With final ADA and GINA wellness program regulations expected this year from the Equal Employment Opportunity Commission (EEOC), 2016 looks to be an important year for regulation of these programs. However, program features like health risk assessments (HRAs) and biometric screenings have already become popular components of employer-sponsored health plans. In many cases, employers incentivize employees to participate through premium discounts, reductions in cost sharing or other inducements. In a recent case, an employer went a little further, designing its self-funded plan to be available only to those employees who participated in an HRA and biometric screenings (regardless of the results). Challenged by the EEOC, this employer prevailed under the Americans With Disabilities Act’s “safe harbor” exception. EEOC v. Flambeau, Inc., W.D. Wis., No. 3:14-cv-00638 (12/31/15).

The Program

In 2011, Flambeau, Inc. provided a $600 credit to employees enrolled in its health plan who participated in its HRA and biometric screening features. In the following two years, the company eliminated the credit and conditioned health plan enrollment on participation in the HRA and biometric screening. The company used aggregate information obtained from the wellness program to establish premium contributions, assess the need for stop-loss insurance, adjust co-pays, and sponsor other programs designed to address the risks identified in the wellness program aggregate data.

The “Safe Harbor”

According to the EEOC, Flambeau, Inc.’s wellness program violated the ADA because it required employees to complete medical examinations – the HRA and screenings – in order to enroll in its medical plan. The EEOC based its complaint on Section 12112(d)(4)(A) of the ADA which prohibits an employer from requiring a medical examination unless such examination is shown to be job-related and consistent with business necessity.

The District Court disagreed and found, as Flambeau, Inc. argued, that such programs are protected by the ADA’s “safe harbor” for insurance benefit plans set forth in ADA Section 12201(c)(2). This section protects employers from liability for acts that would otherwise violate the ADA if such acts were in the course of establishing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks.

The court found support for its position in Seff v. Broward County, an Eleventh Circuit decision, in which the “safe harbor” was applied to uphold a similar program in which an employer imposed a $20 bi-weekly surcharge for employees who did not participate in its wellness program requiring biometric testing and completion of an HRA.

Take Aways For Employers

There are now at least two cases in which employers have used the ADA “safe harbor” to fend off ADA claims. However, employers will have to proceed carefully as the EEOC mulls final ADA wellness program regulations. In its proposed regulations, the agency took issue with the decision in Seff v. Broward County and provided a clearer position on the reach of the “safe harbor” in the final rule. It is unclear what effects that would have on future court decisions.

When an employer intends a wellness program to be a part of its health plan, it should include the terms of the wellness program in its summary plan description (SPD). The EEOC raised this issue when challenging the application of the “safe harbor” because the employer’s SPD did not have express terms related to the program. The court determined this was not dispositive, but it is recommended that the SPD contain wellness program terms, particularly where those terms affect eligibility to participate in the plan.

The “safe harbor” does not apply solely if the wellness program is necessary for the employer to classify, underwrite or administer participants’ health risks under the plan, as the court held in Flambeau, Inc. However, using certain program data to classify health risks and calculate projected insurance costs and cost-sharing amounts, among other things, will help support an argument that the “safe harbor” applies and, hopefully, enhance the results of the program.

Tags: ADA, Flambeau, safe harbor, Seff, wellness program
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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.

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