When dealing with ADA claims relating to benefit plans, make sure to plot the coordinates for the ADA’s Section 501(c) “safe harbor.” Sections 501(c)(2) and (3) protect employers from liability for conduct that would otherwise violate the ADA if it were taken pursuant to an insured or self-insured benefit plan so long as the plan is not “a subterfuge to evade the purposes of the ADA.”
Some courts have relied on the “safe harbor” to reach favorable results for employers. As we reported previously, a district court granted summary judgment to Broward County, FL, upholding the County’s $20 bi-weekly surcharge for employees who did not participate in a "voluntary" wellness program requiring biometric testing for glucose and cholesterol, and completion of a health risk assessment. Seff v. Broward County. Also, a Minnesota district court granted summary judgment to an employer who had terminated an employee for failing to answer health history questions requested by the employer’s insurance broker. Barnes v. Benham Group, Inc.
A plaintiff invariably argues that the purported “safe harbor” is merely a “subterfuge” to evade the purposes of the ADA. The EEOC argues that if a benefit plan contains disability-based distinctions, the plan is a subterfuge unless the sponsor can establish that the distinction is justified by cost justifications and/or risk classification, such as such as age, occupation, personal habits (e.g., smoking), and medical history.
A federal district court has reiterated the rejection of the EEOC’s “subterfuge” analysis. In granting summary judgment on a claim brought by a paraplegic employee who was denied standard coverage for long term care insurance, the court noted that “[t]he D.C. Circuit and every other circuit to have considered the issue have rejected the contention that the ADA safe harbor provision applies only to plans with terms that are actuarially justified.” Instead, the court said, “subterfuge” must be given “its ordinary meaning as ‘a scheme, plan, stratagem, or artifice of evasion.’’ (citation omitted. Rouse v. Berry (March 24, 2012). To establish “subterfuge,” a plaintiff must establish the “actual intent to use the terms of the benefit plan as a means of discriminating against a disabled individual in protected aspects of employment,” the court added.