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No safe harbor, but employer’s ‘voluntary’ wellness program did not violate ADA

By Lorene D. Park, J.D.

In the EEOC’s suit claiming an employer’s wellness program and related health risk assessment violated the ADA prohibition against medical exams and disability-related inquiries, the agency was denied summary judgment, but the employer’s motion was granted in part. The wellness program did not fall within the ADA’s safe harbor provision for insurers, but a federal court in Wisconsin found that it was a “voluntary” program and so did not violate the prohibition against medical inquiries. However, the claim that the employer retaliated against an employee by firing her three weeks after she raised concerns about the wellness programs would go to trial (EEOC v. Orion Energy Systems, Inc., September 19, 2016, Griesbach, W.).

Wellness plan. Orion, a lighting manufacturer, has around 250 employees. In 2008, it switched from a fully insured health plan to a self-insured plan. In 2009, to reduce costs by improving employee health, it began a wellness initiative with three “incentives” whereby employees who enrolled in Orion’s plan: (1) had to certify they did not smoke or pay a surcharge ($80 per month for single coverage); (2) had to exercise 16 times per month or pay a $50 monthly surcharge; and (3) had to complete a health risk assessment (HRA) or pay the entire monthly premium, which was $413.43 for single, $744.16 for limited family, and $1,130.83 for family coverage.

The health risk assessment. The HRA included a health history questionnaire and a biometric screen involving: a blood pressure check; height, weight, and body circumference measurement; and blood draw and analysis. Orion did not receive personally identifying information; instead the questionnaire and samples were collected and compiled by outside vendors and sent back to Orion as anonymous, aggregated data, which allowed it to see the percentage of participants who had certain health risks such as high cholesterol. The goal, according to Orion, was to identify common health issues and offer educational tools and assistance to improve employee health.

Employee objects and is fired. An employee in Orion’s accounting department raised concerns about the wellness initiative and HRA, questioning confidentiality and how the premium was calculated, believing it excessive in light of the service fee Orion paid its third-party administrator (she knew the amount because she paid invoices). She sent a letter to the HR director electing not to participate and signed the opt-out form on April 24, indicating she understood she had to pay the monthly premium of $413.42. She was the only employee to opt out of the wellness program that spring. Meanwhile, her supervisor and the HR director spoke to her about comments she made to coworkers about the premium, telling her such negativity was not welcome and to keep her opinions to herself. She was terminated May 18.

Lawsuit. Filing suit, the EEOC claimed Orion violated the ADA by requiring employees who elected to enroll in its self-insured health insurance plan to either complete the HRA or pay 100 percent of their monthly premium. ADA Section 12112(d)(4)(A) prohibits employers from requiring medical exams and inquiries that are not job-related and consistent with business necessity. The EEOC also claimed Orion unlawfully retaliated by firing the employee shortly after she voiced opposition to and opted out of the wellness program. The agency filed a motion seeking summary judgment on Orion’s liability under the ADA.

Also seeking summary judgment, Orion argued its wellness initiative did not violate the ADA because: (1) the ADA’s safe harbor relating to insurance, 42 U.S.C. §12201(c), applied to its program; (2) Orion did not make prohibited “inquiries” where it received only anonymous, aggregated responses and results; and (3) the wellness program was “voluntary” because Orion’s employees had a choice regarding whether to participate and sufficient time to make that choice.

“Safe harbor” did not apply. Orion claimed that requiring employees who elect its insurance to either participate in the wellness program or pay the full premium was lawful under the ADA’s insurance “safe harbor” provision, which states that the ADA “shall not be construed to prohibit or restrict” a self-insured organization “from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan.” Disagreeing, the court pointed to an EEOC regulation, 29 C.F.R. §1630.14(d)(6), which states that the safe harbor provisions “applicable to health insurance, life insurance, and other benefit plans do not apply to wellness programs, even if such plans are part of a covered entity’s health plan.” The court also rejected Orion’s challenge to the EEOC’s authority to interpret the safe harbor position and found the agency’s interpretation reasonable and consistent with the structure of the ADA.

The safe harbor was created to protect the basic business operations of insurance companies, explained the court. And significantly, Orion’s wellness program was wholly independent from its insurance plan. The wellness program was not used to underwrite, classify, or administer risk; Orion did not use information obtained from the program to determine the premiums it would charge or to determine coverage. In sum, the wellness program was not exempt from the ADA under the safe harbor provision.

Orion’s program allowed as “voluntary.” That said, ADA Section 12112(d)(4)(B) permits employers to conduct “voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at the worksite.” Here, the EEOC argued the HRA was not “voluntary” because Orion shifted 100 percent of the health benefit premium to employees who opted out. However, in the court’s view, even a strong incentive was still just an incentive; it was not compulsion, it was an option. While an employee’s choice may have been difficult, it was a choice nonetheless. Because Orion conducted a voluntary medical exam as part of its health program, it was entitled to summary judgment as to the EEOC’s claim that the wellness program, including the HRA, violated the prohibition concerning medical exams under Section 12112(d)(4)(A).

Retaliation, interference claims go to trial. Summary judgment was denied, however, on the claims that Orion retaliated against the employee for exercising rights protected by the ADA, or interfered with her exercise or enjoyment of rights granted by the ADA. It was undisputed that she expressed concern about the confidentiality of her medical information under the wellness program and that she opted out of the HRA, which was protected activity. And, given conflicting evidence regarding who decided to terminate her and why, as well as the timing of her discharge, there were triable questions on whether there was a causal link. She also claimed she was flat-out told not to share her opinion about the wellness program with coworkers, and a jury could find that this constituted interference with her exercise of rights granted by the ADA.