By: Melanie M. Dunajeski, Drewry Simmons Vornehm, LLC
EEOC v. Flambeau, Inc., 7th Cir. Ct. of Appeals, No.16-14-2, Decided January 25, 2017
Back in 2014, the EEOC filed a flurry of lawsuits alleging that employer-sponsored wellness plans violated the ADA (Americans with Disabilities Act) by requiring employees to fill out a health questionnaire, medical examination and/or submit to biometrics testing as a precondition of participation. Wisconsin plastics fabricator Flambeau Inc. was one of those employers.
Flambeau offered a wellness program to its employees. The program included a health risk assessment that included a questionnaire and measurements for health indicators such as weight, blood pressure and cholesterol levels. Flambeau encouraged employee participation by making it a condition of it making employer contributions toward the employee health insurance premiums. One Flambeau employee failed to take the required assessment, and, as a result, Flambeau terminated his health coverage, with the only coverage available to him being the COBRA coverage with him paying 100% of the cost. He filed a charge of discrimination and the EEOC took up his charge for an agency suit, alleging that Flambeau had violated the ADA by requiring a mandatory medical examination. Flambeau defended, taking the position that its wellness program was part of a bona fide benefit program and as such qualified for the so-called “safe harbor” that would permit such examinations.
The District Court agreed with Flambeau, exempting its wellness plan from the ADA ban under the employee benefit plan safe harbor provisions, and dismissing the EEOC’s case. Similar results were reached in the other two suits filed by the EEOC, but the EEOC only appealed the Flambeau case to the Seventh Circuit Court of Appeals. It was widely anticipated that the decision of the Seventh Circuit would pave the way for a Supreme Court review of this provision of the ADA.
However, many things happened in the interim. First, the EEOC adopted final regulations on wellness plans in May 2016 (effective January 1, 2017) that allowed employers to offer employees up to 30% of the cost of their individual health insurance plans as incentive to participate in wellness programs without fear of violation of the ADA. Second, the employee that was involved in the suit quit his job at Flambeau without ever sustaining any damages. Third, the employer stopped offering its wellness program for a variety of reasons.
In the end, the Seventh Circuit Court of Appeals declined to decide this case on its “merits” – i.e. to decide whether the wellness plan conditions violated the ADA as an involuntary medical examination or was within the safe harbor provisions of that statute. Instead, the court affirmed the dismissal of the action in the district court, on the grounds that the controversy was “moot” – in other words that there was no live controversy between the parties that the court could decide. The employee had not suffered any damages and the employer could not be enjoined to cease requiring wellness program examinations since the whole program had been abandoned. Since the courts do not render advisory opinions on controversies that no longer exist, the decision below has allowed to stand, and any further challenge to wellness program incentives will have to wait for a different case.