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Northwest OH Legal Blog

Tuesday, October 11, 2016

Court Rules that Employer’s Wellness Program is Voluntary Under Americans With Disability Act But Finds Possible Retaliation And Interference

A federal district court in the Eastern District of Wisconsin has ruled in favor of an employer in an action brought by the EEOC under the Americans With Disabilities Act against an employer who implemented a wellness program requiring employees to take a health assessment to participate. The case is EEOC v. Orion Energy Systems, Inc., No. 14-CV-1019 (E.D. Wis. Sept. 19, 2016).  The court granted the employer's motion for summary judgment after finding that the program was voluntary. However, the court ruled against the employer on other grounds regarding retaliation and interference.

In this case, an employer in Wisconsin implemented a wellness program that required employees to take a health risk assessment if they wanted to participate. After an employee was terminated, the EEOC brought an action under the Americans With Disabilities Act ("ADA"). The ADA generally prohibits employers from requiring employees to undergo medical examinations.

The court granted in part employer Orion Energy Systems, Inc.'s ("Orion") motion for summary judgment and denied the EEOC's motion for summary judgment. This ruling illustrates that where employers implement wellness programs that require employees to take a health assessment if they wish to participate, those medical examinations do not violate the ADA as long as the program is voluntary.

In 2008, Orion switched from a fully insured health plan to a self-insured health plan. In 2009, Orion implemented a wellness program. It required employees to either complete a health risk assessment ("HRA") at the beginning of the insurance year or pay the entire monthly premium equivalent amount. Employees who completed the HRA paid no premium equivalent, but still had to pay their own deductibles, co-pays and out-of-pocket expenses. The HRA consists of a health history questionnaire and biometric screen involving a blood pressure check, body measurements, and blood analysis. Orion did not receive any personally-identifiable information as a result of the HRA. The information was compiled by outside entities who then transmitted it to Orion in an anonymous format.

The next year, one Orion employee chose to opt-out of the program. Orion management warned the employee regarding negative comments the employee made to co-workers about the amount of the premium being charged by Orion. The employee claimed she was warned to keep her opinions about the new wellness program to herself and that, if the employee had concerns, she needed to speak with someone in management. The employee later sent an e-mail criticizing the tactics of Orion's former CEO. Afterward, the employee was terminated.

The EEOC brought suit against Orion alleging it violated the ADA by requiring employees who elect to enroll in Orion's self-insured health insurance plan to either complete the HRA or pay 100 percent of their monthly premium amount. The EEOC also alleged that Orion violated the ADA's anti-retaliation provisions, 42 U.S.C. § 12203(a) and (b), by instructing the employee not to discuss her concerns about the legality of this requirement with co-workers and by terminating her employment shortly after she expressed opposition to Orion's wellness program. Orion contended that its requirement that employees who elect to receive health insurance from Orion either participate in the wellness program or pay the full premium amount was lawful under the ADA's insurance "safe harbor" provision, which allows self-insured organizations to administer benefits plans, or alternatively, that its wellness program is voluntary under 42 U.S.C. § 12112(d)(4)(B). Both parties moved for summary judgment.

The court granted in-part Orion's motion for summary judgment and denied the EEOC's motion for summary judgment. Initially, the court found that Section 12112(d)(4)(A) of the ADA "shall not require a medical examination and shall not make inquiries of an employee as to whether such employee is an individual with a disability . . . unless such examination or inquiry is shown to be job-related and consistent with business necessity," but that Section 12112(d)(4)(B) permits employers to conduct "voluntary medical examinations . . . which are part of an employee health program available to employees at that work site." 

The EEOC argued that the HRA was not "voluntary" because Orion shifted 100 percent of the health benefit premium to employees who opted out. Orion argued its wellness initiative did not violate the ADA for three reasons: (1) the ADA's safe harbor relating to insurance applied to the challenged aspects of the wellness program; (2) Orion did not "make inquiries" since it received only anonymous, aggregated results from the HRA; and (3) the wellness program was voluntary because Orion's employees had a choice regarding whether to participate and sufficient time to make that choice.

Regarding the safe harbor provision, the court rejected Orion's argument and found that the safe harbor provision did not apply to Orion's wellness program. The court found that Congress intended that the safe harbor provision was created as a limited exception to protect the basic business operations of insurance companies, and that generally, wellness programs are unrelated to basic underwriting and risk classification. The court found Orion's wellness program was wholly independent from its insurance plan.

The court then addressed Orion's argument that even if its wellness initiative was not immune under the safe harbor provision, Orion's program was still voluntary. The EEOC argued that the wellness program was involuntary because shifting 100 percent of the premium cost to an employee who opted out of a program was so substantial that Orion's offer to pay the health benefit premium in exchange for the employee's participation in the program is more than a mere incentive. The court rejected the EEOC's argument, noting that, "even a strong incentive is still no more than an incentive; it is not compulsion," and that, "Orion's wellness initiative is voluntary in the sense that it is optional."  Therefore, the court found that Orion was entitled to summary judgment and rejected the EEOC's claim that the wellness program, including the HRA, violated § 12112(d)(4)(A).

Concerning the EEOC's retaliation and interference claims, Orion argued that the employee was not engaged in any protected activity by complaining about aspects of the program that were lawful. However, the court rejected Orion's argument, noting it was "undisputed that [the employee] expressed concern about the confidentiality of her medical information under the new wellness initiative. The court found that this is governed under the ADA and that her expression “may have been protected." Accordingly, the court denied Orion's motion for summary judgment as to the retaliation and interference claims.

Although the court ruled for the employer in this case on this issue, it is necessary for employer's implementing wellness programs to make sure their program is voluntary. If the program and accompanying health assessment is truly voluntary, employers can utilize these programs without violating the ADA. However, there is no guarantee another court would find the same program to be voluntary. This ruling is also subject to appeal. Employers must be cautious in making sure their programs are truly voluntary. They must also avoid taking retaliatory actions or else face the risk of EEOC litigation. 


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