Richard Moore

Friday, 30 September 2005 09:49

Employee wellness plans

Employers are too familiar with the ongoing struggle to contain health-care costs. Statistics show that health-care costs increased by 14.7 percent in 2002, by 10.1 percent in 2003 and are projected to increase by 12 percent in 2005. It is, therefore, not surprising that employers are developing and implementing innovative programs to tackle this significant problem. Some employers are developing employee wellness programs designed to induce employees to adopt healthier behavior.

As employers increasingly turn to creative solutions to the health-care problem, such as wellness programs, they are running into numerous complex legal issues. Simple wellness programs implicate a number of federal and state statutes. Some of these laws touch on only portions of wellness programs, while leaving many open questions involving the interplay of the Americans with Disabilities Act (ADA), state disability discrimination laws and the Health Insurance Portability and Accountability Act (HIPAA).

Legal boundaries of wellness programs

A wellness program may take many forms. It may offer programs, such as health club membership discounts, or company-provided workout equipment. It may also involve multiple components with incentives for reaching specific health goals. At this stage, exactly where the law will set the boundaries with respect to each of the different types of wellness programs is open to question.

Regulations under both HIPAA and the ADA address and allow for certain types of wellness programs. For example, although the ADA severely limits an employer from conducting medical examinations in the workplace, the Equal Employment Opportunity Commission (EEOC) permanent regulations permit wellness programs as an exception as long as the plan meets the following criteria.

  •  It must be a voluntary plan.

  •  Medical information obtained in the course of conducting the plan must remain confidential.

  •  It must not penalize nonparticipants.

Exactly what voluntary and penalize mean, however, has yet to be addressed by the EEOC or by the courts. For example, could an employer provide free health care to employees who participate in a wellness plan, while charging employees who choose not to participate a significant premium surcharge? At some point, does the size of the incentive to join the wellness plan render it involuntary?

HIPAA also weighs in on what employers can and cannot do to condition health care premium amounts on participation in a wellness plan. For example, HIPAA prohibits a group health plan from discriminating on eligibility or premium contributions based on any health-status related factor.

However, in its proposed regulations to HIPAA, the U.S. Department of Labor (DOL) asserts that a health plan may provide premium differentials based on health status, but only if provided under the DOL’s definition of a bona-fide wellness plan. According to the DOL, a bona-fide wellness plan must, among other things, provide rewards, in the way of certain discounted premiums; limit those rewards to a small percentage of the cost of coverage; and make rewards available to all similarly situated individuals.

Employers implementing wellness programs will need to be careful in navigating the legal limits. At a minimum, employers interested in implementing wellness programs should consider the following recommendations in this unsettled area.

  •  Frame incentives in a wellness plan as rewards, rather than penalties or disincentives.

  •  Provide accommodations for individuals with disabilities who choose to participate in a wellness plan. If providing health premium discounts or other health insurance rewards to plan participants, provide accommodations for those whose medical condition makes it inadvisable to participate.

  •  Avoid setting wellness plan incentives on specific weight-related criteria (i.e. reaching a specific BMI).

  •  Keep all medical information obtained as part of a wellness plan confidential, and segregate the information from other personnel documents. Where possible, have a third party administrator handle all medical information and have them shield the information from the employer.

Kristine M. Moore is an associate in Dickinson Wright’s Lansing office. For additional information, please visit

Wednesday, 17 December 2003 06:53

In absentia

Ohio law on long-term absenteeism and no-fault attendance policies has been profoundly changed by an Ohio Supreme Court decision this past October.

In Coolidge v. Riverdale Local School District, 100 Ohio St. 3d 141 (2003), the Ohio Supreme Court broke with substantial and long-standing precedent and ruled that public policy prohibits an employer from discharging employees for absenteeism if they are receiving temporary total disability compensation and are absent because of an allowed industrial injury.

As a result, employers throughout the state should be reviewing their leave and attendance policies.

Employers must also face other issues, including the hiring (and eventual dismissal) of temporary workers to replace those on leave. Yet another concerns is whether the ruling will apply to pre-Coolidge terminations over the last several years. It's unclear at this point whether the ruling will be appealed, but it is certain to draw legislative attention.

Many Ohio employers have neutral absenteeism policies, which provide that if an employee is absent for a particular length of time (e.g., 12 months), then the employment relationship will be terminated, regardless of the reason for the absence.

Under Coolidge, however, any such policies would have to be modified. The decision holds that discharges of employees receiving temporary total disability compensation for absenteeism caused by allowed workers' compensation injuries violate public policy.

The plaintiff in Coolidge was a second-grade teacher in the Riverdale Local School District who was assaulted and seriously injured by one of her students on Oct. 22, 1998. She returned to work the next day, but left early to seek medical attention, then called in sick the following work day.

She remained off work and eventually exhausted all of her available options for leave. In September 2000, the Riverdale School board voted to terminate her contract on the grounds that she had "exhausted available paid leave ... been absent without leave (and) ... failed to perform the duties of her contract."

Coolidge applied for and was granted temporary total disability (TTD) compensation shortly after her injuries were sustained, and was on TTD at the time of her termination. She appealed the termination decision to the Hancock County Court of Common Pleas, and the case made its way to the Ohio Supreme Court.

Justice Alice Robie Resnick wrote for a unanimous court that the "the overriding issue in this case is whether public policy embodied in the Workers' Compensation Act protects an employee who is receiving TTD compensation from being discharged solely because of the disabling effects of the allowed injury, that is, absenteeism and inability to work."

The Coolidge decision raises many questions in its wake.

For example, does the decision prohibit discharge for any absences related to an allowed industrial injury? Also, because wrongful discharge in violation of public policy is a tort claim, does Coolidge give rise to civil claims against employers for both economic (e.g., lost wages) and noneconomic (e.g., emotional and punitive) damages?

This radical departure from existing law was unforeseeable and it is likely that the court will be asked to reconsider this decision. Failing that, it seems probable that the General Assembly will make a prompt attempt at a remedy.

Plainly, there are consequences of this decision that have not been considered and are not discussed in the decision. Richard L. Moore is a partner in the litigation group in the Cincinnati office of Vorys, Sater, Seymour and Pease LLP. Reach him at (513)723.4015 or at