Monday, January 11, 2016

Employers feeling good about win in EEOC wellness case

Nine months ago, the EEOC published proposed regulations detailing how and when employers can maintain wellness incentives for employees under group health plans without running afoul of the ADA’s voluntariness requirements for medical exams.

In the closing minutes of 2015, a Wisconsin federal court issued an opinion in one of the first lawsuits filed by the EEOC that had challenged an employer wellness program as an ADA violation. The resulting victory for the employer may cause the EEOC to rethink its wellness-incentive strategy.

The employer in EEOC v. Flambeau, Inc. required employees to submit to a health-risk assessment and a biometric test as a requirement for participating in the employer’s health insurance plan. The EEOC claimed this requirement violated the ADA by requiring employees to submit to the medical examinations.

The district court disagreed, concluding that the ADA’s safe-harbor provision—which provides an exemption for activities related to the administration of a bona fide insurance benefit plan—protects the employer’s screening requirement:
I conclude that the protections set forth in the ADA’s safe harbor enable employers to design insurance benefit plans that require otherwise prohibited medical examinations as a condition of enrollment…. The wellness program requirement was clearly intended to assist defendant with underwriting, classifying or administering risks associated with the insurance plan.… These types of decisions are a fundamental part of developing and administering an insurance plan and therefore fall squarely within the scope of the safe harbor.
Unfortunately for the EEOC, this opinion is a 180-degree departure from its proposed regulations, which state that a wellness program violates the ADA if if requires employees to participate in a wellness program, or denies coverage for non-participation.

This opinion is not, by a long short, the final word on this issue. The 7th Circuit will likely weigh in sometime next year, and, at some point, maybe even the Supreme Court. It is doubtful that the EEOC will drop this issue as an agenda item. Nevertheless, as employers continue to search for ways to battle the high (and rising) cost of medical insurance, Flambeau offers hope that mandatory wellness programs will remain a viable option.