A decision by the U.S. Court of Appeals for the Eleventh Circuit may encourage employers to offset rising healthcare costs through the use of wellness programs and the implementation of fines for nonparticipation in such programs. According to the Eleventh Circuit, under certain circumstances the medical examinations and inquiries connected with wellness programs do not violate The Americans with Disabilities Act’s prohibition on “required” medical examinations and disability-related inquiries, even when employers charge fees for nonparticipation in such programs. Wellness programs can fall within the ADA’s “safe harbor” provision, which exempts certain insurance plans from the ADA’s general prohibitions, as was successfully argued by Broward County, Florida, in defense of a class action filed by one of its former employees after the County instituted a $20 bi-weekly nonparticipation fee. See Seff v. Broward County, Florida, No. 11-12217 (11th Cir., Aug. 20, 2012).
The former employee argued that the County’s wellness program did not qualify as a term of a “bona fide benefit plan” under the ADA, and therefore did not fall within the safe harbor provision, because the wellness program was not explicitly identified in the group health plan. The Eleventh Circuit rejected that argument, finding that the wellness program was a term of the group health plan because it was (1) part of the County’s contract with the insurer; (2) only available to group plan enrollees; and (3) presented as part of the group health plan in at least two employee handouts.
It is important to note that, while the County charged a fee for nonparticipation in its program, participation in the wellness program was not ultimately a condition for enrollment in the group health plan. Moreover, the insurer, not the County, utilized and had access to the information gathered from the examinations and inquiries. While pursuing a plan like the one utilized by Broward County may be attractive, obtain legal advice before instituting such a plan, especially if your business considers implementing the type of paycheck deductions used by Broward County, which tend to provoke litigation.Read More