Back in January I blogged about a case out of the Western District of Wisconsin whereby the federal district court there granted summary judgment against the Equal Employment Opportunity Commission ("EEOC") in their challenge to an employer's wellness program. Undeterred, the EEOC continued with a suit it had previously filed in the Eastern District of Wisconsin against Orion Energy Systems, Inc., also alleging their wellness program violated the Americans with Disabilities Act ("ADA") and that Orion retaliated against an employee who chose to speak out against the program and opted out of the wellness program. The judge in the Eastern District likewise ruled against the EEOC, but on very different grounds than the Western District, potentially giving rise to the 7th Circuit finally addressing this issue.
In 2008, Orion decided to switch from a fully insured health plan to a self-insured health plan, believing that a self-insured company can reduce or at least slow the increase of its health care costs by improving the health of its employees. Toward that end, in the spring of 2009, Orion decided on a wellness initiative including three (3) components:
(1) employees who elected to enroll in Orion's plan would have to certify that they did not smoke or pay a surcharge ($80/month for single coverage);
(2) employees would have to exercise sixteen (16) times per month on a range of motion machine located in Orion's fitness center or pay a surcharge ($50/month); and
(3) employees would have to either complete a health risk assessment (HRA) at the beginning of the insurance year or pay the entire monthly premium equivalent amount, which was $413.43 for single coverage, $744.16 for limited family coverage, and $1,130.83 for family coverage. Employees who completed the HRA paid no premium equivalent, but still had to pay their own deductibles, co-pays and out-of-pocket expenses.
Wendy Schobert was an employee in Orion's accounting department from 2003 until May 18, 2009 when her employment was terminated. Before ultimately opting out of the HRA in April 2009, Schobert raised questions about the new wellness initiative, including the HRA. She questionied whether medical information collected in the HRA would remain confidential and also questioned how the premium amount was calculated, and believed it was excessive in light of the service fee Orion was paying its third-party administrator, Auxiant. Due to privacy concerns in which Orion was conducting the HRA's, Schobert sent a letter to Orion's HR director, stating she elected not to participate in the HRA. Sometime around April 2009, Schobert was "talked to" by her supervisor where Schobert claims she was told to keep her opinions about the new wellness program to herself. On May 7, 2009, Schobert sent an email challenging and criticizing Orion's then CEO's request for information on how much time employees were using to get water and coffee in light of what Schobert believed were Orion's extravagant spending decisions on a variety of programs. A few days later, the CEO instructed the CFO to terminate Schobert.
The EEOC alleged that Orion's wellness program violated Section 12112(d)(4)(A) of the ADA, which states that a covered entity "shall not require a medical examination and shall not make inquiries of an employee as to whether such employee is an individual with a disability or as to the nature of severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity." Section 12112(d)(4)(B), however, permits employers to conduct "voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at that work site." The EEOC argued that the HRA was not "voluntary" under (d)(4)(B) given Orion shifted 100% of the health benefit premium to employees who opted out, and also given that Schobert was fired 3 weeks after opting out (she was the only employee to opt out).
Orion argued that its wellness program did not violate section 12112(d)(4)(A) for 3 reasons:
(1) the ADA's safe harbor provision relating to insurance applies to the challenged aspects of the wellness program;
(2) Orion did not "make inquiries" as prohibited by (d)(4)(A) where Orion received only anonymous, aggregated employee responses and results from the HRA; and
(3) the wellness program was voluntary because Orion's employees had a choice regarding whether to participate and sufficient time to make that choice.
The Safe Harbor Provision Found to Not Apply
The district court judge found that the safe harbor provision did not apply, but that the wellness program was voluntary even though Orion shifted 100% of the health premium to any employee that opted out.
In arguing that their wellness program is protected by the safe harbor provision, Orion relied on Seff v Broward County, 691 F.3d 1221 (2012), and EEOC v. Flambeau, Inc., 131 F. Supp. 3D 849 (W.D. Wis. 2015), the case I mentioned back in January 2016 and cited above. The EEOC argued that these cases were wrongly decided and the Eastern District noted that the EEOC had since created a new regulation on this issue, which should receive "Chevron deference," and the court agreed. However, the court also held that even without relying on the regulation, the safe harbor provision did not apply to Orion's wellness program, declining to adopt the holdings of Seff and Flambeau, because Orion's wellness program was not use to underwrite, classify, or administer risk and, in short, Orion's wellness program was wholly independent from its insurance plan.
The Court Held Orion's Wellness Program to be Voluntary
An employer cannot conduct a medical examination or make medical inquiries of an employee, "unless such examination or inquiry is shown to be job-related and consistent with business necessity." A medical examination or inquiry that is "voluntary" and part of a health program does not violate the ADA. The Court found Orion's wellness program to be voluntary because, even though opting out means paying 100% of the premium cost, the court noted that "a hard choice is not the same as no choice," citing the U.S. Supreme Court case of United States v. Martinez-Salazar, 528 U.S. 304, 315 (2000). Thus, the court granted Orion summary judgment as to the EEOC's claim that their wellness program, including the HRA, violated the ADA.
EEOC's Retaliation Claim Allowed to Move Forward
Because Orion's wellness plan was ruled lawful, they argued that the EEOC's retaliation and interference claims fail as a matter of law, because, Schobert did not therefore engage in protected activity. The ADA's retaliation provision does not protect an employee's right to complain generally. However, the court noted, it is well established that an employee may engage in protected activity even if the challenged practice is not actually illegal, so long as the employee has a sincere and reasonable belief that she is opposing an unlawful practice. The court found Schobert's opting out of the HRA to be protected activity. Therefore, given the conflicting evidence regarding who actually decided to terminate Schobert and why, and the timing of her termination, a fact question remained as to whether there was any causal link between Schobert's protected activity and her termination.
The case is EEOC v. Orion Energy Systems, Inc., September 19, 2016, Griesbach, W.