November 5, 2018

Wellness Programs: Litigation Matters and EEOC Regulation Push-back (article)

Violation of HIPAA Wellness Program Rules

The Department of Labor (DOL) brought forth litigation against an Ohio-based corporation over its wellness program design, citing violation of the HIPAA rules relating the discrimination based on health status, as well as breach of fiduciary duty by the plan sponsor.

In the matter of United States Department of Labor v. Chemstation International, Inc. et al [Docket No. 3:18-cv-00338 (S.D. Ohio Oct 15, 2018]), the company sponsors a self-insured group health plan, together with a rewards-based wellness program. Employees participating in the wellness program would receive premium discounts toward health coverage as long as they attained and maintained a specified number of healthy outcomes such as body mass index, blood pressure, LDL cholesterol and glucose levels, as well as for nonuse of tobacco products. Those who failed to maintain healthy outcomes or declined to participate in the wellness program were charged higher premiums for health coverage. The company did not offer a reasonable alternative way for individual to achieve the reward as required by the HIPAA law.

The parties settled the matter on October 17, 2018.  In accordance with the terms of the court order, Chemstation is required to pay $59,189 reflecting excess withheld premium and lost opportunity costs directly to the affected current and former participants.  The lesson to be learned here is that it is essential to comply with all legal requirements of a wellness program.  Failure to do so is a matter that the governing agencies will pursue.

Violation of GINA’s Employment Discrimination Rules

The Equal Employment Opportunity Commission (EEOC) recently settled a charge against an Indiana company for violation of the Genetic Information Non-Discrimination Act (GINA) employment discrimination rules.  In this matter, job applicants and employees were asked to complete post-offer occupational health questionnaires that required disclosure of family medical history, including parents and siblings’ history with cancer, diabetes, heart disease and stroke.  The EEOC determined that this conduct violates GINA which provides protection for individuals against employment discrimination, based on his/her genetic information including family medical history.  Further, GINA prohibits employers from requesting, requiring or purchasing genetic information from applicants or employees.  

To resolve the matter, the company agreed to pay $62,000 in monetary relief to the affected individuals, as well as amend its workplace policies, and provide internal GINA training to avoid further violation.  This case is an important reminder for employers to comply with all requirements of the law.

Delay in EEOC Wellness Regulations

It appears that the release of the long-awaited revisions to the Equal Employment Opportunity Commission’s (EEOC) wellness program rules relating to the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act, particularly those relating to wellness incentives, has been pushed back until next summer.

As background, last August, the U.S. District Court for the District of Columbia vacated a portion of the EEOC’s wellness program rules in the AARP v. EEOC case; specifically, any wellness incentive based on the collection of medical information derived from a disability-related inquiry or medical examination will not be permitted beginning January 1, 2019 (see our prior Benefit Beat articles from April, February and January, 2018 and September, 2017 editions).

The Court further directed the EEOC to re-evaluate other aspects of its rules released in 2016, specifically, the 30% ceiling on the use of incentives, rewards or penalties for participation in a wellness program. These revised rules were initially designated for release sometime in January, 2019.  However, according to the EEOC’s Fall Regulatory Agenda, these regulations are not expected to be released until summer, 2019.


The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. 

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