On the last day of 2015, the U.S. District Court for the Western District of Wisconsin ruled against the Equal Employment Opportunity Commission (“EEOC”) in its suit against an employer under the Americans with Disabilities Act (“ADA”). The EEOC alleged that the employer violated the ADA provision that “generally prohibits employers from requiring their employees to submit to medical examinations, by conditioning participation in its employee health insurance plan on completing a ‘health risk assessment’ and a ‘biometric screening test.’” In its decision, the Court ruled that a bona fide benefit plan was protected from normally applicable ADA rules.
Based upon this decision and others, the EEOC’s attempts to regulate wellness programs under the ADA may be limited, or at least able to be vigorously challenged.
Background on Matter: EEOC v. Flambeau
On December 31, 2015, the U.S. District Court for the Western District of Wisconsin ruled against the EEOC’s efforts to extend the ADA to any bona fide insurance benefit plan in EEOC v. Flambeau. The Western District joined the 11th Circuit, which similarly ruled against the EEOC in Seff v. Broward County, Florida. The EEOC had argued that Flambeau’s conditioning of health insurance coverage on the completion of health examinations was prohibited under the ADA if not shown to be job-related and consistent with business necessity. The District Court rejected the claim, and instead found that Flambeau’s wellness program was protected under the ADA “safe harbor” rule, which exempts “bona fide benefit plans” from such regulation under the ADA.
The EEOC’s Regulatory Power over Bona Fide Benefit Plans
The EEOC has proposed ADA regulations that intend to address issues under all wellness programs, including, but not limited to, those subject to HIPAA. The rulings in Flambeau and Seff call into question the EEOC’s ability to regulate wellness programs that are “group health plans” (including medical, vision and dental plans) subject to HIPAA, which generally applies to most, if not all, group health plans through either ERISA, the IRC or the Public Health Service Act, as amended (“PHS Act”).
If other courts agree with Flambeau and Seff, the EEOC may be precluded from (or at least be limited in) enforcing ADA regulations that apply to group health plans subject to HIPAA. Alternatively, even if the ADA regulations are finalized and found to apply to all wellness programs, the courts may provide less deference to the EEOC’s position. In King v. Burwell, the U.S. Supreme Court upheld certain provisions of the Patient Protection and Affordable Care Act of 2010 (“ACA”), but the Supreme Court also appeared to provide less deference to the agency positions with respect to the ACA. This and other recent decisions have arguably eroded the deference that governmental agencies typically have been accorded in their agency rulemaking.
Next Steps for Employers
In light of this case development, we recommend that employers carefully consider whether and how their wellness programs are tied to their major medical and other “bona fide benefit plans” to avoid the reach of the EEOC to the extent possible (or at least provide the best possible arguments to place such wellness programs outside of EEOC control). This issue is far from settled, so we will be watching this case and other pending litigation related to the EEOC and wellness programs sponsored by other employers.
For More Information
For additional information on how this may impact your business, please contact the authors, your Polsinelli attorney or a member of the Employee Benefits and Executive Compensation practice.