By Lorene D. Park, J.D.
In a matter of first impression in the Seventh Circuit, a federal district court in Wisconsin found that an employer’s requirement that employees who wanted to participate in its health insurance plan first complete a wellness program (including a health risk assessment and biometric test) did not violate the ADA’s prohibition against medical exams because the requirement was a term of the plan, was used to enable the employer to underwrite, classify, and administer its health insurance risks, and was not used as a subterfuge to evade the purposes of the ADA (EEOC v. Flambeau, Inc.
, December 31, 2015, Crabb, B.).
The employer, which manufactures and sells plastic products internationally, offered employees various benefits, including the ability to participate in its health insurance plan. The plan was self-funded and self-insured, but was administered by a different entity. Participation in the plan was wholly voluntary and was not required as a condition of employment.
In 2010, the employer established a wellness program for employees who wanted to enroll in its health plan for the 2011 benefit year. The program included a health risk assessment and a biometric test. The assessment involved completing a questionnaire on medical history, diet, mental and social health, and job satisfaction. The biometric test included height and weight measurements, a blood pressure test, and a blood draw. Other than tobacco use, the health risks and medical conditions identified were reported in the aggregate, so the employer did not know individual results. The information was used to estimate insurance costs, set premiums, evaluate the need for stop-loss insurance, and adjust co-pays. The employer also sponsored weight loss competitions and made other organization-wide changes to promote health.
After the first year, the employer adopted a policy of offering health insurance only to employees who completed the wellness program. Participation was not a condition of continued employment but was required to receive company-subsidized health insurance.
An employee who participated in the wellness program in 2011 failed to complete the program’s assessments in time to participate in 2012. His health insurance was discontinued and he was offered the COBRA rate for continued coverage. He declined and filed a union grievance, as well as complaints with the Department of Labor and the EEOC. Though the employer agreed to reinstate his insurance if he completed the required testing and assessment, and his insurance was later reinstated, the EEOC filed suit on his behalf claiming that the testing requirement violated ADA Section 12112(d)(4)(A)’s ban on mandated medical examinations.
ADA safe harbor.
Granting summary judgment for the employer, the court found that the wellness program requirement was protected by the safe harbor in 42 U.S.C. Section 12201(c)(2). That section provides that the ADA “shall not be construed to prohibit or restrict” an employer from establishing or administering “the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks.” Because this was a matter of first impression in the circuit, the court looked to Seff v. Broward County, Florida
, an Eleventh Circuit case involving a similar wellness program. There, an employer’s program fell within the safe harbor because it was included in the benefit plan to enable the employer to underwrite, classify, and administer its health insurance risks more effectively.
Here, the EEOC argued that the “employee health program” exception in Section 12202(d)(4)(B) was the only exception to Section 12112(d)(4)(A)’s ban on mandated medical exams concerning wellness programs and it would be “overrun entirely” if the safe harbor applied. Disagreeing, the court noted obvious differences between the protections of the safe harbor, which provides an exception for medical exams tied to employers’ insurance plans, and the section cited by the EEOC, which is an exception for medical exams that are part of “employee health programs” regardless of whether the employer sponsors a plan. Nor did the EEOC’s recently proposed regulatory rules on employee health programs change the court’s view, because they said nothing about the safe harbor’s applicability to medical exams that are part of wellness programs and that are used to administer and underwrite risks associated with an employer’s plan.
Wellness program protected by safe harbor.
Ultimately, the court concluded that the safe harbor applied here. First, the wellness program requirement was a “term” of the employer’s insurance benefit plan, as it was undisputed that employees had to complete the program before they could enroll in the plan. The court noted that employees were given adequate notice of the requirement and the plan’s summary plan description explained that participants would be required to enroll “in the manner and form prescribed” by the employer, which put them on notice that there might be additional enrollment requirements not spelled out in the summary.
Second, it was clear that the wellness program requirement was based on “underwriting risks, classifying risks, or administering such risks.” The undisputed evidence showed the employer’s consultants used the gathered data to classify participants’ health risks and to project insurance costs for the benefit year. They then made recommendations on what the employer should charge participants. After identifying the risks through the wellness program, the employer decided to purchase stop-loss insurance to hedge against unexpectedly large claims.
Not evading ADA.
Finally, the court found that the employer was not using the safe harbor as a “subterfuge” to evade the purposes of the ADA, because the wellness program requirement did not involve a “disability-based distinction” that was used to discriminate against disabled individuals. Regardless of their disability status, all employees who wanted insurance had to complete the wellness program before enrolling in the employer’s plan. Furthermore, there was no evidence the employer used the gathered information to make disability-related distinctions.