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By: Amanda Cash
While the EEOC filed multiple lawsuits in 2014 challenging the employee wellness programs of three different companies, employers won a significant victory on the last day of 2015 in the wellness program arena. On December 31, 2015, a district court in Wisconsin found that a company’s challenged wellness program fell within the “safe harbor” provision of the Americans with Disabilities Act (“ADA”). In this particular case, the EEOC sued Flambeau, Inc., a plastics manufacturer, alleging that its wellness program, which required employees to complete a health risk assessment and biometric testing in order to be eligible for participation in the company’s group health plan, violated the ADA because the exams were not voluntary.
The EEOC based their lawsuit on the ADA’s general prohibitions against employers making health-related inquiries or requiring medical examination of employees and argued that the only “exception” to this prohibition was if the employee wellness program was “voluntary.” The EEOC claimed that Flambeau’s program was not voluntary as employees had to participate in the employee wellness program in order to qualify for health insurance.
The Court, however, noted that the ADA also provides a safe harbor for employers in their establishment and administration of the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks. In considering whether Flambeau met the “safe harbor” requirements, the court considered whether Flambeau’s wellness program was (1) a “term” of its insurance plan and (2) based on underwriting, classifying, or administering risks.
The court found that Flambeau’s wellness program satisfied both requirements. Because employees had to participate in the wellness program in order to qualify for health insurance at Flambeau, the court found that the wellness program was clearly a term of the health insurance plan, even though it was not a part of the written plan documents. In addition, the Court found that because Flambeau used the data collected from the exams to develop the Company’s insurance plan, classify health risks, calculate projected insurance costs, and set premiums, the exams were based on underwriting, classifying or administering risks. The Court relied heavily on an Eleventh Circuit case that found a similar wellness program requirement was valid under the “safe harbor” provision.
While this is certainly a win for employers who wish to establish wellness programs that are connected to a voluntary health insurance plan, employers should be aware that this case is not likely to change the EEOC’s position on wellness programs. Employers are thus cautioned to carefully review their wellness programs to evaluate whether the program is in compliance with the ADA, as well as other laws such as the Genetic Information Nondiscrimination Act (“GINA”), and the Affordable Care Act which also govern employee wellness programs. Employers should also stay tuned to see whether the EEOC’s proposed rule on employee wellness programs is adopted. Given the complexity of the rules governing employee wellness programs, employers are encouraged to consult with counsel for assistance.