Jen­nifer S. Kupper
In-House Coun­sel & Com­pli­ance Officer
A UBA Part­ner Firm

HeatThe last few months have seen as many com­plaints filed by the U.S. Equal Employ­ment Oppor­tu­ni­ty Com­mis­sion (EEOC) against well­ness pro­grams. On August 20, 2014, the EEOC brought its first direct chal­lenge of a well­ness pro­gram under Title I of the Amer­i­cans with Dis­abil­i­ties Act (ADA) against Ori­on Ener­gy Sys­tems, Inc. (The Ori­on Suit). On Sep­tem­ber 30, 2014, the EEOC ini­ti­at­ed its sec­ond ADA action against Flam­beau, Inc.’s well­ness pro­gram (The Flam­beau Suit). The lat­est peti­tion was filed on Octo­ber 27, 2014, against Hon­ey­well Inter­na­tion­al, Inc.’s well­ness pro­gram (The Hon­ey­well Suit), and it includes counts under both the ADA and the Genet­ic Infor­ma­tion Non-Dis­crim­i­na­tion Act (GINA).

In this third part of a series on well­ness pro­grams, I am going to sum­ma­rize the facts of each of the suits as they were pre­sent­ed in the EEOC’s court fil­ings, dis­cuss the often-cit­ed case, Seff v. Broward Coun­ty, as well as some take­aways for employ­ers spon­sor­ing cor­po­rate well­ness programs.

The Ori­on Suit

Orion’s Well­ness Pro­gram, Generally

In March 2009, Ori­on imple­ment­ed a well­ness pro­gram where employ­ees were required to test on a range of motion (ROM) machine and com­plete a health risk assess­ment (HRA), dis­clos­ing their med­ical his­to­ry and under­went blood work. Declin­ing to par­tic­i­pate in the HRA result­ed in a 100% shift in pre­mi­um cost from Ori­on to the employ­ee. Employ­ees who declined to par­tic­i­pate in the ROM test were assessed a penal­ty of $50 per month.

Alle­ga­tions Giv­ing Rise to the Suit

An employ­ee feared that the dis­closed med­ical infor­ma­tion would not remain con­fi­den­tial and declined to par­tic­i­pate in the HRA and ROM test­ing. As a result, Ori­on alleged­ly can­celled the employee’s med­ical insur­ance after the employ­ee failed to pay the entire pre­mi­um and sub­se­quent­ly ter­mi­nat­ed the employ­ee because she did not par­tic­i­pate in the well­ness program.

The ADA and the EEOC’s Claim

As a refresh­er, the ADA gen­er­al­ly pro­hibits an employ­er from requir­ing a med­ical exam­i­na­tion unless the exam­i­na­tion is shown to be job-relat­ed and con­sis­tent with busi­ness neces­si­ty. There is an excep­tion where an employ­er may con­duct vol­un­tary med­ical exam­i­na­tions, includ­ing vol­un­tary med­ical his­to­ries, which are part of an employ­ee health pro­gram avail­able to employ­ees at that work­site pro­vid­ed: (i) par­tic­i­pa­tion in the pro­gram is vol­un­tary; (ii) infor­ma­tion obtained is kept con­fi­den­tial in accor­dance with the ADA require­ments; and (iii) infor­ma­tion obtained is not used to dis­crim­i­nate against an employee.

The EEOC claims that Orion’s well­ness pro­gram was not vol­un­tary because, when the employ­ee object­ed to par­tic­i­pa­tion, she had to pay the entire month­ly pre­mi­um and was assessed an addi­tion­al month­ly charge of $50 for declin­ing to par­tic­i­pate. Fur­ther, the EEOC claims Ori­on retal­i­at­ed against the employ­ee because of the employee’s objec­tions to the well­ness pro­gram and was sub­se­quent­ly ter­mi­nat­ed because of those objections.

The Flam­beau Suit

Flambeau’s Well­ness Pro­gram, Generally

From Decem­ber 2011 through Decem­ber 2012, Flam­beau spon­sored a well­ness pro­gram where employ­ees were required to com­plete an HRA and bio­met­ric test­ing, includ­ing blood work, mea­sure­ments, and a med­ical his­to­ry questionnaire.

Employ­ees who par­tic­i­pat­ed in the well­ness pro­gram paid about 25% of the total employ­ee-only pre­mi­um. Declin­ing to par­tic­i­pate in the HRA result­ed in a 100% shift in pre­mi­um cost from Flam­beau to the employ­ee, pos­si­ble insur­ance can­cel­la­tion, and unspec­i­fied dis­ci­pli­nary action.

Alle­ga­tions Giv­ing Rise to the Suit

An employ­ee was unavail­able to par­tic­i­pate in the HRA and bio­met­ric test­ing on the day in which he was sched­uled. The employ­ee attempt­ed to resched­ule upon return­ing to work. Flam­beau report­ed­ly did not give the employ­ee addi­tion­al time to com­plete the HRA and bio­met­ric test­ing and can­celled his health insur­ance because the employ­ee failed to pay the premiums.

The ADA and the EEOC’s Claim

The EEOC claims that Flambeau’s well­ness pro­gram was not vol­un­tary for the fol­low­ing reasons:

  • If an employ­ee did not com­plete the HRA and bio­met­ric test­ing, the employ­ee risked los­ing his health insur­ance or pay­ing the COBRA cost to keep insurance;
  • Flam­beau told employ­ees that par­tic­i­pa­tion in the well­ness pro­gram was “manda­to­ry” in order to be on the company’s med­ical insurance;
  • Flam­beau told employ­ees that fail­ing to attend the test­ing at his or her sched­uled time would result in “dis­ci­pli­nary action;”
  • Flam­beau did not pro­vide health insur­ance to new employ­ees unless they sub­mit­ted to the HRA and bio­met­ric testing;
  • Flam­beau did not offer health insur­ance to exist­ing employ­ees with­out the COBRA pre­mi­um penal­ty unless they sub­mit­ted to the HRA and bio­met­ric testing.


The Hon­ey­well Suit

Honeywell’s Well­ness Pro­gram, Generally

In August and Sep­tem­ber 2014, Hon­ey­well announced to its employ­ees that they (and their spous­es if they had fam­i­ly cov­er­age) are to under­go bio­met­ric test­ing, includ­ing a blood draw, by a Hon­ey­well ven­dor for the 2015 health ben­e­fit year. If an employ­ee (or the spouse if they had fam­i­ly cov­er­age) declines to par­tic­i­pate in the bio­met­ric tests, the fol­low­ing will be assessed in 2015:

  • The employ­ee will lose health sav­ings account (HSA) con­tri­bu­tions from Hon­ey­well, which range up to $1,500 depend­ing on the employ­ees’ annu­al base wage and type of coverage;
  • The employ­ee will be charged a $500 sur­charge that will be applied to their 2015 med­ical plan costs;
  • The employ­ee will be charged a $1,000 “tobac­co sur­charge,” even if the employ­ee choos­es to not go through the bio­met­ric test­ing for rea­sons oth­er than smok­ing; and
  • The employ­ee will be charged anoth­er $1,000 “tobac­co sur­charge” if his or her spouse does not sub­mit to the test­ing, even if the spouse declines to par­tic­i­pate for rea­sons oth­er than smoking.

Worth not­ing, and the crux of the issue from an employer’s per­spec­tive, is that the incentives/penalties above appear to be inside the para­me­ters of the Patient Pro­tec­tion and Afford­able Care Act (PPACA) and the Health Insur­ance Porta­bil­i­ty and Account­abil­i­ty Act of 1996 (HIPAA).

The ADA and the EEOC’s Claim

The EEOC claims that Honeywell’s well­ness pro­gram is not vol­un­tary because an employ­ee could lose up to $4,000 through sur­charges and lost HSA con­tri­bu­tions for declin­ing to par­tic­i­pate in the Hon­ey­well well­ness program.

GINA and the EEOC’s Claim

As dis­cussed in Part II of this series, under GINA, it is unlaw­ful for an employ­er to request, require, or pur­chase genet­ic infor­ma­tion with respect to an employ­ee or an employee’s fam­i­ly mem­ber. There is an excep­tion if the infor­ma­tion is part of a well­ness pro­gram, sub­ject to strict adher­ence of the fol­low­ing three requirements:

  1. The employ­ee pro­vides pri­or, know­ing, vol­un­tary, and writ­ten authorization;
  2. Only the employ­ee (or fam­i­ly mem­ber if the fam­i­ly mem­ber is receiv­ing genet­ic ser­vices) and the licensed health care pro­fes­sion­al or board cer­ti­fied genet­ic coun­selor involved in pro­vid­ing such ser­vices receive indi­vid­u­al­ly iden­ti­fi­able infor­ma­tion con­cern­ing the results of such ser­vices; and
  3. Any indi­vid­u­al­ly iden­ti­fi­able genet­ic infor­ma­tion pro­vid­ed in con­nec­tion with the ser­vices is only avail­able for pur­pos­es of such ser­vices and shall not be dis­closed to the employ­er except in aggre­gate terms that do not dis­close the iden­ti­ty of spe­cif­ic employees.

With­in the frame­work of the well­ness pro­gram excep­tion, employ­ers are per­mit­ted to offer cer­tain kinds of finan­cial induce­ments to encour­age par­tic­i­pa­tion; how­ev­er, employ­ers may not offer an induce­ment for indi­vid­u­als to pro­vide genet­ic infor­ma­tion. In the HRA con­text, for exam­ple, an employ­er may incen­tivize par­tic­i­pants to com­plete the HRA, but those ques­tions request­ing genet­ic infor­ma­tion must be specif­i­cal­ly iden­ti­fied and clear­ly state that they need not be answered in order to receive the incentive.

In the peti­tion for a tem­po­rary restrain­ing order (TRO) and pre­lim­i­nary injunc­tion, the EEOC claimed that Hon­ey­well vio­lat­ed GINA by requir­ing cov­ered spous­es to under­go bio­met­ric test­ing or the employ­ee and/or spouse will incur penal­ties and lose incen­tives, thus acquir­ing genet­ic infor­ma­tion through induce­ment. U.S. Dis­trict Judge Ann Mont­gomery denied the EEOC’s request in Novem­ber 2014.


Seff v. Broward Coun­ty ADA Safe Har­bor Overview

The Broward Coun­ty Well­ness Pro­gram, Generally

In Octo­ber 2009, Broward Coun­ty adopt­ed a well­ness pro­gram as part of its ben­e­fit plan, which had an HRA and a bio­met­ric screen­ing, includ­ing fin­ger stick, as well as an option­al dis­ease man­age­ment com­po­nent. All infor­ma­tion was kept con­fi­den­tial and any per­son­al infor­ma­tion obtained was not dis­closed to Broward Coun­ty offi­cials and was report­ed only in aggre­gate form. Par­tic­i­pa­tion in the well­ness pro­gram was not required for health cov­er­age; how­ev­er, employ­ees who did not com­plete the HRA and bio­met­ric screen­ing would incur a $20 charge on each biweek­ly paycheck.

The ADA Safe Har­bor Exception

The 11th Cir­cuit U.S. Court of Appeals held that Broward County’s well­ness pro­gram fell square­ly with­in the ADA’s safe har­bor pro­vi­sion, which exempts cer­tain insur­ance plans from the ADA’s gen­er­al pro­hi­bi­tions, includ­ing the pro­hi­bi­tion on required med­ical exam­i­na­tions and dis­abil­i­ty-relat­ed inquiries. The “ben­e­fit plan excep­tion” states that the ADA “shall not be con­strued” as pro­hibit­ing a “per­son or orga­ni­za­tion … from estab­lish­ing, spon­sor­ing, observ­ing or admin­is­ter­ing the terms of a bona fide ben­e­fit plan that are based on under­writ­ing risks, clas­si­fy­ing risks, or admin­is­ter­ing such risks that are based on or not incon­sis­tent with state law…” or where the plan is not sub­ject to state law (a self-fund­ed ben­e­fit plan) so long as the exemp­tion is not used as a sub­terfuge to avoid the pur­pose of the ADA.

The Court held that the well­ness pro­gram was a term of a bona fide ben­e­fit plan, which was avail­able only to group plan enrollees, and was includ­ed in ben­e­fit expla­na­tion hand­outs. Deter­min­ing whether the pro­gram was based on under­writ­ing, clas­si­fy­ing, or admin­is­ter­ing risks, at least one court has defined under­writ­ing as “gen­er­al­ly refer[ring] to the appli­ca­tion of the var­i­ous risk fac­tors or risk class­es to a par­tic­u­lar indi­vid­ual or group for the pur­pos­es of deter­min­ing whether to pro­vide cov­er­age.” The safe har­bor acts to pro­tect the process of risk assess­ment so that accu­rate pre­mi­ums may be established.


Bad Form, Feel­ing the Burn, and New Year’s Resolution

Bad Form

If the facts in the Ori­on and Flam­beau suits are tak­en as true, it is sim­ply bad form, and ille­gal, for an employ­er to retal­i­ate against an employ­ee, and legal action should be sought. It is also a bad idea to shift 100% of the pre­mi­um cost to an employ­ee who declines to par­tic­i­pate in a well­ness pro­gram. The EEOC clear­ly views this as pun­ish­ment and a non-vol­un­tary program.

Feel­ing the Burn

Many leg­is­la­tors, CEOs, and spon­sors of cor­po­rate well­ness pro­grams are angered that the EEOC is bring­ing law­suits and send­ing con­fus­ing mes­sages instead of releas­ing guid­ance on its approach to well­ness incen­tives. Ear­li­er in Decem­ber 2014, a num­ber of promi­nent busi­ness lead­ers orga­nized by the Busi­ness Round­table met at the White House and threat­ened to with­draw their sup­port for PPACA.

New Year’s Resolution

The EEOC recent­ly stat­ed in its 2015 leg­isla­tive agen­da that it expects to release pro­posed reg­u­la­tions on the impact of the ADA and GINA on well­ness pro­grams in Feb­ru­ary 2015.

Employ­ers should remem­ber that well­ness pro­grams have always been an alpha­bet soup of laws under which com­pli­ance is required. Employ­ers should resolve to bring in legal coun­sel and oth­er experts when craft­ing their well­ness pro­grams. There is a fine line between what con­sti­tutes vol­un­tary and non-vol­un­tary, and until guid­ance is issued or cas­es adju­di­cat­ed, that line is hard to see.

For more data on well­ness pro­grams and oth­er plan design trends, down­load the 2014 Health Plan Exec­u­tive Sum­ma­ry. This sur­vey – which has been con­duct­ed every year since 2005 – is the nation’s largest health plan sur­vey and pro­vides more accu­rate bench­mark­ing data than any oth­er source in the indus­try. You can con­tact a UBA Part­ner Firm for a cus­tomized bench­mark report based on indus­try, region and busi­ness size.

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