Labor and Employment 2015 Conference Legal Issues for Employers on Wellness Melinda Maher Partner Gregory Saylin Partner Dorsey & Whitney LLP Minneapolis, Minnesota (612) 492-6082 maher.melinda@dorsey.com Dorsey & Whitney LLP Salt Lake City, Utah (801) 933-8927 saylin.gregory@dorsey.com 1. Speaker Biographies 2. PowerPoint Presentation 2015 Dorsey & Whitney LLP
Labor and Employment 2015 Conference Legal Issues for Employers on Wellness Speaker Bios Melinda Maher is a Partner in Dorsey s Minneapolis Benefits & Compensation group. Ms. Maher s practice focuses on employee health and welfare plans. Her experience includes working with entities involved with health care on compliance with ERISA, COBRA, HIPAA, Medicare Secondary Payer rules, Federal and State health care mandates, and the Affordable Care Act. Ms. Maher works with self-funded and insured employers, hospital systems, clinics, and pharmacy benefit managers on compliance and contracting issues. She advises employers and health care vendors on wellness programs and compliance with the HIPAA Nondiscrimination Rules, the ADA, compliance with the Mental Health Parity Act, the Genetic Information Non-discrimination Act (GINA), and also advises employers on various Federal and State laws affecting on-site clinics for employees. Ms. Maher also advises employers and vendors on compliance for cafeteria plans, disability plans, life insurance plans, vacation and sick leave policies, and other welfare benefits. She counsels Covered Entities and Business Associates on HIPAA Privacy and Security requirements including the revisions to HIPAA made by the HITECH Act, on data security and breach notification responsibilities and requirements under HIPAA and Minnesota law. Ms. Maher is former in-house counsel for a Minnesota-based HMO, PPO and third party administrator. Gregory Saylin is a Partner in Dorsey s Salt Lake City Trial group. Mr. Saylin s litigation practice focuses on employment disputes and counseling, fraud and business torts, securities and corporate control, and complex commercial claims. He also has experience in real property disputes, products liability, and technology litigation. Mr. Saylin is licensed to practice before both Utah and California courts and has broad experience in business dispute resolution and complex and class action litigation. Mr. Saylin has handled matters in both federal and state courts, as well as arbitration before the American Arbitration Association and JAMS. He has successfully represented employers in actions involving age discrimination, sexual harassment, failure to accommodate, trade secrets, covenants not to compete, and retaliatory termination. Mr. Saylin has extensive experience in litigating claims of unfair business practices, defamation, trade secrets, and interference with contract. He has represented dozens of clients, including Fortune 500 companies, in litigation brought under Utah s CAN-SPAM Act and other statutory regulations. Mr. Saylin is a frequent speaker on employment and professional responsibility topics.
Legal Issues for Employers on Wellness Melinda Maher Gregory Saylin Dorsey & Whitney LLP 1 Wellness: Increasing Popularity According to testimony by the Kaiser Family Foundation to the EEOC: 94% of employers with over 200 workers have wellness programs 63% of employers with less than 200 workers have wellness programs According to the American Benefits Council (ABC), the trend is from: wellness (physical/mental health) to well-being, which includes a health component, as well as financial security, both when active and retired 2 1
Wellness: ACA and HIPAA The Affordable Care Act appears to favor wellness Raised the amount that can be used to incent wellness from 20% of premiums to 30% (and up to 50% for incentives to stop smoking) Required coverage for certain wellness initiatives such as smoking cessation Discounts and rewards treated the same But HHS regulation: Made it easier for individuals to earn incentives or avoid penalties through alternatives to actually getting well (e.g., attend smoking cessation rather than actually stop smoking) 3 Wellness Programs Recent Challenges and Controversies EEOC Court Challenges Orion Energy Sys., Inc. Flambeau, Inc. Honeywell Agency Rulemaking and Hearings Treasury, labor and health regulations EEOC Open Meeting, May 8, 2014 4 2
Honeywell Litigation EEOC s ADA Claims Biometric Testing Involuntary Surcharge - $500 HSA Contributions - $250 to $1,500 Nicotine Surcharge - $1,000 to $2,000 (flexible requirements) Up to $4000 for failure to participate Honeywell s Defenses Safe harbor Program voluntary No discipline or loss of coverage Characterizes core penalty at $42/month 5 Honeywell Litigation Procedural Posture Preliminary injunction standard No irreparable harm Balance of harm favors Honeywell Merits reserved for another day [I]ntriguing legal questions that relate to important public interest considerations... [G]reat uncertainty persists in regard to how the ACA, ADA and other federal statutes... interact No current court action; case is back at EEOC 6 3
Wellness: Key Statutes Involving Disability ADA Americans with Disabilities Act HIPAA Non-Discrimination Requirements ACA Affordable Care Act 7 Wellness: ACA and HIPAA HIPAA Non-Discrimination: group health plans may not discriminate on the basis of a health factor Wellness programs must operate in accordance with Rules issued by three agencies: Treasury, DOL and HHS Wellness programs are categorized as Participatory, Activity Only, and Health Contingent 8 4
Wellness: ACA and HIPAA HIPAA Non-Discrimination regulations have impact particularly on: Activity Only, and Health Contingent (with a subcategory for Outcome Based ) Restrictions include: Incentives or penalties must be limited to 30% of total premium (up to 50% if they include a stop smoking incentive) Must provide a reasonable alternative for earning the incentive or avoiding the penalty Program must be reasonably designed to promote good health or prevent disease 9 ADA Statutory and Regulatory Scheme General No medical exam or disability-related inquiries unless Job-related and consistent with business necessity 42 U.S.C. 12112(d)(4)(A) Part of employee health program that is voluntary 42 U.S.C. 12112(d)(4)(B) Safe Harbor ADA shall not be construed as prohibiting a covered entity from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that is based on underwriting risk, or administering such risks that are based on or not inconsistent with state law. 42 U.S.C. 12201(c)(2) EEOC Enforcement Guidance #22 - Wellness program voluntary as long as an employer neither requires participation nor penalizes employees who do not participate Reasonable accommodations 10 5
EEOC: Legal Position on ADA Compliance ADA applies to participatory as well as healthcontingent wellness programs. EEOC position: ADA prohibits employers from requiring a physical exam that is not job-related unless it is voluntary. Biometric screening is a physical exam (a health risk assessment probably would be too). Appears to acknowledge appropriateness of nominal incentive. Regulations state that compliance with HIPAA and the ACA are not determinative of compliance with the ADA. 11 Honeywell Litigation Issues Safe Harbor? Seff v. Broward Cnty., 691 F.3d 1221 (11th Cir. 2012) Barnes v. Benham Grp., 22 F.Supp.2d 1013 (D. Minn. 1998) Voluntary? EEOC Cost of not participating crosses the line Honeywell Voluntary Amount less than Affordable Care threshold (9.5% of family income) Less than 30-50% of allowable reward under HIPAA for healthcontingent programs 12 6
Tension Among Statutes and Regulations ADA statutory and regulatory scheme ACA Presupposes rewards and penalties A reward may be in the form of a discount or rebate of a premium or contribution, a waiver of all or part of a cost sharing mechanism..., the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan. 42 U.S.C. 2705(j)(3)(A). 13 Guidance Coming Soon? The EEOC s Fall 2014 regulatory agenda set a target date of February 2015 for issuance of new rules intended to provide guidance on the impact of the ADA and GINA on wellness programs. Revision is in response to numerous inquiries the EEOC has received about whether an employer that complies with regulations implementing [HIPAA] rules concerning wellness program incentives, as amended by the [ACA], will be in compliance with the ADA. EEOC anticipates that the changes will promote consistency between the ADA and HIPAA, as amended by the ACA, and result in greater predictability and ease of administration. 14 7
Other Statutes and Authorities Genetic Information Non-Discrimination Act (GINA) 15 Wellness: GINA Legal Issues GINA regulates the collection of employee s Genetic Information Health history of the spouse is considered Genetic Information of the employee GINA says an employer may collect Genetic Information as part of a wellness program as long as: There is prior, knowing, voluntary and written authorization Only the employee (or family member) and the licensed health care professional see the information Not disclosed to employer except in aggregate terms 16 8
GINA: Honeywell Litigation EEOC position: Honeywell s biometric testing of spouse is prohibited by GINA because it wasn t voluntary Program collects medical information from covered spouses Covered spouses ( family members under GINA) 29 CFR 1635.3(a)(1) Honeywell s Defenses Biometric tests not genetic Spouses not implicated in GINA s provisions prohibiting employers from gathering genetic information for its predictive value 17 Other Statues and Authorities State discrimination laws, e.g. Minn. Stat. 181.938 ( lawful consumable laws) Negligence (e.g., biometric screening) 18 9
Wellness Plans: Conservative Options Employers seeking to improve employee health in a more conservative manner (both financially and legally) may consider the following: Provide a 15-minute exercise break Most employees may get in a brisk mile walk, or could use time to stretch Provide healthy snacks in vending machines or at meetings Host informational sessions on health, fitness, or nutrition Offer group exercise programs or organize activity clubs 19 Questions? 20 10