Court Denies EEOC Challenge of Wellness Plan

Written by Scott M. Wich

The Affordable Care Act (ACA) brought an emphasis on wellness programs and promoted the involvement of employers in improving the health of employees. At the same time, the EEOC (which has no role in the enforcement of the ACA) retains its responsibility under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) to limit employer inquiries into the health status of employees. In the midst of this tension between laws both promoting and limiting the involvement of employers in the health of employees, a federal district court recently interpreted an ADA safe harbor provision in a manner that has the potential to undercut the EEOC's position regarding wellness programs.

In EEOC v. Flambeau, Inc., the employer established a health plan that required employees to participate in a health risk assessment and biometric test, including a blood pressure test and blood draw. The test results were reported to the employer without any individually identifiable information, and were used to estimate the cost of providing insurance, setting premiums, evaluating the need for stop-loss insurance and adjusting certain co-pays. Employees who refused to participate in the testing were denied coverage and were offered COBRA coverage at their own expense.

The EEOC complained that the health risk assessment and biometric test made the wellness program a required, impermissible medical examination under the ADA. The employer argued that although the health risk assessment and biometric test were required for participation in the health plan, they were permissible because the ADA contains a safe harbor provision for certain medical examinations when they relate to to bona fide insurance plans. The U.S. District Court found the employer's safe harbor argument to be prevailing.

As determined by the court, the ADA safe harbor provision "provides in relevant part that the law ‘shall not be construed to prohibit or restrict’ an employer from establishing or administering 'the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks.'"

The Court found that the employer’s wellness program was both a term of the health insurance plan and that the requirement to participate was based on underwriting risks, classifying risks or administering such risks. As such, the court concluded, the employer’s wellness plan did not violate the ADA.

Two cautionary caveats follow the Flambeau decision. First, the complained-of actions in that lawsuit took place before implementation of the ACA's employer mandate to provide health coverage. In today's environment, an employer's plan that refuses coverage to those who declined the wellness tests could be noncompliant with the ACA and result in significant "A penalty" liability.

Second, while the EEOC has attempted to harmonize the ADA and GINA with the ACA through recently proposed regulations, it has taken a hard-line position in those proposals, as well as in another pending wellness program case that involves the same safe harbor issue. As such, employers should expect continued litigation from the EEOC on plans that invoke this safe harbor provision.

With the uncertainty of the outcome of further litigation from the EEOC as well as the yet-to-be-finalized ADA and GINA wellness regulations remaining to be published after significant public comment, employers are well advised to follow developments on wellness programs. If you have any questions, please feel free to contact the author of this article or your CB&D attorney.

UPDATE: As expected, the EEOC has filed an appeal of the Flambeau decision with the U.S. Court of Appeals for the Seventh Circuit. We will keep you updated on further developments in this area.

About the Author
Scott M. Wich
Partner
Mr. Wich is a regional attorney focusing on providing local, regional and national clients with services concerning management-related labor and...
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