EEOC LOSES BATTLE, BUT MAYBE NOT THE WAR, OVER WELLNESS PROGRAMS

It is now a part of the strategic business plan for most employers to have implemented some form of wellness program for their employees.  These programs are intended to improve the health of employees with the goal of preventing sickness and motivating employees to lead healthier lives.  From the employer’s perspective, these programs are aimed toward the critical financial goals of decreasing (i) the rising cost of healthcare, (ii) illness related absenteeism, and (iii) reduced performance while at work.  Often, these programs include wellness screening tasks, including the collection of biometric data (height, weight, blood pressure, cholesterol, and blood glucose levels) to identify health risks.  It is estimated that 80% or more of employers with a wellness program screen their employees for evaluation and preventive interventions.  As part of the wellness landscape, however, the Equal Employment Opportunity Commission (EEOC) has been challenging employer wellness programs for allegedly violating the Americans with Disabilities Act (ADA).

Although many employers use incentives for participation in these programs, including gift cards and premium discounts, many employers are planning to use financial penalties to motivate employees to participate.  The use of financial penalties in wellness programs has recently been addressed by the U.S. District Court for the Western District of Wisconsin.

In EEOC v. Flambeau, Inc., case number 3:14-cv-00638, the EEOC charged Flambeau with violating the ADA, 42 U.S.C. §12112(d)(4)(A), which generally prohibits employers from requiring their employees to submit to medical examinations, by mandating an employee to submit to biometric testing (height and weight measurement, blood pressure test, and blood draw) and a “health risk assessment”(questionnaire about medical history, diet, mental and social health, and job satisfaction) in connection with Flambeau’s wellness program in order to participate in its employee health insurance plan.  When the employee failed to submit to the assessment and testing, his medical coverage benefit was cancelled, and the entire premium cost was shifted to him in order to remain covered.  In a somewhat contentious debate involving cross motions for summary judgment, the company argued the testing and assessment requirements (1) fell within the ADA’s “safe harbor” exempting activities related to the administration of a bona fide insurance benefit plan and (2) were not a “required” exam under this section of the ADA as the assessment and testing were only required if an employee wanted to participate in the plan, which was entirely voluntary.

Without addressing the second issue of whether the assessment and testing were actually “required” by this section of the ADA, in a matter of first impression in the Seventh Circuit, the court held that the medical examinations at issue in this case fell within the protections of the “safe harbor” provisions of the ADA as the required “health risk assessment” and biometric testing were conditions for employees to receive voluntary, company-subsidized health insurance.  According to this ruling, employers can design and implement health insurance benefit plans that require these types of activities without violating §12112(d)(4)(A) of the ADA.  In making this determination, the court considered several factors, including:  (1) the wellness program requirement was a “term” of the company’s health plan as the employees were required to participate in order to have coverage; (2) the employees were not risking the loss of their employment; (3) the testing and assessment information was sent to the company in aggregate form and not specific to any individual; (4) the wellness program information was driven by the administration of its self-funded, self-insured health plan in order to estimate costs and was clearly intended to assist the company with underwriting, classifying, and administering risks in its plan; (5) the wellness plan was wholly voluntary, and the employees were not required to participate in the plan as a condition of employment; and, (6) the wellness plan clearly did not relate to discrimination in any way.

Although this case seems to hand employers a big win for wellness cases, employers should proceed carefully before instituting changes based on the application of the ADA bona fide benefit plan safe harbor exception.  This opinion is just the first federal district court to issue a decision on the application of the safe harbor provision to wellness programs, and the EEOC has appealed the ruling to the 7th Circuit Court of Appeals, so the war on this issue is far from over. Of course, whatever further developments on the legality of employer wellness programs may arise in the future, our blog has you covered, so check back often.

 

Jana Grimm works closely with clients to counsel them regarding various employment issues that may arise during the course of business. Ms. Grimm has developed a regional reputation for her ability to work proactively with clients to reduce the risk of employment litigation.
 
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