EEOC Attacks Another Wellness Program
What are the Implications for Your Wellness Efforts?
EEOC Files Lawsuit and Motion for TRO and Injunction. Last week, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit in the U.S. District Court of Minnesota to prevent Honeywell International Inc. (Honeywell) from implementing its Wellness Program for 2015. The EEOC claims that:
- Because Honeywell financially penalizes employees for failing to complete biometric screening (including a blood draw) and financially rewards employees who submit to screening, the Wellness Program is not voluntary and violates the Americans with Disabilities Act (“ADA”).
- Because Honeywell financially penalizes employees if their covered spouses fail to complete the biometric screening, it violates the Genetic Information Nondiscrimination Act (“GINA”) because the EEOC considers the results of the screenings to be “family medical history – or genetic information.” (Please note that the EEOC misstated these facts; spouses were only required to participate in nicotine screening.)The EEOC requested that the U.S. District Court for the District of Minnesota issue a temporary restraining order and injunction to prevent Honeywell form moving forward with its Wellness Program for 2015.
Financial Penalties and Inducements. The Wellness Program financial penalties and inducements are:
- $500 surcharge for employees failing to complete the biometric screening.
- Up to $1,500 in HSA contributions for employees completing the screening.
- $1,000 surcharge for each employee and/or covered spouse failing to utilize one of several options to establish that s/he is tobacco-free.
- The biometric screening provides results only for blood pressure, HDL cholesterol, total cholesterol, height, weight, and waist circumference. The screening also included a nicotine test for tobacco use.
- Screening results are only available to an independent third party that makes them available only to the individual taking the test; Honeywell has no access to them.
- Honeywell does not include a health risk assessment (HRA) and does not collect any information on family medical history.
- If an employee or spouse does not submit to biometric screening, Honeywell will still waive the tobacco-use surcharge if (i) the employee and spouse enroll in a tobacco cessation program, or (ii) self-certify their non-tobacco use with a wellness coordinator.
Court Rejects Motion for TRO and Injunction. With the EEOC unable to provide specific guidelines for the level of a penalty or incentive that results in involuntary screening, and with Honeywell’s limits in compliance with those permitted by the Patient Protection and Affordable Care Act (ACA), the court rejected the motion to suspend Honeywell’s 2015 Wellness Program. However, the lawsuit continues.
Observations. Because the court has not yet ruled on the EEOC’s motion and any subsequent lawsuit may be years from a final decision, we will provide some general observations on this topic.
Case May Not Reflect the National EEOC Position. We understand that the national EEOC decision makers in Washington, D.C. are divided over whether wellness programs, like the one adopted by Honeywell, violate the laws over which the EEOC has authority. Nevertheless, this is the third similar action this particular EEOC regional office has brought in recent months. These actions may be the result of a regional bias rather than a nationwide position. The areas over which this regional office has authority are all of Iowa, Minnesota, North Dakota, South Dakota and Wisconsin, and the Northern two-thirds of Illinois (comprised of 86 counties).
Compliance with HIPAA and ACA Rules. Under the final regulations on wellness programs issued under the Health Insurance Portability and Accountability Act (HIPAA), employers may offer employees rewards for participation in a wellness program, with certain limits on the maximum amount of a reward. (Please see our prior newsletter (EEOC Sick Over Wellness Programs http://www.mazconlaw.com/eeoc-sick-wellness-programs/ ) for more information on these standards.)
- The types and amounts of all of the Honeywell penalties and inducements are well within the types and dollar amounts permitted under HIPAA and ACA rules.
- In addition, even with these surcharges, the cost of the medical coverage meets the affordability test under the ACA.
- Thus, these EEOC regional lawsuits beg the question as to whether this is the tale of two federal laws enforced by agencies that simply refuse to work together or agree.
Compliance with the ADA. Even if a wellness program complies with the applicable limits on the amount of rewards under HIPAA and ACA, it must also comply with the ADA, which generally limits an employer’s ability to conduct medical examinations and disability-related inquiries unless participation is “voluntary.” These ADA limits do not apply to medical examinations conducted in accordance with the ADA’s insurance safe harbor provision.
- One question is whether the financial surcharges and inducements rendered the biometric testing involuntary. This seems pertinent since only 53% of the employees and spouses eligible for Honeywell’s group health plan submitted to testing.
- Also, because the Honeywell group health plan was self-insured, it used the same types of actuarial calculations as medical insurance to determine plan costs, and participation in the wellness program entered into these calculations. Thus, the insurance exception may apply such that voluntariness is not a factor.
Compliance with GINA. Title I of GINA includes provisions that prohibit group health plans from requesting or acquiring genetic information. The U.S. Department of Labor has jurisdiction to enforce Title I as it relates to employer sponsored group health plans. Title I generally restricts the collection and use by wellness programs of “genetic information,” which includes: (i) an employee’s genetic tests; (ii) family members’ genetic tests; and (iii) family members’ manifestation of a disease or disorder.Title II of GINA applies to employers and “stand-alone” wellness programs. The EEOC has jurisdiction to enforce Title II. Employers can request or receive genetic information as part of a stand-alone wellness program if (i) it is voluntary with no penalty for not providing the information, and (ii) the program meets certain other requirements.In applying these rules to the Honeywell Wellness Program:
- It appears that the program is part of the Honeywell group health plan, since only participants in the plan are eligible for the biometric testing. Thus, the collection of some genetic information may be permissible under the program.
- There appears to be significant doubt whether the information obtained though the biometric screening or the spousal information is genetic in nature.
- Because the EEOC has jurisdiction only over stand-alone plans, it is unclear whether a court will agree with the EEOC that it has the authority to challenge the Honeywell Wellness Program if it is part of Honeywell’s group health plan.
The EEOC Motion Ignores Precedent. In Seff v. Broward County, 691 F.3d 1221 (11th Cir.2012), the Eleventh Circuit held that the portion of the EEOC’s complaint pertaining to the voluntary nature of the program may eventually be dismissed if it is deemed to be part of a “bona fide benefit plan,” which the court held was generally exempt from the ADA’s prohibition against medical examinations and inquiries. Not surprisingly, the EEOC asserts Seff was wrongly decided.
The EEOC Chose Unsympathetic Employees. The three employees who complained to the EEOC appear to be a somewhat contrived group. All of them, including their spouses, had voluntarily submitted to biometric screening in past years when there were no penalties. In addition, all of them certified in past years that they were not tobacco users. Finally, all of them have already submitted to screenings for 2015.
What Does the Lawsuit Mean for Employers?
- Chilling Effect. It appears that the EEOC is trying to intimidate employers into amending their wellness programs to comply with this regional office’s agenda, even if the guidelines are not required by the ADA or GINA. It is highly probable that the EEOC’s claims will eventually fail, either in the federal district court or on appeal. However, during the interim, the EEOC apparently hopes its actions will force employers to pause before implementing biometric screenings or imposing spousal surcharges.
- For employers in the Eleventh Circuit (Georgia, Florida and Alabama), it is unclear if the EEOC can pursue this type of claim in light of the Seff decision.
- Even though HIPAA and the ACA permit plan designs that provide compelling carrots (or sticks) for participating or maintaining certain health outcomes, if they are overly punitive in nature, employers enhance their risk of possible scrutiny by the EEOC or claims by employees.
Contact Information. For more information from Mazursky Constantine, please contact Don Mazursky (404.888.8840), Randall Constantine (404.888.8877), or Amy Heppner (404.888.8825). For more information from VCG Consultants, please contact Leslie Schneider (770.863.3617).