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EPLI: Do Mandatory Wellness Programs Violate the ADA?


EPLI Do Mandatory Wellness Programs Violate the ADARecent EEOC Lawsuits Challenge Wellness Programs

One year ago we wrote about the potential employment practices challenges healthcare reform could bring in the area of employer-mandated wellness programs. Sure enough, wellness programs, which are encouraged by the Affordable Care Act to incentivize employees, may now be running afoul of the Equal Employment Opportunity Commission (EEOC), or at the very least causing confusion. Earlier this month, the federal agency challenged the validity of mandatory provisions in a wellness program in a lawsuit involving Wisconsin-based Flambeau, Inc., alleging that company’s “voluntary” wellness program violates the Americans with Disabilities Act (ADA).

Flambeau’s wellness program, although nominally voluntary, required employees to submit to a health risk assessment, including biometric testing. Employees who failed to do so faced cancelation of health insurance or a requirement to pay their full insurance premiums. In comparison, employees who submitted to the testing did not have their coverage canceled and were required to pay only 25% of their premiums.

In this specific case, an employee failed to complete the health assessment and testing because he was on medical leave for heart failure. The EEOC claims Flambeau canceled the employee’s medical insurance and shifted premiums to him as a result. According to the EEOC, this is disability discrimination, and Flambeau had made “disability-related inquiries that were not job-related and consistent with business necessity.”

“Employers certainly may have voluntary wellness programs but they actually have to be voluntary,” said John Hendrickson, regional attorney for the EEOC Chicago district. “They can’t compel participation in medical tests or questions that are not job-related and consistent with business necessity by canceling coverage or imposing enormous penalties such as shifting 100% of the premium cost onto the back of the employee who chooses not to participate. Having to choose between complying with such medical exams and inquiries, on the one hand, or getting hit with cancelation or a penalty, on the other hand, is not voluntary and not a choice at all.”

This is not the first lawsuit of its kind in Wisconsin. Another lawsuit is taking place over an employer that took action against an employee who opted out of a what’s considered a “voluntary” wellness program. Wisconsin-based Orion Energy Systems, according to the EEOC, instituted a wellness program that required medical examinations and made disability-related inquiries. “When employee Wendy Schobert declined to participate in the program, Orion shifted responsibility for payment of the entire premium for her employee health benefits from Orion to Schobert.  Shortly thereafter, Orion fired Schobert,” states the EEOC.

The EEOC says Orion’s wellness program violated ADA and retaliated against Schobert because of her good-faith objections to the wellness program.  The EEOC further asserts that Orion interfered with Schobert’s exercise of her federally protected right to not be subjected to unlawful medical exams and disability-related inquiries.

These cases underscore what it appears to be the further scrutiny of wellness programs by the EEOC in the coming months, which will even more complicated by the provisions in the Affordable Care Act. The EEOC has stated that it plans to issue guidance concerning the amount of a reward/penalty allowed for a program to be “voluntary” but as of yet there has been no word or clarification.

In the meantime, it’s wise for companies to review their wellness programs with a professional that understands potential pitfalls that may arise and ensure that their programs are voluntary. Also, should an employee file a lawsuit, be se sure that the appropriate insurance is in place to protect an employer. This involves securing robust Employment Practices Liability Insurance (EPLI) that addresses allegations by employees claiming discrimination, sexual harassment, and wrongful discharge, among other employment-related issues. Axis Insurance Services specializes in offering EPLI coverage to firms and can provide competitive solutions. Contact us at (877) 787-5258.

Sources: MONDAQ, SHRM.org

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Blogged on: October 28, 2014 by Mike Smith
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