Legal Challenges of Mandatory Wellness Programs

In his intro to the 2007 “The Littler Report” entitled Employer Mandated Wellness Initiatives: Respecting Workplace Rights While Controlling Health Care Costs, Garry Mathiason, attorney for Little Mendleson’s San Francisco office and co-author of the “The Littler Report,” stated that healthcare costs are projected to double by 2016, reaching $4.2 trillion and representing 20 percent of every dollar spent. Healthcare costs and employer contributions toward healthcare premiums have increased to the level that they often determine whether a profit is made or whether the employer can continue in business. Employers are seeking new solutions to help curb these increases. The report discusses whether mandatory wellness programs are viable options given the current state of law.

Below is a recap of a December phone interview with Mathiason.

Q&A with Garry Mathiason

VO: How did the “The Littler Report” come about?
GM: We put together a task force with a focus on 300 companies to address the legal issues associated with running wellness programs.

VO: What is one of the most important findings from the report regarding implementing a mandatory program?
GM: In order to make mandatory wellness programs work, companies need a third party provider to navigate comfortably through employee privacy issues. Also, there is no such thing a mandatory. There is a continuum of things that can be done but strictly mandating is not legally accomplishable, but you can move farther by using incentives.

VO: What are some of the most important legal issues that companies will face when considering a mandatory program?
GM: Most important aspects of the report are the Family Medical Leave Act (FMLA), Americans with Disability Act (ADA), Age Discrimination in Employment Act (ADE) and the Health Insurance Portability and Accountability ACT (HIPAA) and federal and state issues such as tobacco legislation.

VO: What is an example of a best in class program?
GM: The Cleveland Clinic is a top program.

VO: What industry is blazing the most trails?
GM: Industry leaders are the healthcare industry. They understand how harmful bad health habits are. Clarion is a good example. Program leaders are in the healthcare industry, but the expertise will reside in the third party providers.

VO: How soon will we see trends come to past?
GM: In the next two years it will be unusual to find a program that is strictly voluntary.

VO: Any advice to companies looking to move towards mandatory programs?
GM: Employers with wellness programs looking to move to mandatory programs should seek legal advice to help with regulations and state statues. The good news is that information is becoming more available and test cases are becoming available.

VO: Any other tips for employers?
GM: Employers should recognize that mandatory programs require a culture change. It would be a big mistake to go from zero to mandatory. It would be a catastrophic failure. If employees are not ready, the program will be viewed as punitive and too controlling. It has to go in stages to get a chance for buy-in to the value in it.

More from “The Littler Report”

Three laws, in particular, received the most attention in “The Littler Report.” The following is a recap of what the report highlighted as the most significant rules: Health Insurance Portability and Accountability Act (HIPPA), Americans with Disabilities Act (ADA) and Age Discrimination in Employment Act (ADEA).

• In general, HIPAA prohibits certain group health plans from discriminating based on health factors and prohibits plans from providing incentives based on the absence or existence of health factors. Wellness programs that do not provide a reward based on health factors are generally considered non-discriminatory under HIPAA.
  
  
• Wellness programs that provide a reward based on health factors must meet certain requirements to be considered non-discriminatory under HIPAA. One example of this is providing a reward only if an individual reduces their cholesterol below a certain score. The updated regulations require that programs providing a reward based on results meet specific requirements.
  
  
• Discrimination against a qualified individual with a disability is illegal under the ADA. Issues are sure to arise when mixing ADA with mandated wellness programs for three reasons according to “The Littler Report”: 1) the ADA limits the circumstances under which an employer may ask questions about an employee’s health or require a medical examination; 2) the ADA enforces confidentiality requirements on the disclosure of medical information; 3) the ADA will apply if an employee is able to perform the essential function of a job, but because of a disability, is unable to achieve a health factor requirement under a mandatory wellness program.
  
  
• The ADEA laws necessitate that if a mandatory program requires an employee to achieve a certain health standard, that standard should consider, and adjust for, the age of the employee.
  
  
• Other laws that should be considered include Title Vll, National Labor Relations Act as well as privacy issues.