Battle Line Drawn on Wellness Incentives

Thursday, January 19, 2017

A recent court decision on the validity of wellness-incentive programs is just the "initial skirmish" in a long war over employees' disclosure of personal and family medical information, experts say.

The Equal Employment Opportunity Commission won the first round in a wellness-incentives lawsuit against AARP last month, after AARP unsuccessfully tried to block EEOC regulations that allow employers to offer workers up to 30 percent of their health-insurance premiums in exchange for participating in wellness programs that include health-risk assessments or tests that reveal private health or genetic information.

While the AARP's legal challenge is still pending, a federal district court ruled in favor of the EEOC, stating that its regulations are valid and that the AARP didn't meet the standards for preliminary injunctive relief.

Although disappointed in the ruling, AARP appears to have no intention of raising a white flag.

"We fully intend to continue pursuing the case to ensure that disclosure of personal and family medical information to wellness programs is truly voluntary, as provided under the civil rights law," the organization said in a statement. "The court's decision made clear that the judge hasn't made a final decision yet and that he will thoroughly review all facts and arguments in this exceptionally complicated case at the next stage, when both sides have fully briefed all issues."

Russ Chapman, special counsel in the employee-benefits practice at Littler in Dallas, refers to this ruling as an "initial skirmish." He says the ruling wasn't surprising, because a preliminary injunction has very high standards and is rarely granted.

Before the EEOC regulations were issued, he says, there was a great deal of uncertainty involving wellness programs. He points to the late 1990s, when the EEOC began enforcement actions against employers. After the Affordable Care Act was passed into law in 2009, the EEOC started filing lawsuits against organizations. Around the same time, he says, Congress criticized the federal agency for its lack of guidance, which resulted in the EEOC issuing these regulations last May, and subsequently triggered AARP's lawsuit.

"We had this legal no-man's land where nobody knew what the rules were," Chapman says, adding that the EEOC regulations were issued as an exception to the Americans with Disabilities Act, which prohibits employers from asking employees disability-related questions or requiring them to undergo medical examinations.

Meanwhile, the EEOC has outlawed wellness programs that require workers to complete health assessments, medical screenings or tests in order to participate in the company's health plan or receive insurance subsidies from their employer.

"The ARRP has an uphill battle," Chapman says. "Employers don't think [the regulations] are discriminatory. They give [them] guidelines that they can follow and some reasonable assurance that there won't be enforcement actions or lawsuits from participants or the EEOC."

Although the federal agency tried to coordinate these regulations with others related to the ACA and the Health Insurance Portability and Accountability Act, there are still some gaps, says Garrett Fenton, a member of the employee benefits practice at Miller & Chevalier in Washington.

The EEOC regulations "are by no means perfect," he says, pointing to rule differences between the ADA, HIPPA and ACA.

Under the ACA, for example, employees and their family members who complete health assessments or medical tests may receive up to 30 percent of the cost of their family coverage if the wellness program is attached to a health plan. That incentive can be bumped to 50 percent if they participate in smoking cessation programs.

However, under the ADA, the incentive can't exceed 30 percent and applies to employees, not family members, and all wellness programs that entail disability-related inquiries or medical examinations.

Fenton believes this case will be a tough sell for AARP, partly because of the Chevron Doctrine, a 1984 Supreme Court decision that says a federal agency is generally entitled to "pretty strong deference" in determining the legitimacy of its rules when they are challenged in court.

He says AARP's argument is that these regulations are a stark departure from the EEOC's previous guidance and that the agency was "arbitrary and capricious" when interpreting the statute in this way.

Fenton says that employers that spent the last seven months complying with the agency's regulations may not welcome an AARP victory. But if the regulations are overturned, he says, it will likely be the result of changes occurring at the regulatory or statutory level, rather than through this lawsuit. He says healthcare reforms related to wellness programs may be made by the incoming Trump administration or the Republican-controlled Congress.

Until then, Fenton says, it is business as usual for HR.

"This is one more reminder that the EEOC regulations are one small sliver of what HR has to worry about with wellness programs," he says, adding that such programs touch a wide array of legal areas, including the Fair Labor Standards Act and Employee Retirement Income Security Act. "Remind yourself that implementing any wellness program needs to be a very coordinated and thoughtful process."

This article originally appeared on Human Resource Executive Online. To view the original article, please click here