Compliance

Court Rejects Wellness Program Sponsor’s Motion to Dismiss

The court found the program was subject to ADA scrutiny, but also that the wellness plan was lawful under the ADA because it concluded the employee's decision whether to participate was voluntary under that statute.

By Rebecca Moore editors@plansponsor.com | September 23, 2016

A federal court rejected Orion Energy System’s argument that the insurance safe harbor provision in the Americans with Disabilities Act (ADA) immunizes wellness plans from ADA scrutiny.

In the lawsuit, the Equal Employment Opportunity Commission (EEOC) argued that Orion required Wendy Schobert to submit to medical testing as part of a wellness program or pay 100% of the premium for the employer-provided health insurance. EEOC contended that this violated the ADA's prohibition against involuntary medical exams.

However, Orion contended that its wellness plan was covered by the ADA's so-called "insurance safe harbor," and thereby was excused from ADA compliance except if it operated as a subterfuge. Orion also argued that the plan was lawful under the ADA because it was voluntary.

The U.S. District Court for the Eastern District of Wisconsin rejected Orion's safe harbor argument, and held that the plan was subject to ADA review. The court concluded that EEOC's recently issued regulations on the ADA's safe harbor provision were within EEOC's authority, and further held that the safe harbor provision did not apply even without regard to the new regulations. However, the court found that the wellness plan was lawful under the ADA because it concluded that the employee's decision whether to participate was voluntary under that statute.

The EEOC also charged in the lawsuit that Orion violated the federal law by firing Schobert when she objected to the program. The court held that there were issues of fact regarding whether Schobert was fired because of her opposition to the wellness plan, and indicated that the case would be set for trial.

In a separate EEOC challenge to an employer’s wellness program, the U.S. District Court for the Western District of Wisconsin found Flambeau, Inc.’s requirement that employees complete a health risk assessment and biometric test falls within the ADA’s “safe harbor,” which provides an exemption for activities related to the administration of a bona fide insurance benefit plan. According to the court opinion, the information gathered through the wellness program was used to identify the health risks and medical conditions common among the plan’s enrollees. Except for information regarding tobacco use, the health risks and medical conditions identified were reported to Flambeau in the aggregate, so that it did not know any participant’s individual results, indicating that it was not using the wellness program to discriminate against any employees.

The opinion in EEOC v. Orion Energy Systems, Inc. is here.

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