Wellness "Sticks," As Well As "Carrots," Are Legal, Court Says

by Constangy, Brooks, Smith & Prophete, LLP
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The U.S. Court of Appeals for the Eleventh Circuit* has held that employers may use "sticks" to encourage participation in wellness programs as well as "carrots," if the wellness program is part of a group health or other benefit plan.

*The 11th Circuit hears appeals from federal courts in the states of Florida, Georgia, and Alabama.

Let me back up and explain the issue a bit.Carrots w caption.jpg

**NERD ALERT (but this is important!)**

As most readers know, the general rule under the Americans with Disabilities Act is that employers cannot make "medical inquiries" of current employees unless the inquiries are "job-related and consistent with business necessity." This means that an employer is normally not allowed to ask for medical information unless there is reason to believe that the employee's medical condition is affecting safety, performance, or behavior on the job.

If this rule were applied without exception, then any wellness program would violate the ADA, right? That is why the ADA has an exception pertaining to voluntary wellness programs. An employer is allowed to ask for medical information from employees -- even if the information is not "job-related and consistent with business necessity" -- if the information is obtained in connection with a voluntary wellness program.

The "voluntary" part of this is very important -- a "mandatory" wellness program would not qualify for the exception. Maybe.

Baseball_bat_1 w caption.jpgA couple of times in the past, I have posted on wellness programs and the ADA, and expressed concern about employers who used "sticks" instead of "carrots" to encourage participation. Specifically, I discussed a program in which Broward County, Florida, charged its employees an extra $20 on each biweekly paycheck if they did not participate. (Actually, the county imposed the $20 charge only if the employees participated in the group health plan and not the wellness program. Employees who were participated in neither one were not penalized in any way.) The City of Chicago was also preparing to start a wellness program that required employees to pay $50 a month to opt out.

I was afraid that these programs might render the wellness programs "not voluntary," meaning that any information obtained from employees in connection with the programs would violate the ADA.

A Broward County employee named Bradley Seff had the same concern, and he filed a class action lawsuit against the county. While the lawsuit was pending, the county stopped imposing the charge.

A federal district court in Florida granted summary judgment to the employer, and yesterday a three-judge panel of the 11th Circuit affirmed. Both courts found that the county's program fell within a "safe harbor" in the ADA, which provides that a covered entity is not prohibited "from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law."

The decision is short on legal analysis, no doubt because there is virtually no case law on this issue. In addition, Mr. Seff's only ground for appeal was that district court should have given more weight to testimony by the county's acting benefits manager. The manager had testified that the wellness program was not a term of the county's benefit plan and that the wellness program was not a term of the county's health and pharmacy plans. The 11th Circuit held that this testimony was either an inadmissible legal conclusion, or a factual statement that did not preclude the possibility that the wellness program was nonetheless a part of the program.

The court said, "The parties do not cite, nor are we independently aware of, any authority suggesting that an employee wellness program must be explicitly identified in a benefit plan's written documents to qualify as a 'term' of the benefit plan within the meaning of the ADA's safe harbor position."

Therefore, because the wellness program

*was sponsored "as part of the contract to provide Broward with a group health plan,"

*"was only available to group plan employees," and

*was presented "as part of [the County's] group plan in at least two employee handouts,"

the court affirmed the district court's ruling that the program fell within the ADA's "safe harbor" provision. And because the program fell within the safe harbor, it was irrelevant whether the program was "voluntary" or whether medical inquiries made in connection with the program violated the ADA.

So, party on, wellness programs!

Photo credits: Wikimedia Commons (public domain).

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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