Legal Developments

Court Draws a Line Between ‘Voluntary’ and ‘Coercive’

A federal court ruled the EEOC failed to justify its reasoning for wellness rules that coerce workers into disclosing health and genetic information.
By: | August 30, 2017 • 3 min read

Dealing a blow to wellness regulations issued last year by the EEOC, the U.S. District Court, District of Columbia ruled that the regulations, which permit the use of significant financial incentives for employees to participate in workplace wellness programs, are arbitrary and capricious. The case is AARP v. EEOC, No. 16-cv-2113 (D.D.C. 08/22/17).

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The issue in dispute is whether the rules violate Americans with Disabilities Act and Genetic Information Nondiscrimination Act provisions protecting employees from involuntary disclosure of their health and genetic information. The rules allow wellness programs to collect protected information from participants. AARP argues that some of the financial incentives offered to employees make participation coercive rather than voluntary.

U.S. District Judge John Bates determined that the EEOC failed to adequately justify its conclusion that programs offering incentives of up to 30 percent of the cost of an employee’s individual health insurance coverage for participation are “voluntary.”

AARP, an advocacy group for individuals aged 50 and older, sued the EEOC last October, claiming that the 30 percent incentive permitted by the rules is too high to give employees a meaningful choice regarding whether to participate in wellness programs. and that the EEOC did not adequately explain how it determined the 30 percent incentive level.

In ruling on AARP’s motion for summary judgment, the court explained that, pursuant to Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837 (1984), it would defer to the EEOC’s chosen interpretation of the term “voluntary” if the agency “offered a reasoned explanation for its decision.” The court was concerned principally with “ensuring that [the EEOC] has ‘examined relevant data and articulated a satisfactory explanation for its action’” and that its “’decision was based on a consideration of the relevant factors.’”

The court also found “little evidence” that the EEOC “actually analyzed any factors that might be relevant to the economic “coerciveness” of the incentive level.

The EEOC put forth three reasons for why it determined that the term “voluntary” permits incentives up to 30 percent. First, the agency contended that it wanted to “harmonize” its regulations with the Health Insurance Portability and Accountability Act. The court noted, however, that the commission did not explain “why it makes sense to adopt wholesale the 30 percent level in HIPAA, which was adopted in a different statute based on different considerations and for different reasons,” particularly when the term “voluntary” is not included in the relevant provisions of HIPAA.

Moreover, the court concluded, the agency’s interpretation is, in fact, inconsistent with HIPAA. The court found, therefore, that the EEOC’s argument that it adopted the 30 percent level to “harmonize” with HIPAA did not support its interpretation of the term “voluntary.”

Second, the EEOC stated that the 30 percent level was based on “current insurance rates.” The court rejected this argument, finding it “utterly lacking in substance.” A review of the administrative record, the court stated, revealed no study or analysis of “current insurance rates” or how they relate to the voluntary disclosure of information in wellness programs.

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Finally, the EEOC asserted that it relied on comment letters in making its determination. The court found the only comment letter identified by the EEOC to be “unpersuasive,” particularly given that the majority of comment letters opposed the chosen incentive level. Acknowledging that the agency is entitled to rely on some comments and not others, the court explained that the agency must nonetheless “explain why it chose to rely on certain comments rather than others.”

The court also found “little evidence” that the EEOC “actually analyzed any factors that might be relevant to the economic “coerciveness” of the incentive level.

Noting the disruption vacating the rules would cause to employers and employees alike, the court instead ordered the EEOC to review and reconsider the regulations while they remain in effect. The EEOC is to file a status report proposing a schedule of review by Sept. 21.

Christina Nevins, Esq., is the disability legal editor at LRP Publications. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]