “direct observation” method when they voluntarily produced urine samples while being observed by a same-sex monitor in a designated restroom facility. The Supreme Court also reaffirmed Ohio’s long standing rule of employment-at-will, holding that because “Sterilite had the legal right to terminate appellees’ employment at any time, appellees’ argument that their consent was involuntary because of their fear of termination necessarily fails.”

BMD Litigation Member John Childs and Partner Daniel Rudary represented Sterilite before the Supreme Court of Ohio. Their brief to the Supreme Court can be read here, and Attorney Rudary’s January 28, 2020 oral argument can be viewed here.

See additional coverage on the decision in the ABA Journal and Bloomberg News.


Supreme Court Backs HHS in DSH Payment Battle

DSH payments are statutorily required payments intended to offset hospitals’ uncompensated care costs to improve patient access to Medicare and Medicaid. The payments also serve to help the financial stability of safety-net hospitals that oftentimes treat uninsured or underinsured patients. The U.S. Department of Health and Human Services’ (HHS) specifically makes DSH payments to hospitals that serve a high number of low-income patients. The Medicare DSH adjustment is calculated based on two factors: the hospital’s Medicare patients with low incomes and those with low incomes, but not on Medicare.

Sweeping Changes Proposed for Federal Title IX Legislation

Monica B. Andress and Krista D. Warren

The Latest CMS Guidance: HIPAA Edition

Metaverse in the Workplace: What Do Employers Need to Know?

Emerging technologies are creating a host of new legal issues for employers. The rise of the metaverse has been one of the most anticipated expansions over the last few years. The metaverse is a virtual world that allows users to interact with each other in simulated environments. The metaverse in the workplace has been expanding rapidly as businesses explore the use of virtual reality and augmented reality to improve workflows and communication.

A Win for the Hospitals: An Update on the Latest 340B Lawsuit

On Wednesday, the Supreme Court unanimously rejected massive payment cuts to hospitals under the 340B drug discount program. Now, the Department of Health and Human Services no longer has the discretion to change 340B reimbursement rates without gathering data on what hospitals actually pay for outpatient drugs. This “straightforward” ruling was based on the text and structure of the statute, per the Supreme Court. Simply put, because HHS did not conduct a survey of hospitals’ acquisition costs, HHS acted unlawfully by reducing the reimbursement rates for 340B hospitals.