Eleventh Circuit Rules Wellness Program Complies with the ADA

Eleventh Circuit Rules Wellness Program Complies with the ADA

by Posted on: November 5, 2012Categories: LiveWell 24/7   

On Aug. 20, 2012, the Eleventh Circuit Court of Appeals ruled that an employer’s wellness program that required employees to complete a health risk assessment (HRA) and take a biometic screening, or pay a penalty, did not violate the Americans with Disabilities Act (ADA). According to the court, the employer’s wellness program fell under the ADA’s safe harbor for bona fide benefit plans. Seff v. Broward County Florida (11th Cir. 2012).

This Clarke & Company Benefits, LLC Legislative Brief summarizes the Eleventh Circuit’s decision and discusses what the decision means for employer-sponsored wellness programs. A copy of the decision is available at: www.ca11.uscourts.gov/opinions/ops/201112217.pdf.

ADA Requirements

General Restrictions

The ADA limits when an employer may obtain medical information from job applicants and employees.

  • Before a job offer is made, the ADA prohibits all disability-related inquiries (that is, questions likely to elicit information about a disability) and medical examinations, even if they are related to the job.
  • After a conditional job offer is made, an employer may ask disability-related questions and require medical examinations, as long as it does so for all entering employees in the same job category.
  • After employment, an employer may make disability-related inquiries and require medical examinations only if they are job-related and consistent with business necessity.

Voluntary Wellness Programs

As an exception to the ADA’s general restrictions, an employer may conduct disability-related inquiries and require medical examinations as part of a voluntary wellness program without violating the ADA.

The Equal Employment Opportunity Commission (EEOC), the regulatory agency with authority over the ADA, has provided little guidance regarding the extent to which employers can encourage participation in wellness programs and still have the programs be considered voluntary under the ADA. Although the EEOC has changed its position over the years, the EEOC currently seems to take the position that a wellness program is voluntary if employees are not required to participate and they are not penalized if they decide not to participate.

Safe Harbor for Bona Fide Benefit Plans

The ADA contains a safe harbor provision that exempts certain employer-sponsored plans from the ADA’s general prohibitions, including the prohibition on making disability-related inquiries and requiring medical examinations. Under the safe harbor, an employer is permitted to establish a health plan that is “bona fide” based on underwriting risks, classifying risks and administration that is not used as a subterfuge to evade the purposes of the ADA.

The EEOC has not formally expressed its opinion on whether wellness programs that are linked with group health plans and require participation or penalize employees for nonparticipation may fall under the ADA’s safe harbor for bona fide benefit plans.

Court Decision

In the Eleventh Circuit case, Broward County offered a wellness program that required employees to complete an HRA questionnaire and take a biometric screening that measured cholesterol and glucose levels. Broward County’s health insurer used information from the wellness program to identify employees with certain health conditions and provide them with an opportunity to participate in a disease management coaching program. Employees who participated in the disease management coaching program were eligible for copay waivers for certain medications.

Broward County received aggregated, not individual, data about employees who participated in the wellness program.

Employees were not required to participate in the wellness program to be eligible for the County’s health insurance plan. To increase participation in the wellness program, however, Broward County imposed a $20 charge on each biweekly paycheck issued to employees who enrolled in the group health insurance plan but refused to participate in the wellness program.

The plaintiff, an employee of Broward County who incurred the $20 charge, filed a class action lawsuit in Florida, arguing that the wellness program violated the ADA’s prohibition on non-voluntary medical examinations and disability-related inquiries.

A federal district court in Florida ruled in Broward County’s favor and held that the wellness program did not violate the ADA because it met the safe harbor for bona fide benefit plans. The court concluded that the wellness program was a bona fide benefit plan because it was part of the County’s group health plan and it was designed to develop and administer present and future benefit plans using accepted principles of risk assessment.

Because it found that the County’s wellness program fell within the ADA’s safe harbor provision, the district court declined to address whether the program imposed non-voluntary examinations or inquiries that would have otherwise been prohibited under the ADA.

On appeal, the Eleventh Circuit affirmed the district court’s ruling that the wellness program did not violate the ADA because it met the safe harbor for bona fide benefit plans.

Implications for Employer-Sponsored Wellness Programs

The Eleventh Circuit’s ruling is significant because it provides another avenue for analyzing whether a wellness program complies with the ADA. In order to fall under the safe harbor, the ruling encourages employers to closely tie their wellness programs to their group health plans. However, at this point, it is not clear whether and to what extent the EEOC will follow the court’s ruling. Also, this decision is not binding on courts outside of the Eleventh Circuit (Alabama, Florida and Georgia).

Thus, until this ruling is considered by other courts or the EEOC addresses how the ADA’s safe harbor for bona fide benefit plans applies to wellness programs, employers may still want to design their wellness programs to be “voluntary” under the ADA. To do this, employers should focus on rewarding employees for participating in the wellness program instead of penalizing employees that choose not to participate.

In addition, employers should remember that there are additional laws that apply to employer-sponsored wellness programs, namely the Health Insurance Portability and Accountability Act (HIPAA), the Genetic Information Nondiscrimination Act (GINA) and any state laws. Employers should work with their advisors to make sure their wellness programs are designed to be compliant with these legal requirements.

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