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Thursday, August 23, 2012

On Monday, the Eleventh Circuit Court of Appeals ruled in Seff v. Broward County that Broward County, Florida’s wellness program qualified for the Americans with Disabilities Act (ADA) bona fide benefit plan safe harbor and therefore was not discriminatory under the ADA.  This is a helpful ruling for employers maintaining or looking to implement wellness programs.

Background.  The ADA generally provides that an employer can only require medical examinations of its employees if they are job-related and consistent with business necessity.  However, the ADA also says that it is not intended to prohibit an employer “from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.”

The Case. In the case, Broward had a wellness program with biometric screening and an online health risk assessment.  Employees who were determined to have asthma, hypertension, diabetes, congestive heart failure, or kidney disease were offered the opportunity to participate in a disease management program, which gave them the chance to receive waivers of co-payments for some medications.  If an employee chose not to participate in the wellness program at all, he or she was charged $20 on each bi-weekly paycheck.

The issue in the case was whether the wellness program was part of the Broward County’s health plan, within the meaning of the ADA safe harbor.  If it did not meet the safe harbor, it could have been ruled to violate the ADA (if another exception did not apply).  Broward’s acting benefits manager had testified that the wellness program was not part of the plan.  However, the court said it did not read the ADA safe harbor as requiring the wellness program to be part of the same physical document as the plan.  The court instead pointed out that the health insurer offered the program as part of its contract to provide insurance, the program was only available to plan enrollees, and that Broward presented the program in at least two employee handouts.  These were sufficient for the wellness program to qualify for the safe harbor in the court’s view.

Our Thoughts. This is good news for employers.  The ADA’s treatment of wellness programs has been somewhat of a gray area, and this helps provide some clarity.  However, employers should not read too much into the case.  For example, the case does not speak to a wellness program that is available to employees regardless of their participation in the health plan.  It is not clear such a program would qualify for the safe harbor, although it may be permissible under other ADA provisions.

Additionally, while the court does not require that the wellness program be part of the plan document for ADA purposes, wellness programs that provide medical care (like disease management programs) are ERISA welfare plans.  As a result, they should either have their own plan document or be part of the health plan’s document.  Finally, any wellness program needs to comply with HIPAA’s nondiscrimination requirements.

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