Another Win for Wellness

September 23, 2016

On Monday, September 19, the U.S. District Court for the Eastern District of Wisconsin issued an opinion finding that penalizing an employee by requiring the employee to pay the entire premium for participation in an employer’s healthcare plan if the employee refused to complete a voluntary health risk assessment to participate in the employer’s wellness program did not violate the Americans with Disabilities Act (ADA).

On Monday, September 19, the U.S. District Court for the Eastern District of Wisconsin issued an opinion finding that penalizing an employee by requiring the employee to pay the entire premium for participation in an employer’s healthcare plan if the employee refused to complete a voluntary health risk assessment to participate in the employer’s wellness program did not violate the Americans with Disabilities Act (ADA). E.E.O.C. v. Orion Energy Systems, Inc., C.A. No. 14-CV-1019. The Equal Employment Opportunity Commission (EEOC) takes the position in this case and generally that incentives or penalties can convert voluntary participation in completing a health risk assessment or participating in a wellness program to involuntary or mandatory participation in violation of the ADA, which prohibits an employer from demanding that an employee complete medical examinations or inquiries that are not job-related or consistent with business necessity. The Court held that the employee was faced with a choice of taking the penalty or participating and, while that was a hard choice, it was nonetheless a choice.

The Court also issued other findings, most notably that voluntary wellness programs are not protected by the ADA’s “safe harbor” provision. The Court held that the EEOC acted within its authority in publishing a regulation that excludes wellness programs from the “safe harbor” provision relating to insurance under ADA which permits employers to draft their health insurance plans as they see fit as long as the plan is not a subterfuge for discrimination.

In holding that wellness programs are unrelated to the basic underwriting and risk classification protected by the ADA’s safe harbor, the Court declined to adopt the holdings of Seff v. Broward County, 691 F.3d 1221 (2012) and EEOC v. Flambeau, Inc., 131 F. Supp. 3d 849 (W.D. Wis. 2015). The Court reasoned that Orion did not use any information obtained through the wellness program to impact its underwriting such that Orion could not contend that its wellness program fell within the ADA’s safe harbor. Assuming Orion had done so, using information obtained from its wellness program to impact the underwriting of its healthcare plan would have surely violated a number of federal laws, including Genetic Information Nondiscrimination Act (GINA), the Health Insurance Portability and Accountability Act (HIPAA), and the ADA. However, the Court stated, “[b]y applying the safe harbor provision to employer wellness programs, the ADA would not prevent employers from requiring medical examinations as a condition to participate in its wellness programs so long as the exams pertain tangentially to health.” Id. at p. 17.

The Court’s opinion was issued after hearing both parties’ cross motions for summary judgment. Although the Court granted summary judgment to the employer on the EEOC’s claim that the wellness program violated the ADA because it was not voluntary, other causes of action alleged, such as the former employee’s retaliation claim for being terminated, were not dismissed and, thus, the case will proceed on those causes of action.

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Boyd B. Nicholson, Jr., Managing Director, Haynsworth Sinkler Boyd, P.A., ONE North Main, 2nd Floor, Greenville, SC 29601