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DeWitt Helps Client Secure Big Win Against EEOC in Widely-Reported Employee Wellness Case

The U.S. District Court for the Western District of Wisconsin has rejected the Equal Employment Opportunity Commission’s (EEOC) claim that a company’s wellness plan violated the Americans with Disabilities Act (ADA). Instead, the Court agreed with the employer, Flambeau, Inc.’s position that its wellness plan was covered by the safe harbor exception of the ADA. Attorneys Stephen A. DiTullio, John C. Gardner and Raluca (Luca) Vais-Ottosen of DeWitt Ross and Stevens S.C. represented Flambeau in these proceedings. The case is Equal Employment Opportunity Commission, v. Flambeau, Inc., and the decision in favor of Flambeau was issued on December 31, 2015 (W.D. Wis. Case No. 14-CV-638-BBC, 2015 WL 9593632). Read the decision here.

Flambeau offered voluntary health insurance to its employees. The company covered 75% of the insurance premiums, while the employees were required to cover the remaining 25%. In order to manage the increasing cost of providing health insurance, Flambeau required employees participating in the health plan to complete a health risk assessment questionnaire (HRA) and submit to a biometrics test. Flambeau did not receive any individual medical information obtained from the HRA or biometrics test; instead, it received aggregate, statistical summaries that its third-party healthcare consultants used to make cost predictions, anticipate the need for stop-loss insurance and adjust the insurance premium rates paid by employees.

One of the company’s employees did not participate in the HRA and biometrics test in the fall of 2011. Consequently, Flambeau discontinued his health insurance. A few months later, after the employee agreed to participate in the HRA and biometrics testing, Flambeau reinstated his medical insurance. The employee filed a charge of discrimination with the EEOC claiming that Flambeau’s HRA and biometrics process violated the ADA. The EEOC subsequently filed a civil lawsuit against Flambeau on the same grounds.

The Western District Grants Summary Judgment in Favor of Flambeau

Following discovery, Flambeau and the EEOC filed cross-motions for summary judgment during the summer of 2015. Among other arguments, Flambeau asserted that its actions were legal pursuant to the ADA insurance safe harbor provision set forth in 42 U.S.C. § 12201(c)(2). That provision states that the ADA does not 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 long as the employer does not use the safe harbor as a subterfuge for illegal disability discrimination.

The Western District agreed with Flambeau. First, the Court found that Flambeau’s wellness plan was undisputedly a term of its health insurance plan, because: 1) employees were required to participate in the HRA and biometrics testing to be eligible for the Company’s health insurance plan; 2) the employees received various Company handouts informing them of the HRA and biometrics testing and therefore had adequate notice of the requirements; 3) the HRA and biometrics testing schedule coincided with the annual enrollment period for the health plan; and 4) the insurance summary plan description explained that employees would enroll “in the manner and form prescribed” by Flambeau, a note that the Court determined was sufficient to inform participants that there may be other enrollment requirements.

Second, the Court found that the HRA and biometrics testing process was “based on underwriting risks, classifying risks, or administering such risks” as required by the safe harbor exception. The Court based its conclusion on the following facts: 1) Flambeau’s healthcare consultants used the HRA and biometrics data to classify plan participants’ health risks and project insurance costs; and 2) the healthcare consultants then made recommendations regarding plan premiums, imposing higher premiums for tobacco users, and purchasing stop-loss insurance. The Court explained that these types of recommendations and decisions are fundamental to developing and administering an insurance plan and, therefore, the protections of the ADA’s safe harbor exception were triggered.

Finally, the Court found no evidence that Flambeau used the HRA and biometrics testing process as a subterfuge for illegal discrimination. Indeed, Flambeau did not use any of the information gathered from the wellness plan to make any disability-based distinction that discriminated against individuals. Consequently, the Court granted summary judgment in Flambeau’s favor, giving a significant win to employers utilizing similar wellness plans.

The EEOC has filed two additional lawsuits addressing similar wellness plans (EEOC v. Orion Energy Systems, 1:14-cv-01019, U.S. District Court for the Eastern District of Wisconsin; EEOC v. Honeywell International, Inc., 0:14-cv-04517, U.S. District Court for the District of Minnesota). Both lawsuits are still pending. We will continue to monitor any developments in these cases and the EEOC’s enforcement efforts with regard to wellness plans generally. In the meantime, if you have any questions related to any of these issues, please contact your DeWitt employment or employee benefits attorney.

About the Author

Raluca has assisted numerous clients with immigration matters ranging from family-based and individual immigration applications, to employment related visas and I-9 Employment Eligibility Verification issues. In addition to her immigration practice, she also has an extensive background in Employment Law. She assists companies in a number of areas, including but not limited to claims of workplace discrimination, harassment and retaliation, termination and constructive discharge, workplace investigations by state and federal agencies, as well as employment litigation.

Contact Luca by email or by phone at (608) 252-9291.

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