Monday, January 18, 2016

Court Upholds Required Wellness Plan Evaluation

Back in 2014 we reported on the case of EEOC v. Flambeau, Inc. In that case, the employer made employee participation in the company sponsored health insurance plan contingent on a medical evaluation through its wellness program.

The EEOC alleged that the employee of Flambeau, Inc., in Baraboo, Wisconsin, was hospitalized with a heart condition at the time that his employer mandated that all employees receiving employer sponsored health insurance undergo biometric testing and a health risk assessment as part of their wellness program. Part of the biometric testing and risk assessment required employees to, among other things, undergo tests and disclose medical history that would reveal conditions covered by the ADA that were not job related. Moreover, the employer had a policy that any employee who did not undergo the evaluation would lose their right to participate in the employer sponsored insurance plan with the employer contribution towards premium. Rather those non-participating employees would be forced to continue coverage through COBRA. The EEOC argued that the employer violated the ADA which provides that a “covered entity shall not require a medical examination ... unless such examination is shown to be job-related and consistent with business necessity.” In plaintiff's view, defendant violated the Act because the wellness program evaluation was not job related and that the wellness program itself was not a part of the actual insurance plan.

The Court held in favor of the defendant employer. In a first of its kind finding, the court ruled that the company’s wellness program was, in fact, a part of its insurance plan as it impacted the assessment of risk for the group.  As a part of the company’s insurance plan, the court easily found that the evaluation requirements which included examination which was not job related fell under the exception in the ADA provides in relevant part that the ADA “shall not be construed to prohibit or restrict” an employer from establishing or administering “the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks.

As a first of its kind case in the Wisconsin Federal District Court in which it was filed, it is almost certain to be appealed. That case will be heard by the 7th Circuit Court of Appeals located in Chicago and serving the northern part of Illinois. While we wait for that appeal, employers can be more comfortable with the practice of requiring a wellness program evaluation as a condition of eligibility for participation in its group health insurance plan.