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Analysis: EEOC’s ADA and GINA wellness regs survive AARP’s challenge

January 3rd, 2017  |  Joy Waltemath

By Joy P. Waltemath, J.D.

EEOC regulations under the ADA and GINA that say the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage does not render “involuntary” a wellness program (either a participatory or health-contingent program) that seeks the disclosure of ADA- or GINA-protected information survived a challenge by the AARP, the federal district court in the District of Columbia ruled in late December. It found that AARP had associational standing—bringing suit on behalf of its members—to challenge the regs, but AARP did not establish irreparable injury. Specifically, the potential disclosure of health information required by the regs is not public disclosure, and employers are statutorily forbidden from using it to discriminate against employees. Further, paying higher premiums is economic harm, which is not irreparable. The court also found the EEOC entitled to some deference given that “voluntary” is not defined in either the ADA or GINA, and that on this limited record (resulting from AARP’s delay in challenging the regs), the EEOC had offered an apparently reasonable explanation for its change of course to allow the use of penalties or incentives.

Wellness programs and the ADA, GINA, and HIPAA. Per the court’s analysis in AARP v. EEOC, the litigation concerns the intersection of the ADA, GINA, the Health Insurance Portability and Accountability Act (HIPAA), the Affordable Care Act (ACA), and their various implementing regulations, as applied to employer-sponsored wellness programs. In short, the ADA and GINA allow “voluntary” collection of otherwise protected health information if it is collected as part of an “employee health program” (ADA) or where it offers “health or genetic services, including wellness programs” (GINA). HIPAA bars discrimination on the basis of “any health status related factor,” but employers may offer “premium discounts or rebates modifying otherwise applicable copayments or deductibles in return for adherence to [wellness] programs.”

EEOC regs under ADA and GINA. In May 2016, the EEOC issued regulations under the ADA and GINA to address the incentives that employers may offer employees for participating in healthcare wellness programs, which may require employees to reveal information protected under either the ADA or GINA. These EEOC regs essentially would permit employers to increase premiums for employee self-only coverage by up to 30 percent if employees choose not to participate in employer-sponsored wellness programs that solicit ADA- or GINA-protected information. AARP challenged the regs in October 2016, asserting that they are arbitrary and capricious under the Administrative Procedure Act (APA) because the incentives render the disclosure of GINA- and ADA-protected information “involuntary” and permit coerced disclosure in violation of the law.

How we got here. To facilitate an understanding of the litigation, the court addressed the regulatory history surrounding wellness programs. HIPAA regs issued in 2006 capped the size of the reward that could be offered for participation in a wellness program at 20 percent of the cost of employee-only coverage; they defined “reward” to mean a discount or a penalty. These regulations divided wellness programs into two categories: “participatory” and “health-contingent,” and the 20 percent cap applied only to health-contingent wellness programs. In 2010, the ACA amended the HIPAA nondiscrimination provisions to allow for rewards of up to 30 percent of the cost of coverage in exchange for participation in a health-contingent wellness program; the HIPAA regs were amended accordingly in 2013.

EEOC changing positions. The EEOC first issued ADA enforcement guidelines in 2000 stating that employers could collect ADA-protected information as part of a wellness program as long as providing the information was not a condition of obtaining any offered reward or incentive. In 2009, EEOC signaled it was waving, first implying by letter that it would be consistent with the 2006 HIPAA regs and allow employers to provide incentives—and then it rescinded that portion of the letter. In its 2010 GINA regs, the EEOC said that providing genetic information to a wellness program must be voluntary—it could not be required, nor could an employer penalize those who chose not to provide it.

ACA confusion. But the changes made by the ACA to HIPAA regarding wellness programs explicitly permitted the use of incentives in wellness programs.  Then, in 2012 the Eleventh Circuit held in Seff v. Broward County, Florida that wellness programs that are part of a bona fide group plan fell under the “safe harbor” provision of the ADA as a term of the health plan, an interpretation that the court noted “would appear to have allowed employers to impose unlimited penalties or incentives on employees to induce them to participate in wellness programs, including those programs that required the disclosure of ADA-protected information.”

Finally, in 2016, the EEOC issued final rules applying to both participatory and health-contingent wellness programs: The final ADA rule provides that the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage does not render “involuntary” a wellness program that seeks the disclosure of ADA-protected information. The final GINA rule permits employers to offer incentives, again up to 30 percent of the cost of self-only coverage, to employees to disclose information about a spouse’s (and only a spouse’s) manifestation of disease or disorder (which constitutes genetic information of the employee under GINA) as part of a health risk assessment in connection with a wellness program.

Associational standing. The court spent a good bit of time addressing the EEOC’s challenge to AARP’s standing, because the regulations that AARP challenges apply to employers, not to AARP or its members directly, and harm to the AARP from the regulations depends on the actions of third-party employers. However, where an organization itself has not suffered an injury but its members have, the organization may bring suit on behalf of its members under an associational standing theory. The court found that it had done so here, although the EEOC quibbled over the finer points of whether AARP failed to present any evidence of “traditional indicia of membership.” It also found that at least one of AARP’s members would have standing to sue in his or her own right regarding the ADA rule and the GINA rule. Finally, the court found that AARP had amply demonstrated that this suit is germane to its purpose—advocating for the rights of older individuals, who certainly have an interest in avoiding discrimination on the basis of disability or genetic information.

Irreparable harm lacking. AARP claimed that its members will suffer irreparable harm because many of them will be unable to afford the premium increase permitted under both the ADA and GINA rules, and instead will be forced to disclose confidential medical information. But the court pointed out that the disclosure here is not public disclosure; both the statutes and regulations limit the permissible disclosure of health information obtained through wellness programs in order to prevent employers from being able to use information disclosed as part of wellness programs to discriminate against employees.

More importantly, none of the declarations from members that AARP submitted indicated that irreparable harm from this disclosure was likely. Being required to pay a higher premium constitutes harm, but it is an economic harm, which typically does not constitute irreparable harm. And although one declarant alleged the coerced disclosure of ADA-protected information, the disclosure apparently had already occurred, so a preliminary injunction would serve little purpose. Also, AARP’s unexplained delay in bringing suit weighed against a finding of irreparable harm, undermining its argument that an injunction was urgently needed.

Success on the merits. AARP raised two principal arguments as to both rules: first, that EEOC’s interpretation of the term “voluntary” to permit the use of 30 percent incentives is contrary to both the ADA and GINA; second, that EEOC did not adequately explain its reversal from its previous position that incentives were not permitted under either statute. Peeved because of AARP’s delay in bringing suit and its request for expedited review, which meant the administrative record could not be prepared in time for the court to review it for the preliminary injunction, the court gave deference to the EEOC and concluded that AARP was not likely to succeed on the merits.

“Voluntary.” Neither the ADA nor GINA defines the term “voluntary” or explains what it means to conduct a “voluntary” medical examination or to voluntarily provide medical information. But nothing in either statute directly prohibits the use of incentives in connection with wellness programs either; neither statute speaks to the level of permissible incentives at all, noted the court, finding the statutes to be ambiguous on this point, leaving it to defer to the EEOC to determine the exact contours of this provision.

AARP only objected to the specific level of incentives EEOC had adopted, which it said allowed coercion: 30 percent of the cost of self-only coverage under both the ADA and GINA rules, or 60 percent of the cost of self-only coverage if the incentives/penalties are stacked. But there is nothing in either the ADA or GINA to indicate that the particular incentive level EEOC selected is not permitted, making EEOC’s choice of the permissible incentive level not irrational. “The new regulations may permit employers to offer a strong incentive to their employees to disclose health information, but ‘[a] hard choice is not the same as no choice’” concluded the court.

Reasoned explanation. As for whether AARP could succeed in arguing that EEOC failed to give a reasoned explanation as to why it reversed a long-held position that incentives were not permitted under the ADA or GINA, the court again noted the difficulty presented by the lack of a full administrative record. But based on the record it had, the court found the EEOC offered a seemingly reasonable explanation: The agency’s former interpretation prohibiting incentives undermined provisions in HIPAA and the ACA that permitted employers to offer incentives in order to promote the use of wellness programs. Employers and industry groups were concerned and confused, so EEOC chose to harmonize its regulations with HIPAA regulations that implemented the ACA’s 30 percent incentive cap in order to provide clarity to employers and to promote the ADA’s and GINA’s goal of preventing employment discrimination and effectuating the wellness provisions of the ADA, HIPAA, and GINA.

Public interest. Finally, the public interest weighed against granting injunctive relief, the court said, given AARP’s somewhat weak showing of harm, the late date for proposed injunctive relief, and the “considerable disruption for employers and insurers who designed their 2017 health plans” around the January 1 applicability date. Enjoining the rules now would cause uncertainty for employers and employees, which AARP had not shown to be warranted.