The EEOC’s thwarting of otherwise compliant wellness programs under the auspices of the Americans with Disabilities Act (ADA) is a bone of contention for many in our industry, me included. So I was intrigued to learn that a Wisconsin federal district court recently ruled that an employer may require mandatory participation in its wellness program as a condition of participating in the employer’s group health plan under the ADA’s safe harbor provision.
The employer, Flambeau, Inc., required participants to complete a health risk assessment and engage in biometric screenings in order to be eligible to participate in the company’s group health plan. The health risk assessment requested information about medical history, diet, mental, social health and job satisfaction. The screenings included blood draws, blood pressure screenings, and height and weight measurements, and other tests similar to a routine physical examination. The data gathered was used to design the plan and determine premium levels. When an employee who was previously enrolled failed to undergo the required testing, his insurance was discontinued and he was offered COBRA coverage. (The employee declined COBRA because it was too expensive and filed a complaint with the EEOC and the DOL. He was later permitted to enroll after negotiations with the DOL, but he was required to undergo the screenings to do so.)
The EEOC brought suit against Flambeau in September 2014 under the ADA’s prohibitions against requiring employees to undergo medical testing, alleging that the program violated the ADA because the health risk assessment and screenings were mandatory instead of voluntary. As a reminder, the EEOC sued two other employers back to back in 2014, Orion Energy Systems, another Wisconsin company, and Honeywell International. EEOC’s August 2014 suit against Orion contended its wellness program violated the ADA by requiring an employee to participate in the wellness program, charging a higher monthly health insurance premium and fining the employee $50 for any refusal to participate. EEOC’s suit against Honeywell in October of the same year alleged its wellness program violated the ADA because it required employees participating in the group health plan to complete biometric screenings and refrain from tobacco use or complete a tobacco cessation program. Failure to do so resulted in surcharges to the employee. The EEOC’s suit against Flambeau was the second of three suits filed by EEOC in 2014 challenging employers’ wellness programs under the ADA. See prior HSB Blogs, “Wellness Programs, Part One and Part Two” and “Long Awaited Guidance from the EEOC Regarding Wellness Programs.”[1]
Flambeau defended the EEOC’s claims, contending the ADA’s safe harbor provision protected its wellness program. The safe harbor provision permits bona fide benefit plans to underwrite, classify or administer risks as they see fit as long as the safe harbor provision is not used as a subterfuge to evade the purposes of the ADA.[2] The purpose of the safe harbor provision is to permit development and administration of benefit plans using accepted principles of risk assessment. Flambeau moved for summary judgment and the district court granted the motion, dismissing the EEOC’s case on the grounds that the ADA safe harbor protected Flambeau’s wellness program. The court held that the safe harbor exemption was a separate exemption from the ADA’s voluntariness standard such that it applied regardless of the mandatory nature of the requirements. Specifically, the court stated, “the protections set forth in the ADA’s safe harbor enable employers to design benefit plans that require otherwise prohibited medical examinations as a condition of enrollment without violating the ADA.”[3] The federal appellate court upheld the district court’s ruling.
The Flambeau case is a comforting balm to employers who use wellness programs to address rising healthcare costs and wellness program providers. However, it is one of several cases in a fluid area of the law. Employers are well-advised to keep abreast of and tread carefully around these developing issues.
[1] http://www.scemployersblog.com/category/wellness/
[2] 42 U.S.C.S. §12201(c).
[3] E.E.O.C. v. Flambeau, Inc., 2015 WL 9593632, *1 (W.D. WI., December 31, 2015).