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A Kentucky federal judge has transferred a proposed class action accusing United Surgical Partners International Inc. (USPI) of discriminating against employees who use tobacco, ruling that the case properly belongs in Texas, where the company is based and its health plan is administered.

In his Wednesday order, U.S. District Judge David L. Bunning concluded that Kentucky lacks sufficient ties to the lawsuit brought by Dara Janosky, who claimed USPI’s wellness program unlawfully penalized tobacco users by charging a $50 monthly surcharge for their health coverage.

“The only apparent connection between this case and plaintiff’s causes of action is the happenstance that plaintiff chose to live in Kentucky while working for defendant in Ohio,” Judge Bunning wrote.

ERISA Venue Rules Push Case to Dallas

Janosky, who worked at a USPI facility in Ohio but resided in Kentucky, filed her Employee Retirement Income Security Act (ERISA) complaint in Kentucky in May. She alleged that the company’s wellness program unfairly forced employees like her to pay higher premiums unless they joined a smoking cessation program.

USPI, which operates over 500 outpatient surgical centers in 37 states and employs more than 16,000 workers, argued that ERISA’s venue provisions weren’t satisfied in Kentucky. The company pointed out that the plan was administered first in Addison, Texas, and later in Dallas, making Texas the correct jurisdiction.

Judge Bunning agreed, noting that under ERISA, cases must be filed where the plan is administered, where the alleged breach occurred, or where the defendant resides—all of which point squarely to Texas.

Limited Ties to Kentucky

Janosky attempted to justify filing in Kentucky by claiming USPI had “sufficient contacts” with the state through operations near its border and Kentucky-based employees. But the judge rejected that reasoning, calling it “wholly speculative.”

“That there may be ‘dozens’ of class members who reside in Kentucky that travel out of state to work in defendant’s facilities … is an insufficient basis for jurisdiction,” Bunning wrote.

The judge further found that transferring the case would be more convenient, since witnesses and plan administrators are based in Texas, and nearly half of USPI’s employees work there.

While acknowledging Janosky’s financial hardship and travel concerns, Judge Bunning said the balance of convenience still favored the company, solidifying his decision to transfer the case to the Northern District of Texas.

Counsel

Janosky is represented by Kimberly Dodson, Leslie LeeAnn Pescia, and Oren Faircloth of Siri & Glimstad LLP.
United Surgical Partners is represented by Ashley E. Johnson, Jennafer Tryck, and Karl Nelson of Gibson Dunn & Crutcher LLP.