AARP Bid to Halt Wellness Rules Could Spell Trouble for Employers

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By Kevin McGowan

Nov. 7 — AARP’s lawsuit to halt the EEOC’s wellness rules rests on flawed premises, lawyers who represent employers and health insurers say.

AARP argued that Equal Employment Opportunity Commission regulations permitting financial incentives for employer-sponsored wellness programs run the risk that employers will discriminate based on workers’ health data.

But attorneys representing employers and health insurers think the advocacy group’s fears are overstated. What’s more, a court ruling in favor of AARP could be bad news for employers that are now learning to live with the EEOC rules, they said.

A court ruling granting AARP’s request to block the EEOC rules “would really throw a monkey wrench into the works” at this stage, Garrett Fenton, a lawyer with Miller & Chevalier in Washington, told Bloomberg BNA.

If the court endorses AARP’s reasoning, it would be ruling that “the EEOC gave too much flexibility” to employers regarding wellness program incentives and design, he said.

That would be a negative result for employers that wanted the EEOC to move closer to Affordable Care Act regulations on wellness programs from the departments of Treasury, Labor and Health and Human Services, he said. Fenton represents large employers and health insurers on employee benefit issues.

A lawyer who represents workers, however, said AARP accurately alleged the EEOC’s rules violate federal anti-discrimination laws that say employees can’t be forced to divulge their medical or genetic information to employers.

HIPAA Shield

Federal health privacy laws prohibit wellness programs that are part of group health plans from sending individualized health data to employers, management attorneys told Bloomberg BNA. The Health Insurance Portability and Accountability Act would bar employers from making job-related decisions based on an employee’s health status, even if an employer got access to such individual data, the attorneys said.

It’s “theoretically possible” that individual health data submitted to a wellness program could be disclosed to an employer that then uses it against the worker, said Kirk Nahra of Wiley Rein in Washington, who represents insurance companies and other health-care entities covered by HIPAA. But “it’s very unlikely.”

HIPAA provisions and the typical structure of wellness programs mean employers never see individualized health information, Nahra told Bloomberg BNA.

“In my experience, with health insurers and employers offering wellness programs, they don’t want to get into trouble,” Nahra said. “That means they’re minimizing the amount of individualized data that could be disclosed.”

Fears Called Exaggerated

AARP’s allegations that employers with wellness plans force workers to disclose their individual health and genetic information are exaggerated, lawyers who represent employers said.

“There’s no nefarious purpose for a wellness program,” said Adam Solander of Morgan Lewis & Bockius in Washington, who represents employers offering such programs.

Far from trying to get access to employees’ health data, employers with wellness programs “go out of their way” to avoid receiving such information, Solander told Bloomberg BNA.

The AARP lawsuit doesn’t allege any actual transfers from wellness programs to employers of employee health or genetic information, said Frank Morris, also of Morgan Lewis & Bockius.

“It’s a made-up potential problem,” Morris told Bloomberg BNA.

AARP Got It Right

But a lawyer who represents workers disagrees.

AARP “got it exactly right” about the dangers to employees who effectively are forced to participate in wellness programs, said Brian Markovitz, a lawyer with Joseph Greenwald & Laake in Greenbelt, Md.

Wellness programs can be a “backdoor” for employers to access employee health information that the Americans with Disabilities Act and Genetic Information Nondiscrimination Act otherwise would prohibit them from seeing, Markovitz told Bloomberg BNA.

The EEOC’s ADA rule allows employers to offer employees incentives of up to 30 percent of the cost of individual health-care coverage for wellness program participation. The agency’s separate GINA rule says the employer also can offer a 30 percent discount on an employee’s health insurance costs if the employee’s spouse participates.

It’s hardly “voluntary” if an employee who chooses not to divulge private health information to a wellness program could face “penalties” of up to 60 percent of his health-care costs, Markovitz said. The EEOC “seems a little blind to the economic pressure” employees face if they must pay hundreds or even thousands of dollars more for health-care coverage for choosing not to join the wellness program, he said.

As for legal protections against disclosure of individual employees’ private health information, HIPAA is a “toothless tiger,” Markovitz said.

There’s no private right to sue under HIPAA and the Department of Health and Human Services rarely, if ever, sues to enforce the act’s privacy protections based on individual complaints to the agency, Markovitz said.

Not ‘Voluntary’ if ‘Penalty’ at Stake

The EEOC said in 2010 GINA regulations that disclosure of genetic information isn’t voluntary if an employer offered financial incentives for such information.

That was the correct call, Markovitz said.

The Affordable Care Act didn’t compel a change in the EEOC’s interpretation of GINA or the ADA, he said. The agency should have stuck to its prior position that employer financial incentives for wellness programs can’t be squared with the anti-discrimination laws, he said.

If employees are “giving up money” when they choose not to participate, it’s not a “voluntary” wellness plan under the ADA or GINA, Markovitz said. A court making a “fair assessment” would find the EEOC’s current rules violate the intent of the ADA and GINA, he said.

The AARP lawsuit has been assigned to Judge John D. Bates, who was appointed by President George W. Bush to the U.S. District Court for the District of Columbia.

The EEOC’s response to the lawsuit is due Nov. 14, and AARP’s reply is due Nov. 22.

The court then will decide whether to grant an order temporarily halting implementation of the EEOC’s rules while the lawsuit is pending.

Employers Wary of Court Outcome

Employer representatives previously criticized the EEOC’s rules under the ADA and GINA because they set tighter limits on wellness program incentives than the Affordable Care Act and its implementing regulations.

Now that the EEOC rules are in place, however, employers are tweaking their wellness programs to comply before the Jan. 1 effective date, Fenton, with Miller & Chevalier, said. Employers greeted the EEOC’s final rules “with somewhat a sigh of relief” that they weren’t more restrictive, he said.

Employers would have preferred the EEOC to say that wellness programs that comply with the ACA also are automatically compliant with the ADA and GINA.

The Affordable Care Act rules gave employers more freedom to offer employee incentives and to experiment with differently designed wellness programs.

But there haven’t been “too many bumps in the road” as employers revise their wellness programs to fit within the new EEOC rules, Fenton said.

Risks for Employees ‘Overstated.’

AARP’s arguments that employer incentives always are coercive and that HIPAA doesn’t adequately protect individuals against involuntary disclosure of health data are questionable, Fenton said.

Employers are “all over the map” regarding the incentives they offer, he said. But even the ACA would limit incentives to 30 percent of an employee’s health insurance costs in most cases, he said.

The notion that employers with wellness programs are going to get access to employees’ individual health data is “overstated,” Fenton said.

“That’s exactly what HIPAA is designed to prevent,” he said.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

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