The U.S. Court of Appeals
for the Eleventh Circuit has ruled that a wellness program feature-a
$20 health insurance premium surcharge for failing to complete a
health risk assessment-did not violate the Americans with
Disabilities Act of 1990 (the "ADA"). In Seff v.
Broward County, Florida, the Eleventh Circuit held that
"bona fide benefit plans," such as Broward County's
wellness program, are exempt from certain ADA prohibitions.
The ADA generally prohibits
employment discrimination against disabled individuals and limits the
circumstances under which an employer may require employees to
undergo medical examinations or provide answers to inquiries about
medical conditions. While voluntary medical exams and inquiries may
be part of an employer sponsored wellness program if the information
obtained is kept confidential and not used to discriminate, little
guidance exists on what "voluntary" means for ADA purposes.
In 2009, Broward County
began offering a wellness program, which consisted of a biometric
screening and a health risk assessment, to employees who participated
in its group health plan. Employees were not required to participate
in the wellness program to be eligible for coverage in the group
health plan. However, employees who did not participate in the
wellness program were assessed a $20 health insurance premium
surcharge each pay period.
Broward County employees
subsequently filed a class action lawsuit in federal district court,
alleging that the wellness program violated the ADA's prohibitions on
involuntary medical examinations and disability related inquiries.
The district court ruled in Broward County's favor, finding that the
wellness program was a "term" of a bona fide benefit plan,
and, therefore, did not violate the ADA.
Certain safe harbors
contained in the ADA exempt bona fide benefit plans from otherwise
applicable restrictions. Under such safe harbors, employers are
permitted to create a plan that is "bona fide" based on
underwriting, classification, or administration of risks that are not
subterfuge for discrimination.
The district court found
that Broward County's wellness program fit within the ADA's safe
harbor for bona fide group health plans because it: (i) was part of a
group health plan, and (ii) had the objective of enhancing overall
cost-effectiveness. Therefore, court concluded that Broward County's
wellness program was exempt from the ADA restrictions.
On appeal, the Eleventh
Circuit was asked to consider whether Broward County's wellness
program failed to be a bona fide plan because it was not a
"term" ( i.e., clearly part of) the plan document.
In the district court proceedings, Broward County's benefits manager
had testified that the wellness program was not expressly provided
for in the relevant benefit plan. Thus, the employees argued that
because the wellness program was not expressly identified in the
benefit plan's written document, it did not satisfy the ADA safe
harbor.
The Eleventh Circuit said
there was no specific authority requiring a wellness program to be
expressly identified in the benefit plan's written documents.
Moreover, the Eleventh Circuit noted that the wellness program was:
(i) only available to individuals who enrolled in the group health
plan, and (ii) presented as part of the group health plan in employee
communications. Accordingly, the Eleventh Circuit affirmed the
district court's ruling, concluding that the wellness program was a
"term" of Broward County's group health plan, and therefore
within the ADA safe harbor for bona benefit fide plans.
While the Seff
decision is a positive outcome for employers, it creates precedent
for courts only within the Eleventh Circuit's jurisdiction (i.e.,
Florida, Georgia and Alabama) and does not bind courts outside the
Circuit. Moreover, the Equal Employment Opportunity Commission-the
regulatory agency tasked with enforcing the ADA- has yet to issue
formal guidance to address permissible wellness program designs.
Thus, many employers who sponsor wellness programs are still in an
unpredictable regulatory environment.
Employers must be cognizant
that their wellness programs are also required to comply with other
applicable laws, including the Patient Protection and Affordable Care
Act of 2010, Health Insurance Portability and Accountability Act of
1996, the Genetic Information Nondiscrimination Act of 2008, and
relevant state laws. Because these compliance determinations are
extremely fact-specific, employers should consult with qualified
legal counsel before implementing wellness program designs.
