Federal Court in Wisconsin Rules That Insurance Safe Harbor Provision in ADA Does Not Immunize Wellness Plan from ADA Scrutiny

 
Friday, September 23, 2016
 
A federal court has ruled in favor of the U.S. Equal Employment Opportunity Commission (EEOC) in a disability discrimination case involving wellness programs filed against Orion Energy Systems. The court rejected the employer's argument that the insurance safe harbor provision in the Americans with Disabilities Act (ADA) immunizes wellness plans from ADA scrutiny.

In the Orion lawsuit (EEOC v. Orion Energy Systems, Inc., No. 14-CV-1019 (E.D. WI)), EEOC argued that Orion required Wendy Schobert to submit to medical testing as part of a wellness program or pay 100 percent of the premium for the employer-provided health insurance. EEOC contended that this violated the ADA's prohibition against involuntary medical exams. However, Orion contended that its wellness plan was covered by the ADA's so-called "insurance safe harbor," and thereby was excused from ADA compliance except if it operated as a subterfuge. Orion also argued that the plan was lawful under the ADA because it was voluntary.

The district court rejected Orion's safe harbor argument, and held that the plan was subject to ADA review. The court concluded that EEOC's recently issued regulations on the ADA's safe harbor provision were within EEOC's authority, and further held that the safe harbor provision did not apply even without regard to the new regulations. However, the court found that the wellness plan was lawful under the ADA because it concluded that the employee's decision whether to participate was voluntary under that statute.

The court also held that there were issues of fact regarding whether Schobert was fired because of her opposition to the wellness plan, and indicated that the case would be set for trial.

Since the defendant's motion for summary judgment was denied, the next step in the process should be the scheduling of a trial on the retaliation claim.
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