Thursday, February 25, 2016

The Dangers of Data Mining Through Workplace Wellness Plans

Workplace wellness programs continue to grow in popularity, despite being an enforcement target of the Equal Employment Opportunity Commission (“EEOC”). We have previously posted some updates on the evolving law and regulations in this arena, as well as some compliance recommendations.
Some popular wellness program features include financial incentives, disincentives, and data mining. According to some sources, more than a third of U.S. employers use financial incentives to encourage employees to participate in wellness programs. In addition, data mining and use of “big data” is becoming increasingly common, with organizations ranging from the Colorado state government to Wal-Mart Stores, Inc. hiring outside firms to gather data to identify at-risk employees and to make targeted, anonymous health recommendations. These data-mining organizations analyze items such as participant’s credit scores, purchase receipts, prescriptions and treatments, midterm voting records, and insurance claims. Using this data, these organizations are able to make predictions (i.e. an employee with a gym membership is likely healthier than an employee with a high bar tab) and to make individualized suggestions to particpants (i.e. recommend a second opinion or physical therapy before opting for invasive surgery).

While data mining may allow a wellness program to have a greater impact on employee health and employer insurance costs, employers should consider the potential for legal costs that might swallow other potential cost savings. The EEOC takes a dim view of wellness plans that run afoul of the Americans with Disabilities Act (“ADA”) and Genetic Information Nondiscrimination Act (“GINA”). These laws place limits on the types of medical inquiries that can be made of employees and contain confidentiality requirements for data that is permissibly gathered. In addition, these laws prohibit discrimination based on a legally protected disability or genetic information. These compliance obligations can all be potentially impacted by data mining that is done without proper care.
Again, the EEOC has prioritized challenges to workplace wellness programs that run afoul of the ADA and GINA. In late 2014, the EEOC filed lawsuits against three employers. To date, those cases have largely been resolved in favor of the employers. For example, in November 2014, a Minnesota federal district judge denied the EEOC’s motion to enjoin Honeywell’s wellness program. More recently, a federal judge in the Western District of Wisconsin dismissed an EEOC’s complaint, finding that the employer’s wellness program was lawful. The employer in that case, Flambeau Inc., required its employees to either undergo a biometric test and a health risk assessment or forfeit their insurance. The Court found that, on those specific facts, the employer had not violated the ADA because the wellness program (1) was a term of the employer’s benefit plan, (2) was part of the underwriting risk assessment, and (3) was not a “subterfuge” for unlawful activity.
These employer victories are encouraging, but surely came with sizeable legal costs that most employers want to avoid. The EEOC is expected to continue to challenge wellness programs and has plans to issue final ADA and GINA rules on wellness programs this year. While waiting for these rules, employers have a little time to catch their breath and do some meditation on their wellness programs to make sure they are compliant and designed to lawfully achieve the employer’s health goals. 

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