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Macy’s Inc. along with subsidiaries of health giants Cigna and Anthem are in the crosshairs of a lawsuit by the Labor Department for allegedly mismanaging the retailer’s tobacco cessation program in its employee wellness plan ( Acosta v. Macy’s Inc. , S.D. Ohio, No. 1:17-cv-00541, complaint filed 8/16/17 ).
Since 2011, Macy’s tobacco cessation program hasn’t met the regulatory requirements to be a nondiscriminatory wellness program under the Employee Retirement Income Security Act, the department alleged in a lawsuit filed Aug. 16 in federal court in Ohio. That’s because the program didn’t provide a reasonable alternative standard to avoid a surcharge that ranged from $35 to $45 for individuals who couldn’t meet the standards of the program, the lawsuit said.
In addition, since 2011, participants who entered the retailer’s tobacco cessation program were still required to pay a surcharge that ranged from $35 to $45 per month, the lawsuit said. Those funds were to be deposited into Macy’s welfare benefits plan trust and would be used to pay medical claims and plan expenses. At some point, and following Macy’s instructions, Cigna and Anthem started using a less-favorable reimbursement rate to process out-of-network claims, which caused participants to overpay certain claims, the lawsuit said.
Macy’s, Cigna, and Anthem declined to comment on the new lawsuit.
The lawsuit doesn’t specify how many participants were affected or the amount in damages. The DOL declined to comment.
This may be one of the first lawsuits by the department involving a large employer’s wellness plan. In 2014, the Equal Employment Opportunity Commission brought lawsuits challenging wellness programs adopted by Honeywell International Inc., Flambeau Inc., and Orion Energy, with mixed results. A federal judge in Minneapolis denied the EEOC’s request to block Honeywell from penalizing workers who didn’t participate in a corporate wellness program. Earlier this year, a federal appeals court affirmed a district court decision that dismissed the lawsuit against Flambeau. Orion agreed to pay $100,000 to settle the lawsuit it faced.
Cigarette smoking is the leading cause of preventable disease and death in the U.S., killing more than 480,000 Americans per year, according to data from the Centers for Disease Control and Prevention, the nation’s health protection agency. As of 2015, 15.1 percent of all adults or 36.5 million Americans were smokers. The total economic cost of smoking is more than $300 billion a year, including nearly $170 billion in direct medical care for adults, according to the CDC.
The Affordable Care Act requires employers that provide health insurance plans to cover tobacco cessation as a preventive service.
Employers can save nearly $6,000 per year for every employee who quits smoking, according to the American Lung Association. Comprehensive tobacco cessation programs can cost an average of $1.20 to $4.80 per person per year, according to a 2015 paper by Johns Hopkins Bloomberg School of Public Health.
Many employers offer smoking cessation programs. According to the National Business Group on Health, 78 percent of large employers in the U.S. already do.
The department’s Office of the Solicitor represents the agency.
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