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Casino workers in Missouri and Kansas advance lawsuit claiming they were penalized as smokers

Cody Newill

At issue in Tuesday’s ruling is whether the casinos’ health plans, which included a $50 monthly tobacco surcharge, violated the federal law governing employee health plans.

At least 1,500 casino workers in Missouri, Kansas and other states will become part of a class action lawsuit alleging their wages were illegally reduced because they smoke.

In a ruling Tuesday, U.S. District Judge Stephen Bough in Kansas City granted the workers certification as a class for their lawsuit against Penn National Gaming Inc., moving them a step closer to recouping their money.

PNG operates 41 casinos in 19 states and employs 18,000 workers. The company’s subsidiaries include Argosy Casino in Riverside, Missouri; Hollywood Casino St. Louis; and Hollywood Casino at Kansas Speedway in Kansas City, Kansas.

The lawsuit was originally filed in Platte County Circuit Court in March 2020 by three casino workers, on behalf of similarly situated workers. But PNG moved it to federal court, as it was entitled to do, a month later.

The lawsuit also alleged that PNG operated an illegal tip pool and unlawfully deducted from workers’ wages what it cost the casinos to obtain and renew the workers’ gaming licenses. Those claimants have also been certified as a class, by agreement of the parties.

At issue in Tuesday’s ruling is whether the casinos’ health plans, which included a $50 monthly tobacco surcharge for smokers, violated ERISA, the federal law governing employee health plans. That’s because the plaintiffs claim PNG didn’t notify plan participants of an alternative way to avoid the surcharge.

And while workers could avoid the surcharge if they completed a smoking cessation program, they weren’t reimbursed for the surcharges they were hit with before completing the program. The workers say that violated ERISA’s requirement that outcome-based wellness programs must give participants notice of a “reasonable alternative standard” to qualify for a discount or rebate.

The class certified by Bough consists of all workers who participated in PNG’s group health plan from 2016 to 2020 and had a tobacco surcharge deducted from their wages. The class is thought to consist of at least 1,500 members.

Alex Ricke, an attorney with Stueve Siegel Hanson in Kansas City, which represents the workers, said not a single PNG employee who has completed a tobacco cessation program over the last five-plus years has successfully avoided the surcharge.

“Part of the reason something like a notice is so important here, especially if you're legitimately concerned about your employees’ health, is you want them to complete the tobacco cessation program,” Ricke said.

George Hanson, another attorney with Stueve Siegel Hanson, said he believed Bough’s ruling was the first of its kind involving a tobacco surcharge that allegedly violates ERISA.

Hanson said PNG was penalizing smokers who work in places where smoking is often pervasive.

“In some of these casinos, smoking continues to be permitted,” Hanson said. “So just think of the irony of penalizing a worker for smoking when they are all smoking in some way in at least those facilities which permit patrons to light up.”

An attorney for PNG declined to comment. PNG officials could not be reached for comment.

PNG two weeks ago announced third-quarter revenues of $1.5 billion and net income of $86 million, down from $141 million a year earlier.

Copyright 2021 KCUR 89.3. To see more, visit KCUR 89.3.

Dan Margolies is editor in charge of health news at KCUR, the public radio station in Kansas City. Dan joined KCUR in April 2014. In a long and varied journalism career, he has worked as a reporter for the Kansas City Business Journal, The Kansas City Star and Reuters. In a previous life, he was a lawyer. He has also worked as a media insurance underwriter and project development director for a video production firm.