The federal government's employee advocate is trying to draw a line in the sand for wellness programs, and raising questions about the value and legality of some employers' incentive-based cost containment strategies.
The Equal Employment Opportunity Commission (EEOC) is suing Orion Energy Systems on behalf of an employee who refused to participate in a health risk assessment and was subsequently fired--the first case of its kind.
In 2009, Orion Energy Systems joined more than 90 percent of large employers and adopted a wellness program. The Wisconsin-based company went quite a bit further than most, however, and made eligibility for health insurance premium contributions contingent upon participation in a health risk assessment--leaving at least one employee who opted out, Wendy Schobert, paying more than $400 per month in health plan premiums.
Schobert, an account and paralegal, didn't pay that $400-plus for long, though. She was fired about a month later, in May 2009, in what the EEOC now contends was retaliation for opting out of the HRA.
In a lawsuit filed in federal court in Green Bay, the EEOC alleges that requiring Schobert to participate in the wellness program and the subsequent firing was a violation of the Americans with Disabilities Act and its prohibitions on non-work related "medical examinations and inquiries."
While HRAs and related incentives for participating in them are ADA-compliant as long as they remain voluntary, the EEOC argues that Orion Energy's policy of tying all premiums to participation leaves employees without an actual choice, especially today, when the Affordable Care Act requires consumers to obtain insurance through an employer-sponsored plan if it is available.
"Having to choose between responding to medical exams and inquiries--which are not job-related--in a wellness program, on the one hand, or being fired, on the other hand, is no choice at all," said John Hendrickson, regional attorney for the EEOC, in a media release.
Wellness programs "can't compel participation by imposing enormous penalties such as shifting 100 percent of the premium cost for health benefits onto the back of the employee or by just firing the employee who chooses not to participate," Hendrickson said.
Orion Energy has not responded to lawsuit, but large employers and insurers selling wellness products may want to watch the case.
While the EEOC's suit may not affect wellness programs writ large, it may have implications for the incentives increasingly being incorporated into them and raises questions about the compatibility of the ADA and parts of the ACA, argues University of Michigan law professor Nicholas Bagley.
The ACA allows employers to vary premiums by up to 30 percent based on wellness program participation. "Is a plan that varies premiums by 30% truly voluntary?" Bagley asks in a blog post. "Might such a plan violate the ADA, even if it was authorized by the ACA?"
Employers and benefits companies have been waiting on the EEOC for more than a year to issue guidance on wellness programs and anti-discrimination laws, as a small backlash against wellness programs has brewed, in the Harvard Business Review and at large employers like Penn State University.
Until the EEOC weighs in or federal courts set a precedent, however, questions persist about the line between incentive-driven health engagement and coercion.
"Ratcheting up the incentives might be the only way to make their wellness programs work," Bagley writes about employers using of financial carrots and sticks to pursue an ROI. "But ratcheting up the incentives might also violate the ADA. In other words, it's possible that wellness programs can either be effective or legal--but not both."