The Equal Employment Opportunity Commission appears to be implementing an assault on corporate wellness programs based on the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. After staying on the sidelines while the popularity of workplace wellness programs skyrocketed, the EEOC has brought its third lawsuit in about two months alleging that an employer’s wellness program, in violation of the ADA and GINA, was not “voluntary” due to the “large” and “substantial” penalties to those who chose not to participate. EEOC v. Honeywell International, Inc. (D. Minn., filed Oct. 27, 2014). This attack raises complex challenges for employers since the agency has not issued guidance on wellness programs even as other federal statutory schemes permit, and even promote, wellness programs.
Just seven business days after it received the first charge of discrimination, the agency, in a rare procedural move, filed a court action for an expedited hearing and requested a Minnesota federal court to enjoin key provisions of the large employer’s corporate wellness program. The hearing on the request is scheduled for November 3.
According to the EEOC, because Honeywell International’s program was involuntary, the disability-related inquiries and medical examinations within the program, which could reveal lifestyle and health issues of employees and their spouses, violate the ADA.
The lawsuit also alleges Honeywell’s wellness program violates GINA’s proscription against providing inducements to an employee to obtain that employee’s family medical history. According to the EEOC, by penalizing an employee if the employee’s spouse does not participate in the program’s biometric screening, which could yield information related to such conditions as hypertension and diabetes, the program is providing a financial inducement to obtain genetic information (i.e., family medical history).
According to the EEOC, employees not participating in Honeywell’s program would pay up to $2,500 in “direct surcharges,” as well as lose “up to $1,500 in contributions” to the employee’s health savings account. The Honeywell program appears to require individuals to participate only in the biometric testing, not achieve any particular test results, to qualify for the premium discount. In its prior two lawsuits, the EEOC alleged not participating in the employer’s wellness program would result in the employee paying 100 percent of the health insurance premium, a penalty the agency described as “steep,” “enormous,” and created “dire consequences.” Generally, wellness programs with premium surcharges, as in Honeywell’s, are more common than those that result in the employee’s having to pay the full health insurance premium, as in the first two EEOC litigations.
If the EEOC’s temporary restraining order and preliminary injunction are granted, Honeywell would be prevented from imposing any penalty or cost on an employee who declines to participate in biometric testing, or whose spouse declines to participate in such testing, and from providing any inducement to an employee’s spouse to participate in the testing.
Little EEOC Guidance
EEOC regulations and Interpretive and Enforcement Guidance permit employers to conduct medical examinations, which can include obtaining medical histories, as part of a voluntary wellness program. For years, the EEOC’s position has been that “[a] wellness program is ‘voluntary’ as long as an employer neither requires participation nor penalizes employees who do not participate.” In 2013, the EEOC reiterated that it “has not taken a position on whether and to what extent a reward amounts to a requirement to participate, or whether withholding of the award from non-participants constitutes a penalty, thus rendering the program involuntary.” Not long after announcing that it plans to issue guidance this year on the amount of a reward or penalty allowed for a program to be “voluntary,” an EEOC Commissioner suggested that any guidance with “bright line” rules was unlikely.
Other Agencies Provide Guidance
While the EEOC had been silent on incentives in wellness plans, Congress and other government agencies have not. More than 18 years ago, in the Health Insurance Portability and Accountability Act (HIPAA), Congress carved out an exception to the general rule that group health plans and group health insurance issuers may not discriminate against individual participants and beneficiaries by allowing premium discounts, rebates, or modification to otherwise applicable cost sharing (including copayments, deductibles, or coinsurance) in return for adherence to certain programs of health promotion and disease prevention. The Departments of Labor, Health and Human Services (HHS), and the Treasury published joint final regulations implementing the HIPAA nondiscrimination and wellness provisions in December 2006. Wellness plans complying with these regulations became common in workplaces.
In March 2010, with the President’s support for an incentive-based approach to wellness and a statement of Congress’ approval of such an approach to wellness, the Affordable Care Act amended the HIPAA nondiscrimination and wellness provisions to allow employers to provide larger incentives to employees who satisfy requirements of the employer’s health promotion and disease prevention (i.e., wellness program).
Regulations implementing the HIPAA provision have been issued as well. They include “bright-line” rules for determining the nature and extent of the incentives an employer may include in its wellness program.
The business community has responded to the HIPAA and ACA provisions by enacting wellness programs in large numbers and the EEOC is well aware that it is challenging a mainstream feature of corporate America. Some 94 percent of employers with more than 200 workers and 63 percent of employers with fewer employees have a wellness program, according to a EEOC press release issued when it filed its first wellness lawsuit.
Court Ruled on Premium Discount
Prior to the EEOC’s trio of cases, there has been little “wellness” litigation. The U.S. Court of Appeals for the Eleventh Circuit upheld Broward County’s program of a $20 premium discount in each bimonthly paycheck to motivate employees to complete a health risk appraisal that included a “finger-stick” blood test. Seff v. Broward County, 692 F.3d 1221 (11th Cir. 2012). The Court held the employer’s program was protected by the “safe harbor” provision of the ADA, which allows insurers and self-insured employers to establish benefit plans that are based on sound underwriting and classifying of risk principles so long as they are not a “subterfuge” for disability discrimination. In its brief in Honeywell, the EEOC argues that this decision was wrongly decided and does not protect Honeywell’s wellness plan.
The EEOC’s brief suggests the ADA allows “nominal” incentives and GINA prohibits all incentives to encourage biometric screening involving genetic information, including family medical history. The Commission would effectively make meaningless the ACA and HIPAA provisions and regulations. In its brief, the EEOC acknowledges as much. It states, correctly, that both the HIPAA and ACA regulations note that compliance with those regulations does not establish compliance with other laws or regulations governing wellness programs (i.e., the ADA). However, neither HIPAA nor the ACA has such an express proviso with regard to other laws governing wellness programs
The extent compliance with HIPAA and the ACA is a defense against the EEOC’s legal attack likely will be a threshold issue in the case against Honeywell. In a press release, the company refers to the EEOC’s lawsuit as “frivolous” and states that its “wellness plan incentives are in strict compliance with both HIPAA and the ACA’s guidelines.” It added that it is “disappointed that the EEOC would take a position that is so contrary to a fundamental component of the President’s health care plan, legislation passed by Congress, and the desire of all Americans to lead healthier lives.”