Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
Sept. 15 — EEOC’s challenge to the validity of a Wisconsin employer’s corporate wellness program under the Americans with Disabilities Act may have hit a jurisdictional roadblock with the U.S. Court of Appeals for the Seventh Circuit ( EEOC v. Flambeau Inc., 7th Cir., No. 16-1402, oral argument 9/15/16 ).
During oral argument before the Seventh Circuit Sept. 15, a three-judge panel peppered attorneys from the Equal Employment Opportunity Commission and Flambeau Inc., a manufacturer of plastic products based in Baraboo, Wis., with questions about potential damages an employee suffered under a since-ended wellness program.
Without a determination that the now-retired employee suffered an economic loss, emotional distress or some other damage, the case likely constituted “much ado about ancient history,” one of the judges said.
Departing from these questions, the court asked attorneys for both the agency and the company to prepare briefs on the jurisdiction question and submit them to the court in 10 days.
“This came out of the blue,” Flambeau’s counsel, Stephen A. DiTullio, told Bloomberg BNA following the oral argument. Jurisdiction “really wasn’t discussed at any stage before.”
The EEOC originally filed suit in September 2014 alleging Flambeau violated the ADA’s prohibition on involuntary medical exams and disability-specific inquiries when it required employees to complete health risk assessment questionnaires and biometric tests as a component of its wellness program.
The EEOC alleged employee Dale Arnold had been unable to complete biometric testing and was subsequently dropped from Flambeau’s medical plan because participation in the wellness program was required for health benefits. At the time, Arnold was on medical leave for cardiomyopathy and congestive heart failure and was unable to complete the testing.
Flambeau responded with a motion for summary judgment, arguing that its program was permissible under the ADA’s insurance safe harbor provision. The safe harbor generally provides an exemption for employers to administer the terms of a bona fide benefit plan “that are based on underwriting risks, classifying risks, or administering such risks” and that aren’t inconsistent with state law.
The EEOC in May issued new regulations (RIN:3046-AB01) under the ADA that explain how employers can offer inducements for wellness plan participation without coercing employees to submit to involuntary medical exams or to divulge other types of protected information. The new rules permit employers to offer employees inducements of up to 30 percent of the costs of self-only coverage.
On Dec. 30, 2015, the U.S. District Court for the Western District of Wisconsin agreed the ADA safe harbor insulated Flambeau from liability under the ADA.
The district court noted that the Seventh Circuit hadn’t ruled on the question and followed the Eleventh Circuit's decision in Seff v. Broward Cnty., 691 F.3d 1221, 26 AD Cases 1153 (11th Cir. 2012), which held a county wellness program that sought employees’ personal medical information as part of its group health coverage and charged nonparticipants $20 per pay period fit within the ADA’s safe harbor for insurance plans.
EEOC attorney Anne Noel Occhialino, representing the agency during oral argument, told the court the district court had erred because the ADA explicitly prohibits employers from requiring medical exams and disability-related inquiries in the context of health programs unless such exams and inquiries are voluntary.
Moreover, Occhialino characterized Flambeau’s use of the safe harbor provision as “subterfuge,” designed to avoid the ADA’s strict prohibitions on such conduct.
Judge David F. Hamilton quickly focused on the question of jurisdiction and what, if any, remedy the court could provide in the dispute.
Hamilton’s questions reflected the fact that health coverage was restored to Arnold in May 2012, after a gap of five months. As a result, Arnold incurred out-of-pocket expenses of less than $1,000. In addition, Flambeau ended the wellness program with the 2014 plan year.
Hamilton said Arnold could only have suffered a minor degree of emotional distress.
“Now I understand no one wants to be without health insurance, especially if you have health issues, but this looks like much ado about ancient history,” Hamilton told Occhialino.
DiTullio, a partner in the Madison, Wis., office of DeWitt, Ross & Stevens SC, expressed similar frustration with the EEOC’s posture.
“I was equally befuddled as to why this case was chosen or pushed because when I asked” Arnold about emotional distress at his deposition, “there was no evidence, no testimony as to emotional distress,” DiTullio told the court. “As far as out-of-pocket, it was nominal.”
Occhialino stressed that the case was about the broader protections available under the ADA and the precarious precedent established under the district court’s understanding of the safe harbor.
Hamilton, together with panel judges Joel M. Flaum and Daniel A. Manion, accepted Occhialino’s offer to brief the court on those issues.
To contact the reporter on this story: Michael J. Bologna in Chicago at firstname.lastname@example.org
To contact the editor responsible for this story: Susan J. McGolrick at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)