The class action wave seems to have come ashore for employers using financial incentives to drive participation in wellness programs.  Leveraging the uncertain legal environment we have discussed previously, a federal district court in Florida granted class certification to current and former employees charged a $20 bi-weekly surcharge for not participating in a "voluntary" wellness program requiring biometric testing (finger stick for glucose and cholesterol) and completion of an online health risk assessment.   

The federal court complaint, filed on August 10, 2010, sought a class of all current and former employees who are/were enrolled in Broward County’s health insurance plan since the inception of its 2009-2010 "voluntary" wellness program, approximately 5,000 individuals.  Alternatively, the complaint sought a class of 267 current and former employees who, in addition to being enrolled in the applicable health plan, paid the $20 bi-weekly surcharge.  In addition to declaratory and injunctive relief and attorneys’ fees, the complaint initially sought to recover damages for the 267 class members who allegedly paid surcharges and emotional distress damages for an unidentified portion of the larger 5,000 employee class who allegedly participated in the "voluntary" wellness program out of fear of losing $20 from their pay each and every week on a go-forward basis.    

In its December 6, 2010 Order, the Court grants class certification for the smaller class of individuals who allegedly were enrolled in the health plan and paid the $20 surcharge, finding that plaintiff had satisfied both Rule 23(a) and Rule 23(b)(3) requirements for class certification.  The Court’s Order does not discuss whether a class could have been certified under Rule 23(a) or (b) for the larger class referenced in the complaint.  Apparently, the sole named plaintiff, Bradley Seff, voluntarily withdrew his claims for declaratory and injunctive relief after Broward County claimed he resigned his employment and, therefore,lacked standing to seek such relief on behalf of the class.    

As the Court noted in its Ruling, the crux of the case is whether Broward’s "voluntary" wellness program is voluntary within the meaning of the ADA.  In discussing Rule 23(a) requirement of "commonality", the Court wrote, "[b]ecause Broward’s policy applied to all employees who enrolled in the health benefits program, and the class is limited to those employees who incurred a charge, it is likely that these issues can be resolved without individualized factual or legal inquiries."

Many employers believe reasonable incentives, whether framed as premium discounts or surcharges, do not violate the ADA’s requirement that medical inquiries be either voluntary or "job-related and consistent with business necessity."  While such programs pass muster under HIPAA, unfortunately, the absence of caselaw continues to create uncertainty over the legality of such programs under the ADA. 

It will be interesting to see whether the Broward County case moves to a ruling on the merits.  it would be nice to have a court weigh in on whether reasonable surcharges violate the ADA.  Until employers receive such guidance, uncertainty will continue to hover over these very valuable programs.

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Photo of Francis P. Alvarez Francis P. Alvarez

Francis P. (Frank) Alvarez is a Principal in the White Plains, New York, office of Jackson Lewis P.C. He is the Leader of the Disability, Leave and Health Management Practice Group, which assists employers in meeting the legal and practical challenges posed by…

Francis P. (Frank) Alvarez is a Principal in the White Plains, New York, office of Jackson Lewis P.C. He is the Leader of the Disability, Leave and Health Management Practice Group, which assists employers in meeting the legal and practical challenges posed by federal and state laws protecting injured and ill employees.

Counseling hundreds of employers each year, Mr. Alvarez spearheads the firm’s effort to provide imaginative and creative solutions to the complex array of workplace disability and health management issues faced by both large and small companies. In the Jackson Lewis tradition, Mr. Alvarez counsels clients with the goal of either avoiding litigation entirely or improving outcomes before administrative agencies, courts and juries.

Mr. Alvarez especially enjoys assisting clients conduct the “individualized assessment” required by a growing number of federal and state laws. These efforts include helping employers effectively communicate with employees and medical providers in an effort to evaluate potential risks to health and safety posed by employee injuries or illnesses. In an area of law in which there often are few bright lines, Mr. Alvarez attempts to develop practical and constructive solutions centered on the concept he calls “tc2” — taking care of employees and taking control of risks.

Recently, Mr. Alvarez has begun leading the Firm into another exciting and fast-developing area of workplace law called “health management.” Challenged by increases in health care and work injury costs, employers are searching for innovative ways to motivate employees to participate in wellness and health promotion programs. Mr. Alvarez leads a team of Jackson Lewis attorneys who advise employers on ways to implement these important programs while complying with emerging and largely undeveloped federal and state law protections.

Mr. Alvarez writes and speaks frequently on disability management issues, including legal developments under the Americans with Disabilities Act and the Family and Medical Leave Act. He has delivered presentations at major speaking engagements, including SHRM’s national and legislative conferences. Throughout his legal career, Mr. Alvarez has represented employers as lead counsel in both trial and appellate courts and has successfully tried employment discrimination claims to verdict.