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Insurance Termination and Shareholder Rights

by | Apr 10, 2024 | Business Law

Employers should be wary about terminating an employee’s health insurance while an employee is on leave attempting to recover from a serious injury that occurred while working at the ’employer’s facility, especially if the employee is a minority owner of the company. It is a black letter law in Ohio that states that the majority owners of an Ohio corporation owe various duties to the minority owners. These duties include, without limitation:

  1. Fiduciary Duty: Majority shareholders have a fiduciary duty to act in the best interests of the corporation and its shareholders. This duty requires them to exercise good faith, honesty, and loyalty in their dealings with the corporation and its shareholders, including minority shareholders.
  2. Fair Dealing: Majority shareholders must deal fairly with minority shareholders. They may not take advantage of their position to gain personal benefits or engage in self-dealing transactions that harm the minority shareholders.
  3. Non-Oppression: Majority shareholders are prohibited from oppressing or unfairly prejudicing the rights of minority shareholders.
  4. Disclosure and Transparency: Majority shareholders should provide accurate and timely information to minority shareholders regarding the corporation’s affairs. They may not withhold material information that could impact the minority shareholders’ interests.
  5. Equal Treatment: Majority shareholders must treat all shareholders equally and avoid actions that discriminate against minority shareholders. They may not favor themselves or other majority shareholders at the expense of minority shareholders.
  6. Minority Shareholder Rights: Majority shareholders must respect the rights of minority shareholders. These rights may include access to corporate records and the right to receive fair and equal dividends or distributions. For additional information on Minority Shareholder Rights, see our other blog post on this topic.

Employers should make reasonable accommodations for employees so that injured employees may resume employment following the employee recovery. If an employer cancels an injured employee’s health insurance while the employee is recovering, the employer may be liable for the resulting damages.

If litigation regarding the termination of an employee’s health insurance is a possibility, parties must take steps to preserve all potentially relevant documents and electronically stored information. These steps include but are not limited to suspending routine document retention and destruction policies and “putting a “litigation hold” in place to ensure the preservation of relevant documents. The electronic information that must be preserved includes, but is not limited to, e-mails, texts, word processing documents and files, spreadsheets, databases, calendars, telephone logs, internet usage files, network access files, and all forms of social media.

Whether you are an employer seeking to terminate benefits or an employee seeking time to recover from an injury sustained on the job, retaining attentive and experienced legal counsel will help ensure that your position is competently advised, and optimal results are achieved efficiently.

For more information on insurance termination, please contact Matthew Mullins at (216) 621-7860.

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