What the Wellness Industry Needs to Know about the AARP v. EEOC Decision

Posted by Barbara J. Zabawa | Aug 23, 2017 | 2 Comments

In October last year, the AARP filed a complaint against the Equal Employment Opportunity Commission (EEOC) about the EEOC's wellness rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).  Specifically, the AARP complained that the EEOC went against Congress' intent by allowing a 30% incentive maximum under the ADA and GINA for purposes of gathering employee or family health information through workplace wellness programs.  The AARP argued that the EEOC's incentive maximum was arbitrary and unjustified. 

Yesterday, the U.S. District Court in the District of Columbia issued an order agreeing with the AARP's argument.  The court refused to defer to the EEOC's judgment in interpreting what is meant by a “voluntary” wellness program that seeks health or genetic information from employees or their family members.  Instead, the court questioned whether the EEOC had truly evaluated the incentive limit in light of the purposes of the ADA and GINA, which are to prevent discrimination against employees on the basis of a disability or genetic precondition.  The court noted that the EEOC failed to provide a convincing rationale for its incentive limit and seemed to ignore the data and concerns provided by other stakeholders.  The court highlighted a significant concern expressed by some stakeholders that a 30% incentive level “was likely to be far more coercive for employees with lower incomes, and was likely to disproportionately affect people with disabilities specifically, who on average have lower incomes than those without disabilities.”  Opinion at 26. 

As a result, the court ordered the EEOC to go back to the drawing board, evaluate the evidence about what incentive limit constitutes the dividing line between voluntariness and coercion, evaluate the impact of its decision on various groups, and then adequately explain its decision on what a “voluntary” incentive limit may be.  Importantly, the court did not vacate the current incentive limits under the ADA and GINA rules – the 30% maximum incentives are still intact.  However, those who work in the workplace wellness industry may be wondering what to expect in light of this court decision.  Here are a few insights:

  1. The current ADA and GINA incentive limits of 30% of the total cost of self-only coverage are still intact. The court deliberately considered the disruption it would cause if it struck down the current EEOC rules.  So, it left the current incentive limits in place while it asked the EEOC to reconsider its decision about making 30% the incentive maximum. 
  1. The EEOC may appeal the decision. The court's decision was a “final” decision in the case, granting summary judgment in favor of the AARP and denying the EEOC's summary judgment motion.  This means the court's decision is ripe for appeal.  It will be up to the EEOC to decide whether to appeal the decision to the District of Columbia Court of Appeals.  
  1. An EEOC appeal may face an uphill battle. Although I was surprised that the court did not defer to the EEOC's judgment, like so many courts do when a federal agency is charged with interpreting laws (a legal doctrine called “Chevron deference”), the tide may be turning on a court's willingness to “trust the judgment” of the federal agency.  This court in the AARP case spent a lot of time discussing the evidence and comments brought forth by various stakeholders about the validity of a 30% incentive maximum under the ADA and GINA.  In a way, the court was showing the EEOC all of the comments and data that it failed to consider when writing the ADA and GINA final rules last May.  The court criticized the EEOC's rationale for settling on a 30% maximum incentive, which the EEOC explained was to “harmonize” the ADA and GINA rules with the HIPAA/Affordable Care Act incentive rules.  Upon a closer look, the court concluded that the ADA and GINA incentive maximum did not harmonize with the HIPAA/ACA rules, but in fact made the incentive limits more confusing.  The court's willingness to closely examine the EEOC's rule making process and rationale may reflect a new view of the judiciary's role in evaluating agency rules.  The newest appointee to the U.S. Supreme Court, Justice Neil Gorsuch, appointed just this year by President Trump, has been openly critical of judicial deference to agency rules.  In a past opinion, Judge Gorsuch denounced agency deference as “a judge-made doctrine for the abdication of the judicial duty.”  See this article for an interesting take on Justice Gorsuch's stance on this issue.  Justice Gorsuch's view may be setting the tone for the lower courts when reviewing federal agency rules.
  1. The EEOC may end up lowering the incentive maximum under the ADA and GINA. The court in the AARP case gave the EEOC until September 21, 2017 to come up with a timeline during which it would review the ADA and GINA wellness incentive rules.  If the EEOC decides against appealing the decision, it must start reviewing its rules in light of all the comments and data pointed out by the court.  Using this information, the EEOC must decide whether the 30% maximum incentive makes sense.  The court was certainly not persuaded that a 30% maximum made sense because that is what the HIPAA/ACA rules use.  As a result, the EEOC may end up lowering the incentive maximum incentive, perhaps below 20%.  An incentive maximum below 20% may be possible because the court pointed out in its opinion that a RAND study found that “high powered” incentives of 20% or more might place a disproportionate burden on lower-paid workers.  Opinion at 26.

What Should You Do Now?

Until the EEOC changes its rules, you should continue to abide by the ADA and GINA wellness incentive rules as currently written.  By September 21st, we should have a better idea of when the EEOC might change its rules.  We may also know whether it intends to appeal the court's decision.  The Center for Health and Wellness Law will continue to monitor any developments in wellness law.  As always, if you need compliance assistance with workplace wellness program development or implementation, contact us.  We are here to help you.

About the Author

Barbara J. Zabawa

Attorney Barbara J. Zabawa started the Center for Health & Wellness Law, LLC after she recognized a need for legal services that shared a mission with providers to improve patient outcomes and population health, encourage wellness, protect patient interests in choice of provider and treatment options, provide holistic care, and expand information access. Attorney Zabawa has 20+ years of experience in the health care field, first receiving her Master's in Public Health from the University of Michigan before attending law school at UW Madison, where she graduated with honors in 2001. From 2003-2005, Ms. Zabawa clerked for the Honorable Barbara B. Crabb in the United States District Court for the Western District of Wisconsin and worked on a variety of matters, including employment, patent infringement, civil rights, and contract matters. She also served as a Skadden Fellow representing health care consumers on both the national and local level by helping consumers navigate private insurance coverage issues and advocating for their interests as a Funded Consumer Advocate at the National Association of Insurance Commissioners (NAIC). Attorney Zabawa has worked for a large health insurance company providing advice on the Affordable Care Act as well as HIPAA Privacy and Security compliance. In addition, she was in private practice at a large regional law firm for seven years, where she was a shareholder, led her firm's health care team and served as its HIPAA Privacy Officer. While in private practice, she handled a variety of health law matters, such as compliance with fraud and abuse laws, professional scope of practice matters, state licensing issues, HIPAA privacy and security compliance, Medicare and Medicaid reimbursement and conditions of participation compliance, Accountable Care Organization and other joint venture agreements, employment agreements, as well as business litigation. Attorney Zabawa is the author of the forthcoming book "Rule the Rules of Workplace Wellness Programs." She is a frequent speaker and writer both nationally and regionally on workplace wellness program compliance, the Affordable Care Act, fraud and abuse issues and HIPAA compliance. She has published several law review articles in the practice of health law and has been interviewed by TV, radio and print media regarding wellness, health reform, and HIPAA. She is a Board Member for Rogers Memorial Hospital Foundation, Board President for the Wisconsin Alliance for Women's Health, Board Member for Health Promotion Advocates, and currently serves on the Oversight Advisory Council for the Wisconsin Partnership Program and the State Bar Health Law Section Board. Education JD - University of Wisconsin Law School, cum laudeMPH - University of Michigan School of Public HealthBA - Lawrence University Admitted to Practice: • New York• Wisconsin• Federal District Court of the Western District of Wisconsin• Federal District Court of the Eastern District of Wisconsin• Court of Appeals for the Seventh Circuit• United States Supreme Court


JC Reply

Posted Sep 19, 2017 at 20:06:35

This is BS, 30% of a typical individual health plan of $10k or more is a lot for somebody making even 100k /year, let alone people who make less. There needs to be a lot more laws in the wellness area, like requiring disclosure so employees know exactly how much opting in versus opting out will cost up front before the biometrics testing. There needs to be easy, clear method to opt out. My company hides the fact that you are signing up for wellness and gives no option to opt out, which I thought was illegal since it is supposed to be voluntary. How many companies did EEOC sue concerning wellness and lost every case, then AARP sued and EEOC loses again. Why are employees subjected daily to illegal workplace laws, with little recourse?

JC Reply

Posted Sep 19, 2017 at 20:22:48

My company required biometric testing to avoid $1500 smoking surcharge and$500 biometric surcharge but said nothing about signing up for wellness. Then you receive Biometric results and they thank you for signing up for wellness. So basically they con you into signing up for wellness and say it is part of your insurance with no opt out provision (wellness is supposed to be voluntary). 30% penalty is a lot. Hope the judge requires 5% or less and basically makes wellness plans obsolete. I think people have had it with corporate intrusion of their health information and daily lives.

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