By Jennifer Carsen, JD, Legal Editor

Can employers legally require employees to participate in a wellness program as a condition of being covered by the company’s health plan? A new court decision from the Western District of Wisconsin says yes.

Employee balks at required wellness assessment

Dale Arnold worked at a Wisconsin outpost of international plastics manufacturer Flambeau, Inc. Arnold willingly participated in the company’s two-part wellness program—consisting of a health risk assessment and a biometric test—that year the company was giving out a $600 credit for doing so.

The health risk assessment required each participant to complete a questionnaire about his or her medical history, diet, mental and social health, and job satisfaction. The biometric test was similar to a routine physical examination and included a blood draw, a blood pressure test, and height and weight measurements. Except for information regarding tobacco use, all information was reported to Flambeau in the aggregate; it did not know any participant’s individual results.

The next year, Flambeau pulled the $600 carrot and replaced it with a big stick: Employees were now required to participate in the two-part wellness program in order to participate in the company insurance plan (Flambeau’s plan was self-funded and self-insured but carried out by a third-party administrator).

Arnold failed to complete the program’s assessment and tests by the required deadline, and Flambeau discontinued his insurance coverage. Flambeau offered Arnold the option of paying the Consolidated Omnibus Budget Reconciliation Act (COBRA) rate for continued coverage through that calendar year, but Arnold declined on the grounds that it was too expensive.

EEOC enters the fray

A disgruntled Arnold wasted no time in filing a union grievance, a complaint with the Department of Labor, and a complaint with the Equal Employment Opportunity Commission (EEOC). Flambeau and Arnold then made amends—Arnold finally participated in the required tests and assessment and Flambeau reinstated his health coverage retroactive to the first of the year—but the EEOC filed suit on his behalf anyway.

The EEOC contended that Flambeau’s policy violated the Americans with Disabilities Act (ADA)—specifically, 42 USC Section 12112(d)(4)(A), which generally prohibits employers from requiring employees to submit to medical exams. Flambeau, however, countered that the health risk assessment and biometric tests required by its wellness program fell within the ADA’s “safe harbor,” which provides an exception for activities relating to the administration of insurance benefits.

The safe harbor set forth in 42 USC Section 12201(c)(2) 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.”

Court sides with employer

“It is clear,” District Judge Barbara B. Crabb said, writing the court’s opinion, “that the wellness program requirement was a ‘term’ of defendant’s benefit plan … it is difficult to fathom how such a condition could be anything other than a plan term.”

Handouts gave employees adequate notice of the wellness program requirement, the court said, and the health risk assessments and biometric testing were scheduled to coincide with open enrollment. The plan’s summary plan description (SPD) also explained that participants would be required to enroll “in the manner and form prescribed by” Flambeau, which put employees on notice that there might be additional enrollment requirements beyond those spelled out in the SPD.

Because Flambeau’s wellness program was based on underwriting risks, classifying risks, or administering such risks, the court concluded, it fell within the safe harbor of 42 USC Section 12201(c)(2). (EEOC v. Flambeau, Inc., 2015 U.S. Dist. LEXIS 173482)

Lessons for employers

While this is a relatively new area of the law that remains uncharted territory to a large extent—Judge Crabb noted the issue had not previously come up in the Seventh Circuit—this decision is good news for employers.

It’s important to remember that if you require employees to participate in a wellness program in order to be eligible for health coverage, as Flambeau did, you must use the data in the manner spelled out by the ADA’s safe harbor. And receiving health data in the aggregate is always legally safer than knowing the precise height, weight, and health quirks of every single employee individually.

Finally, one of the most important takeaways from this case is one that never directly came up in the court’s opinion: Employees who receive a cash bonus for voluntarily participating in a wellness program are unlikely to respond well when that cash bonus is taken away and replaced with a hard-and-fast mandate of required participation—even when that mandate is perfectly legal.