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EPL: Lawsuits Over Wellness Programs Spark Ire from Employers, Legislators

Posted on: December 10, 2014 by Caitlin Morgan

EPL Lawsuits Over Wellness Programs Spark Ire from Employers, Legislators

EPL: Lawsuits Over Wellness Programs Spark Ire from Employers, Legislators

 

In October we discussed how the Equal Employment Opportunity Commission (EEOC) was looking into potential violations by companies with wellness programs, with a couple of lawsuits filed alleging violations under the Americans for Disability Act (ADA) in requiring an employee to take a biometric test or face cancellation of medical insurance or penalties. Criticism has mounted over these suits, stating that the agency’s litigation arm should have waited until the EEOC could issue new guidance to help employers devise wellness programs that steer clear of potential disability discrimination.

“The problem is that the Affordable Care Act (ACA) encouraged wellness programs. You’re suing companies that are attempting to provide wellness programs, before the commission has given guidance about what companies may do,” said Senator Lamar Alexander (R-TN). “That’s discouraging employers who are trying to give employees cheaper insurance if they lead a healthy lifestyle.”

 

The EEOC defended the two lawsuits filed in Wisconsin, saying the employers in those cases had allegedly threatened discipline against employees who did not participate in the wellness programs, or cut off insurance coverage altogether to employees who declined to sign onto the wellness program.

 

All Eyes on Honeywell Lawsuit

Now on the heels of the lawsuits in Wisconsin, a third EEOC suit was filed in against Honeywell, further fueling the fire among employers who claim the timing of these suits are out of sync considering that many companies are in the middle of open enrollment. “The fact that the EEOC sued is shocking to our members,” said Maria Ghazal, vice-president and counsel at the Business Roundtable, a group of chief executives of more than 200 large U.S. corporations. “They don’t understand why a plan in compliance with the ACA is the target of a lawsuit,” she said. “This is a major issue to our members.”

The EEOC’s petition against Honeywell originally sought to enjoin the company from implementing its wellness program, charging violations of both the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act (GINA). However, the district court in November denied the EEOC’s request for a temporary restraining order and preliminary injunction, based on a finding that Honeywell’s program did not pose “irreparable harm” to participants. The judge did not address the EEOC’s likelihood of success in the litigation and the suit is poised to go forward.

In the Honeywell wellness program, employees and their spouses are asked to get blood drawn to test their cholesterol, glucose and nicotine use, and also have their body mass index and blood pressure measured. An employee who refuses is subject to a $500 surcharge on health insurance premiums and could lose up to $1,500 in Honeywell contributions to a health savings account. A worker and spouse are also each subject to a $1,000 tobacco surcharge if they refuse to do the screening. That means a couple could face a combined $4,000 in financial penalties.

Employers are watching the Honeywell case closely because many have similar incentive-based wellness plans. In fact, 80% percent of employers with 500 workers or more offer some sort of wellness program, according to a 2014 national survey of employer-sponsored health plans by the benefits consultant Mercer. Of those, 42% offer employee incentives to undergo biometric screening, and 23% tie incentives to actual results, such as reaching or making progress toward blood pressure or BMI targets.

As we stated in our earlier article, the problem lies with the fact that there isn’t clarity between the health law under the ACA and legislation under the ADA. The health law encourages employers to offer workers financial incentives to participate in wellness programs. It allows plans to incorporate wellness incentives — both penalties and rewards — that can total up to 30% of the cost of employee-only coverage, an increase over the previous limit of 20%. If the wellness activity aims to help someone reduce or quit smoking, the incentive can be even higher, up to 50% of the plan’s cost. Under the ADA, employers aren’t permitted to discriminate against workers based on health status, they can, however, ask workers for details about their health and conduct medical exams as part of a voluntary wellness program. What constitutes a voluntary wellness program under the law is the question? Employers, patient advocates and policy experts want the EEOC to spell out what “voluntary” means under the ADA and clarify the relationship between the health law and the ADA with respect to wellness program financial incentives.

We’re keeping a close look on how these lawsuits proceed and will keep you abreast of developments. Caitlin Morgan offers Employment Practices Liability Insurance to a number of industries to address exposures related to workplace issues including allegations of discrimination. Please contact us at 877.226.1027 to discuss how we can provide your insureds with the protection they need.

 

Sources: Law 360, Hire Right, PBS, NPR

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Posted in: Employment Practices Liability Insurance law preventing lawsuits