Our firm has acknowledged recently (see http://www.seyfarth.com/publications/MA041715-EB) that there are some questions about the authority of the EEOC to issue its proposed wellness regulations that claim legitimacy under the Americans with Disabilities Act (ADA). Just before the New Year, Judge Crabb of the U.S. District Court for the Western District of Wisconsin added her voice to those who think the EEOC is overreaching.

The new decision arises out of EEOC v. Flambeau, Inc., No. 14-cv-638 (W.D. Wisc. Dec. 30, 2015).

The EEOC, in particular the Chicago office of the EEOC, argued that Flambeau, Inc. violated the ADA section found at 42 U.S.C. § 12112(d)(4)(A) by conditioning participation in an employer-subsidized, self-funded health plan on completion of a “health risk assessment” and “biometric screening test.” The health risk assessment “required each participant to complete a questionnaire about his or her medical history, diet, mental and social health and job satisfaction.” The biometric test “involved height and weight measurements, a blood pressure test and a blood draw.”

Judge Barbara Crabb summarily rejected the EEOC’s reliance on Section 12112(d)(4)(A). That section prohibits disability-related medical examinations or inquiries that are not job related and consistent with business necessity. The judge reasoned that any EEOC reliance on 12112(d)(4)(A) is trumped by the ADA benefit plan safe harbor in § 12201(c)(2), as long as the wellness provisions are terms in an employer health plan, and are used to help the employer administer and underwrite insurance risks. The judge said that the safe harbor may not apply to protect wellness programs that are not part of a plan, assuming Section 12112(d)(4)(A) invalidates such programs.

Judge Crabb relied on statements of the Flambeau Inc.’s consultants that they used the aggregate wellness data to classify health risks, project plan costs and determine participant premiums. That the wellness terms were not set forth in a summary plan description or collective bargaining agreement was not consequential. Judge Crabb also said that the ADA’s “subterfuge” exception to the ADA benefit plan safe harbor was not triggered because the EEOC offered no evidence that the employer’s wellness terms were used to discriminate against any employee in a non-benefit plan aspect of employment.

EEOC v. Flambeau, Inc. is important because it is yet another rejection of how the EEOC reads the ADA benefit plan safe harbor. (The Court of Appeals for the 11th Circuit also has stated in Seff v. Broward County, 691 F.3d 1221 (2012) that the EEOC position on the ADA benefit plan safe harbor is agency overreach.) The Flambeau decision will help employers with a proactive wellness culture to defend against EEOC attacks.

Three final points are worth making:

  • EEOC v. Flambeau, Inc. could, of course, be appealed to the Court of Appeals for the 7th Circuit.
  • Employers still need to be mindful of nondiscrimination and wellness rules under the Health Insurance Portability and Accountability Act (HIPAA) and under the Genetic Information Nondiscrimination Act (GINA) that apply to employer health plans.
  • Whether wellness plans actually provide a return on investment remains subject to debate. A new study has shown a positive correlation between wellness programs and stock performance, (see http://www.mercer.com/newsroom/wellness-stock-performance.html), but the return on investment debate continues.