Labor & Employment Law Daily Wrap Up, DISCRIMINATION—DISABILITY—D.N.J.: Provider of independent medical review services not a ‘covered entity’ subject to ADA liability, (Apr 15, 2025)

By Robert Margolis, J.D.

The employer had contracted with a third-party medical reviewer to evaluate employee requests for exemption from COVID-19 vaccination requirement.

Following the “plain language” of the ADA, which restricts liability to “covered entities” encompassing only an “employer, employment agency, labor organization of joint labor-management,” 42 U.S.C. §§ 12111(2) and 12112, the federal district court in New Jersey has held that a third-party that contracted with an employer to provide an independent medical review of employee requests for COVID-19 vaccination exemptions was not subject to ADA liability because it is not a “covered entity.” The court, in an unpublished opinion, granted a motion to dismiss brought by defendants Mitchell International, Inc. and the third-party specialist (the Independent Medical Review or IMR defendants), dismissing with prejudice a claim by a former MGM Resorts International (MGM) employee that the IMR defendants entered into a “Prohibited Contract in Violation of the AMA.” The court also dismissed several state-law tort claims brought by the employee, and held it lacked personal jurisdiction over the third-party specialist. All dismissals were with prejudice (Klemmer v. MGM Resorts International, No. 1:22-cv-073633-KMW-EXP (D.N.J. Apr. 11, 2025, unpublished)).

The employee had worked at one of MGM’s casinos as a floor supervisor until a temporary layoff when the casino closed in March 2020 due to the pandemic. When the casino reopened in October 2020, it contacted the employee, who accepted its offer to return to work. However, the employer implemented a COVID-19 vaccination mandate.

Exemption sought. The employee requested an accommodation and provided a letter from her internist stating that her medical history made it unsafe for her to take any of the available vaccines. The employer emailed the employee telling her that it intended to submit her request for exemption to a “third-party healthcare provider for review,” sought and received from the employee a HIPAA release, and then submitted her medical records to the IMR defendants who decided that she did not have a “contraindication” to the vaccines. A second letter from the employee’s allergist also was submitted to the IMR defendants (after another HIPAA release was signed), but they reached the same conclusion. When the employee still declined to be vaccinated, she was not hired.

The employee sued her employer as well as the IMR defendants, but only the IMR defendants’ motion was at issue. She brought claims against them for “Prohibited Contract in Violation of the ADA,” intentional infliction of emotional distress, civil conspiracy, negligent advice, and negligent infliction of emotional distress. The court dismissed all claims against the IMR defendants with prejudice.

ADA “covered entity.” The court dismissed the “Prohibited Contract in Violation of the ADA” claim because neither of the IMR defendants were “covered entities” under the ADA and therefore neither was subject to liability under that statute. The theory of the employee’s claim was that the IMR defendants’ contract with the employer was illegal because it involved the unlawful disclosure of her confidential medical records. But the ADA, in 42 U.S.C. § 12112, limits liability for discrimination to “covered entities,” and in 42 U.S.C. § 12112(2) makes clear that a claim for “participating in a contractual or other arrangement” that violates the ADA is a form of prohibited “discrimination” such that it applies only to “covered entities.” Covered entities include only “employer, employment agency, labor organization of joint labor-management.” 42 U.S.C. § 12111.

Confidentiality provisions. The ADA also contains confidentiality provisions applicable when an employer requires an employee to submit to a medical exam. 42 U.S.C. § 12112(d)(3) and (4). So, while a contract that violates HIPAA disclosure requirements may be an illegal contract under the ADA for violating the statute’s confidentiality provisions, liability for such an illegal contract does not extend to parties that are not “covered entities.” Because the IMR defendants were not the employee’s employer, or any of the other types of entities that can be “covered entities,” they were not subject to liability and the court dismissed the claim against them.

In addition, even if the IMR defendants were covered entities, the claim still would fail because the employee voluntarily executed HIPAA waivers both times her medical records were submitted to the IMR defendants. It is well-settled that for ADA purposes, information voluntarily disclosed by an employee is not protected by Section 12112(d).

Negligence-based claims. The court also dismissed the employee’s negligence-based claims against the IMR defendants, finding that they did not owe her a duty of care as a matter of law. The Third Circuit has held that independent medical reviewers do not owe a duty of care to the subject of the review. Skelcy v. UnitedHealth Grp., Inc., 620 F. App’x 136, 140 (3d Cir. 2015). The basis for that holding, equally applicable here, was that the employee did not rely on the advice of the third-party reviewer to help understand the course of treatment or medical condition evaluated, and did not form a relationship of any kind with the reviewer such as would create a duty. Here, not only did the employee not form a relationship of any kind with the IMR defendants, she rejected their advice and continued to refuse the COVID vaccination.

Personal jurisdiction. The court also held that it lacked personal jurisdiction over the third-party specialist, a California resident. She had contracted with the medical review agency, which is a Delaware corporation with its principal place of business in California, to provide independent medical review of employee exemption requests. She had no direct contractual agreement with the employee’s New Jersey employer, did not perform any services in New Jersey, and never interacted with the employee either virtually or in person. Her alleged tortious conduct was to render a negligent medical opinion, but she rendered her opinion entirely from California. The court found under the circumstances that she lacked the requisite minimum contacts with New Jersey for personal jurisdiction.

The case is No. 1:22-cv-07363-KMW-EAP.

Judge: Williams, K.

Attorneys: Dana Wefer (Law Offices of Dana Wefer) for Maryanne Klemmer. Martin W. Aron (Jackson Lewis) for MGM Resorts International, Inc.

Companies: MGM Resorts International; Mitchell International, Inc.

Cases: DisabilityDiscrimination Discrimination CoverageLiability Procedure NewJerseyNews