United States: All Is Well For Employers: Three Things You Need To Know About Court Ruling In Wellness Program Lawsuit

Last Updated: January 11 2016
Article by Richard R. Meneghello

A federal judge in Wisconsin just issued a key ruling upholding an employer's wellness program despite a challenge from the Equal Employment Opportunity Commission (EEOC). The decision, published on December 31, 2015, is a definite win for those employers across the country that have established or want to establish such programs (EEOC v. Flambeau, Inc., Western District of Wisconsin.)

Here are three things you should take away from this ruling:

1. This Could Be A Sign Of Very Good Things To Come

This decision could set off a chain of victories for employers in this area of the law. A quick examination of the background facts helps to demonstrate why this decision is positive news for businesses and why it could be the start of something good.

Flambeau, Inc., which manufactures and sells plastic products, established a wellness program for its workers in 2011. At first, the program offered the additional benefit of a $600 credit to any worker who participated. But by 2012, the company required any employee who wanted to obtain health insurance to complete the wellness program requirements.

Its wellness program had two requirements: a health risk assessment, which required participants to complete a questionnaire about medical history, diet, mental health, social wellbeing, and job satisfaction; and a biometric test, which amounted to a routine physical examination (height, weight, blood pressure, blood draw).

The information gathered by the program administrators was used to identify health risks and medical conditions common among the workforce. However, the company did not receive any specific results about any of the individual employees who submitted to the requirements. Instead, the administrators reported the information to the employer in aggregate, allowing the company to estimate insurance costs and set premium levels.

One worker refused to complete the requirements and was dropped from insurance coverage. The EEOC filed a lawsuit on his behalf, claiming that the program violated the Americans with Disabilities Act's (ADA) ban on employer-mandated medical examinations.

The federal district court judge who heard the case rejected the EEOC's challenge and upheld Flambeau's wellness program. She ruled that the program fell squarely into the ADA's "safe harbor" for insurance benefit plans. Because this was a matter of first impression in Wisconsin, she looked favorably to a 2012 case from the 11th Circuit Court of Appeals, Seff v. Broward County, which also upheld an employer's wellness program that sought worker's medical information as part of its group health coverage.

Employers should feel buoyed by the fact that this decision so clearly places this wellness program into the protections of the ADA's safe harbor. Although an appeal by the EEOC is likely, many remain hopeful that the judge's decision in this case starts a chain reaction that sees other similar wellness programs cleared as legally compliant.

2. Employer Plans Must Still Comply With Certain Rules To Benefit From Safe Harbor

But in order to stay on the right side of the law, you would do well to heed some lessons from the Flambeau decision when establishing your wellness program. The court examined the program at issue from various angles to make sure it satisfied a number of conditions.

First, the court said that the wellness program requirement has to be a "term" of an employer's insurance benefit plan in order to qualify under the ADA's safe harbor. In other words, an employer could run the risk of an ADA violation if it sets up a wellness program that collected such data outside the realm of its insurance benefits offerings. In this case, the court looked to the fact that Flambeau's wellness program was only required if workers wanted to enroll in the plan. It was also deemed critical by the court that the employer provided adequate advance notice of the wellness program requirements to workers through educational handouts, and that the assessment and testing coincided with the open enrollment period.

Second, the court found that the wellness program requirement was clearly intended to assist the employer with underwriting, classifying, or administering risks associated with the insurance plan. As noted above, the information was collected in aggregate and then directly used to classify health risks so that the company could calculate its projected insurance costs for the benefit year. The court said that although the employer could have potentially designed and administered an insurance plan without gathering this data, the fact that it decided to collect the information does not render its actions illegal.

The court also specified that the wellness program was not a condition of employment, and workers could refuse to participate and remain employed with the company. Although they would then have to obtain health insurance elsewhere, the program was not seen as mandatory because of this option.

Finally, the court concluded that there was no evidence that the employer's actions in setting up the plan were actually a subterfuge for discrimination. The EEOC did not show that the employer made any disability-based distinctions that were used to discriminate against any specific workers or group of employees, or that it used the data collected to treat any single worker differently.

Interestingly, the court noted that the employer failed to explicitly include the wellness program requirements in either the insurance plan's summary plan description or the collective bargaining agreement that governed the worker's employment. The judge concluded that such an omission was irrelevant for the purpose of her decision, since the summary plan description does not establish the terms of the actual benefit plan.

3. Stay Tuned For Final EEOC Regulations

This decision comes at an interesting time for the EEOC. The agency recently proposed new regulatory rules that will govern employee health programs, and the EEOC argued that one of its proposed rules rejects the reasoning used by the Broward County decision in determining the contours of the ADA's safe harbor provision.

In the Flambeau case, the court dismissed the applicability of the proposed regulation for two reasons. First, the rules are still in the formative stages, and have not yet been finalized and adopted. Second, even if they were in place, the court found that the proposed rule in question speaks only to the safe harbor's applicability to "wellness program incentives." In other words, the court believed that the proposed regulation would restrict an employer's ability to develop a stand-alone wellness program unrelated to the administration of a health insurance plan, but would not impact a wellness program designed as part of insurance coverage.

This decision could lead the EEOC to go back to the drawing board and rework its proposed regulations, which remain in administrative limbo at the start of the new year. We expect the regulations to become finalized at some point in 2016, at which point you may need to adjust to a new normal when it comes to wellness plans.

Until then, employers should remain heartened by this decision. Although the specific law on the ADA's safe harbor and the administration of health insurance plans could be different in your local jurisdiction, and you should check with your counsel to ensure any plan you develop is compliant, this case is welcome news at the beginning of the new year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Richard R. Meneghello
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions