Wellness programs, already something of a force in the group health plan industry, received a shot in the arm at the end of 2015 when a federal district court in Wisconsin ruled that an employer may require compliance with a wellness program as a condition for participation in its group health plan, without violating the Americans with Disabilities Act (ADA).
In the arduous struggle for effective wellness programs as part of a well-designed group health plan, the EEOC's recent challenges to such programs as violating the ADA and the Genetic Information Nondiscrimination Act (GINA) have been particularly daunting.1 This became particularly so in 2014 when the EEOC filed three lawsuits challenging the legality of such programs.
EEOC Challenges to Wellness Programs: A Brief History
The ADA prohibits a covered employer from making health-related inquiries or requiring medical examination of employees. In response to HIPAA, wellness programs featuring health risk assessments, questionnaires, and health screening exams emerged as a critical element of group health plan design in the 1990s. The EEOC took the position that they were subject to the ADA and, by 2009, took the position that a wellness program consisting of a health risk assessment or screening exam would comply with the ADA only if it was "voluntary." The EEOC refused, however, to take a position on what level or amount of financial incentive would render such a program non-voluntary.2
In 2014, the EEOC's assault on employer-provided wellness programs began in earnest when the agency filed a trio of lawsuits challenging employers sponsoring such initiatives.
On August 20, 2014, the EEOC filed a lawsuit against Orion Energy Systems, Inc. in the Western District of Wisconsin, alleging that the company's wellness program, which requires employees to complete a health risk questionnaire and screening, is unlawful under the ADA.3 Failure to comply with the wellness program requirements would cause the employee to forgo any employer contributions to the health plan premium. The EEOC's lawsuit also alleged that an employee was terminated after she complained about the wellness program.
On October 27, 2014, the EEOC brought suit against Honeywell International, Inc. in a Minnesota federal court, requesting a temporary restraining order enjoining the company from continuing to operate its wellness program, which required employee participants in the group health plan and their covered spouses to complete biometric screenings, and refrain from tobacco use (or complete a tobacco cessation program). Noncompliance would result in surcharges to the employee's share of their health plan premiums. The district court denied the EEOC's request for injunctive relief on the grounds that the EEOC had not shown a threat of irreparable harm. The case was later voluntarily dismissed.
On September 30, 2014, the EEOC sued Flambeau, Inc., a plastics manufacturer, in the Western District of Wisconsin, 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's prohibition against medical questions or examinations, unless they are voluntary, job-related or subject to business necessity.
The EEOC was criticized for filing lawsuits against employers when the agency had not provided any guidance regarding what it would consider a compliant wellness program under the ADA or GINA. In April of 2015, the EEOC issued proposed regulations setting out conditions under which a wellness program requiring that participants complete a health risk assessment or undergo a health screen in order to receive a reward under the program may comply with the ADA's voluntariness exemption.4 On October 30, 2015, the EEOC issued a notice of proposed rulemaking proposing rules under which a wellness program as part of an employer's group health plan may avoid violating GINA.5
On December 30, 2015, the latest development in the saga of the mandatory wellness program went decidedly in favor of employers.
The Flambeau Wellness Program
The wellness program established by Flambeau was ordinary in its requirements, but the reward for participation pushed the limits of wellness plan design. To enroll in the Company's group health plan, employees were required to complete a medical history questionnaire and a health screening that included blood testing, blood pressure, and height and weight measurement, among other tests. The company used the aggregated data from these tests to design its group health plan, determine premium levels and adjust certain cost-sharing features of the plan. The company also used the data to design additional programs intended to promote healthy life choices.
When one employee failed to be tested and was therefore not eligible for coverage for the 2012 plan year, the company offered him COBRA coverage for that year. The company later permitted him to undergo testing and be enrolled in the plan retroactively to the first day of the plan year after he filed a union grievance and complained to the EEOC. Nevertheless, the EEOC filed suit, alleging that the wellness program violated the ADA's prohibition against mandatory physical examinations and medical questionnaires.6 The EEOC did not allege that the company's wellness program violated GINA.
Which Exemption Applies?
The EEOC's legal position regarding wellness programs is that only the "voluntariness" standard is relevant to determining whether the program complies with – or violates – the ADA.7 This exemption from the medical examination and inquiry prohibition is very narrow, explicitly stating that the program must be made "available to employees at that work site."
However, another exemption from the ADA...
