Wellness programs have become a popular tool for employers to address ever-increasing employee healthcare costs. However, wellness program designs are limited by the requirements of the Americans with Disabilities Act (ADA), among other laws. A recent decision by the Eleventh Circuit in Seff v. Broward County may make it easier for employers to provide wellness programs. In that decision, the court held that Broward County’s wellness program did not violate the ADA, even though employees who refused to participate were subject to financial penalties. The court concluded that the program was not subject to the ADA’s prohibition on required medical examinations and disability-related inquiries because the wellness program falls within a safe harbor for insured plans. The safe harbor covers a program that is:
- offered under the terms of a bona fide benefit plan,
- based on underwriting risks, classifying risks, or administering risks, and
- not inconsistent with state law.
The Broward County Wellness Program
The Broward County wellness program, which was implemented in October 2009, has two components: (1) a health risk assessment questionnaire and (2) a finger stick blood test to measure glucose and cholesterol. The wellness program is administered and paid for by the County’s health insurer and is not a condition for health coverage. An employee who completes the assessment and blood test and is identified as having asthma, hypertension, diabetes, congestive heart failure, and/or kidney disease may participate in a disease management program and qualify for co-pay waivers for certain medications.
From June through December 2010, the County applied a $20 charge to each bi-weekly paycheck for an employee who did not complete the questionnaire and blood test. The charge was suspended in January 2011.
The Class Action
Bradley Seff, who was subject to the $20 charge, filed a class action complaint against the County in 2010 alleging that the County’s wellness program violated the ADA by requiring medical exams and making medical inquiries that are not job-related and for which there is no business necessity. (See 42 U.S.C. § 12112(d)(4)(A).) The County argued that its wellness program falls under a safe harbor of the ADA for insured wellness plans. The safe harbor exempts from the ADA’s prohibition on non-voluntary medical exams and inquiries a wellness program if its terms are part of a bona fide benefit plan, it is “based on underwriting risks, classifying risks, or administering such risks,” and is not inconsistent with state law. (See 42 U.S.C. § 12201(c).)
The District Court for the Southern District of Florida concluded that the County’s wellness program met the requirements of the ADA insurance safe harbor and rendered summary judgment for the County:
- First, the court found that the wellness program was a term of the County’s group health plan (i.e., a bona fide benefit plan) because (a) the County’s health insurer pays for and administers the program under a contract with the County, (b) only employees enrolled in the County’s health plan may participate in the wellness program, and (c) the wellness program was described in benefit plan handouts provided to County employees.
- Second, the court held that: “[T]he wellness program falls under the safe harbor provision because it is designed to develop and administer present and future benefits plans using accepted principles of risk assessment…In other words, the program is based on underwriting, classifying and administering risks because its ultimate goal is to sponsor insurance plans that maintain or lower its participant’s premiums. ”
The Eleventh Circuit, reviewing only the first issue, affirmed the District Court’s decision that the County’s wellness program falls under the ADA insurance safe harbor. On appeal, Seff had argued that the District Court erred in finding that the wellness program was a term of the County’s health plan because the County’s benefits manager had testified that the wellness program was not included in the written plan documents of the County’s health plan. The court rejected this argument, observing, “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 provision.”
The Eleventh Circuit’s decision in Seff v. Broward County is the first federal appeals court to consider the application of the insured plan safe harbor to wellness plans. The decision demonstrates a way to design a wellness program that does not violate the ADA, even when it offers incentives to participate or penalties for non-participation. In its July 2000 Enforcement Guidance, the EEOC advised that an employer may make disability-related inquiries or conduct medical exams under a “voluntary” wellness program. For this purpose, a program is “voluntary” if the “employer neither requires participation nor penalizes employees who do not participate.” The EEOC has stated that is has not taken a position on whether an employer may offer incentives to participate in a wellness program or whether the ADA would prohibit such a program as being non-voluntary. The EEOC also has stated that a financial penalty for not participating could violate the ADA, without addressing insured plans in particular. Whether the EEOC and other courts adopt the Eleventh Circuit’s view of insured plans remains to be seen. In any event, it is important to keep in mind that a wellness program that is part of an insured plan may be subject to additional requirements under state insurance law and must comply with privacy and nondiscrimination rules under federal law, including Health Insurance Portability and Accountability Act (HIPAA) and Genetic Information Nondiscrimination Act (GINA).