Settlement reached in allegation of coercion by wellness program – Employment and Human Resources

United States: An agreement was reached when the wellness program was allegedly compulsory

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On March 4, 2022, Yale University agreed to settle a class action lawsuit filed in 2019 by participants in Yale’s Health Expectations program (the “Program”). The $1.29 million settlement is currently awaiting court approval. This case illustrates the pitfalls that can arise when designing wellness programs and the importance of closely monitoring and updating wellness programs in a rapidly changing regulatory environment.

wellness programs

A wellness program is an employee benefit designed to encourage its participants to voluntarily improve their health and fitness so that the improvements in healthy behaviors reduce the cost of health claims over time. Wellness programs come in many different forms and, depending on their design, may be subject to a variety of federal laws, including the Employee Retirement Income Security Act of 1974 (“ERISA”), the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Nondiscrimination Genetic Information Act of 2008 (“GINA”) and the Americans with Disabilities Act of 1990 (“ADA”). The Yale case involved the ADA and GINA, which allow employers to obtain medical or genetic information from employees when employees voluntarily participate in a wellness program.

Yale Health Expectancy Program

Yale’s collectively negotiated program required certain union employees and their spouses to either (a) undergo medical exams and examinations (including mammograms, diabetes screening, and colonoscopies) or (b) $25 a week ($1,300). per year) to opt out of the program. If a participant chose to opt out, the fee was deducted directly from the participant’s paycheck.

Current and former program participants, with the support of the AARP, are suing Yale, claiming that this “unusually punitive” program violates the ADA and GINA because the size of the opt-out fee makes participation in the program involuntary. AARP successfully used this argument in a 2016 lawsuit against the U.S. Equal Employment Opportunity Commission (“EEOC”) to invalidate ADA regulations that set limits on the amount of rewards that offer a wellness program and still qualify as ” voluntary” could apply. However, Yale has not changed its opt-out program in response to the EEOC litigation and subsequent regulatory changes.

Participants in the program also alleged that Yale violated HIPAA when it shared medical screening results with its outside wellness providers without prior approval. Yale partnered with an outside provider to verify program participants’ testing and eligibility data, which was then shared with a second provider who matched program participants with a health coach. The vendor that performed the data validation was a Yale business partner and subject to HIPAA, but the second company was not. Participants were asked to sign a form waiving their HIPAA rights so that information could be shared with the second provider, but in some cases where the program participant did not sign the waiver, data was still shared.

The settlement

Some of the settlement terms may be of interest to plan trustees:

  • Yale will pay $1.29 million, which will be distributed to employees who were covered by the program and to cover plaintiffs’ attorneys’ fees and costs, subject to court approval.

  • Yale may continue to offer the program but will not charge opt-out fees for four years.

  • Yale will change its practices regarding the transmission of health information related to the Program and will require its affiliated providers to delete data obtained inappropriately. Information will no longer be shared without proper HIPAA approval. Participants who are actively receiving coaching have the option to continue receiving coaching (or not) and retain or delete their recordings without penalty.

Next Steps

According to the Yale settlement, employers should consider the following actions:

  • Employers should review their wellness program design and relevant documents to ensure compliance with HIPAA, GINA, ADA and other laws governing wellness programs.

  • Employers should review the types and levels of incentives their wellness programs offer. The EEOC has not yet finalized new ADA or GINA wellness program regulations to replace the repealed 2016 regulations.

  • The EEOC released tentative proposed regulations in early January 2021, but these were never officially released and were withdrawn by the Biden administration. Those unpublished January 2021 regulations would have limited certain wellness program incentives to a minimum amount — such as a “water bottle or gift card of modest value.”

  • Employers should review their service level agreements and business partner agreements with wellness program providers to ensure they adequately address HIPAA compliance

The content of this article is intended to provide a general guide to the topic. Professional advice should be sought in relation to your specific circumstances.

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