By Phil Larson

It is sometimes said that "no good deed goes unpunished."  When we look at the context of employer  wellness, I am reminded of this point, especially in light of recent federal caselaw on this topic.  

Employer provided wellness is seen as a good thing, often designed to improve health and to provide an added benefit from an employer to an employee.  Unfortunately, the legal landscape when it comes to wellness was drafted years ago and we are left with a minefield of compliance hurdles for entities to remember when designing their wellness program.  The legal issues include but are not limited to federal and state privacy requirements, nondiscrimination, the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), the Affordable Care Act (ACA), the Employee Retirement Income Security Act (ERISA), Consolidated Omnibus Budget Reconciliation Act (COBRA), and federal and state tax laws to name a few.     

Federal caselaw on this topic can also remind us that fixing improperly designed wellness programs can be difficult with a broad array of penalties available to plaintiffs or for government enforcement actions.  As wellness is often tied to a major health plan by the employer, the health plan compliance requirements can come into play.  Some recent litigation on this point provides just some of the remedies that may be required with improperly run wellness programs:

1.   ​Awarding attorneys fees, litigation expenses and costs.  This is an important concern for many ERISA cases and leaves open the possibility that even a small issue may entail these large costs when dealing with employee benefits.  

2.   Correcting claims over multiple years.  Employers may be forced to pay for claims going back many years or to re-adjudicate past claims. 

3.   ​Reimbursements over multiple years.  Separate than a claim for services, Employers may be forced to make injured parties whole for their loss (e.g. repaying a tobacco surcharge) going back many years. 

4.  Disgorgement of unjust enrichment or profits.  Employers may be required to undue any unjust enrichment or profits resulting from the conduct determined out of compliance.  Courts struggle with determining this point but it is allowed and requested by plaintiffs.   

5.   Awarding interest.  Employers may be forced to make injured parties whole for their loss including interest going back many years.

6.  Independent Fiduciary.  Employers may be forced to pay reasonable costs and expenses of an independent fiduciary to re-adjudicate claims or correct errors.

7.   Injunction.  Employers may be stopped from further actions that impose compliance concerns.  ERISA can even allow for the removal of "fiduciaries" preventing them from making decisions over the plan.  

8.  Penalties and fees.  Several penalties and fees may exist with improperly run wellness including fines ranging from $100+ per day for each affected individual depending on the compliance topic or penalties for improper tax reporting.  Yes, that employer provided FitBit, cash, or gym membership reimbursement under the wellness program can be taxable (see IRS Chief Counsel Memorandum here discussing cash or cash like wellness incentives).  Other federal penalties and fees can even include damage for emotional harm or punitive damages (see EEOC guidance on employment discrimination including the American Disabilities Act or ADA here).  To make matters worse, some penalties are considered excise taxes which may not be tax deductible and ERISA fiduciaries can be personally liable for breaching their duties under the plan.  

9.   Other Relief.   Courts are given broad discretion to undue wrongs in ERISA related cases, including making an employer pay for a benefit that did not exist for the plaintiff.  In one recent federal case, the employer did not provide a Summary Plan Description required under ERISA to inform participants of a benefit.  In that case, the court awarded the full benefit to the claimant when the benefit was later needed under an "equitable relief" theory.  See Snitselaar v. Unum Life Ins. Co. of America, No. 17-014 (N.D. Iowa Jan. 22, 2019). 

10.  Brand Impact.  Finally, entities should always consider the impact on your business name for improper wellness compliance.  Sometimes, this is the worst and most punitive of all the wrongs and the most difficult to repair. It can take years to build a brand, but a moment to tarnish it.        
   
Employer wellness remains a complicated area for employers, health plans, vendors, and insurers.  Entities should tread carefully--what may be seen a small wellness program can have drastic impact on your brand or result in damages spanning multiple years or involve corrected tax returns.  Entities should also consider who is liable in their contracts or service agreements for compliance but some harms like brand impact or lost trust of your employees are difficult to remedy.    

By Phil Larson

Many entities understand the Americans with Disabilities Act or ADA prohibits discrimination against individuals on the basis of disability in regards to employment compensation and other terms, conditions, and privileges of employment.  This is found under title I of the ADA and includes ‘‘fringe benefits available by virtue of employment, whether or not administered by the covered entity.’’  The ADA Title I also restricts the medical information employers may obtain from employees by generally prohibiting disability-related inquiries or requiring medical examinations.  42 U.S.C. 12112(d)(4)(A).  The statute further provides an exception to the prohibition of disability related inquiry or medical exams for voluntary employee health programs, which includes many workplace wellness programs. 

A wellness program that is an employee health program may be part of a group health plan or may be offered outside of a group health plan or group health insurance coverage.  Common examples include: a health risk assessment (HRA) or medical questionnaire; medical examinations; screening for high blood pressure, cholesterol, or glucose; classes to help employees stop smoking or lose weight; physical activities in which employees can engage (such as walking or exercising daily); coaching to help employees meet health goals; and/or the administration of flu shots. 

Section 102 of the ADA provides that any information relating to a medical condition of an employee obtained by an employer during “voluntary medical examinations, including voluntary work histories, which are part of an employee health program available to employees at that work site,” must be “collected and maintained on separate forms and in separate medical files and [be] treated as a confidential medical record.” 

To state a viable claim under the ADA’s confidentiality provisions, a plaintiff has to allege (1) the employer obtained the medical information through employment-related medical examinations and inquiries; (2) the information was disclosed by the employer and not treated confidentially; and (3) the employee suffered a tangible injury as a result of the disclosure.  Please note, caselaw has held emotional injury as a recognizable injury.

Employers and wellness program providers must take steps to protect the confidentiality of employee medical information provided as part of any employee health program or for other employment areas (like FMLA, medical leave, and workers compensation).  Based on recent comments from the EEOC, here are some things to remember for ADA confidentiality:   

Training.  
It is critical to properly train all individuals who handle medical information about the requirements of the ADA and, as applicable, HIPAA’s privacy, security, and breach requirements and any other privacy laws.

Policies.
Employers and program providers should have clear privacy policies and procedures related to the collection, storage, and disclosure of medical information.

Protections.  
On-line systems and other technology should guard against unauthorized access, such as through use of encryption for medical information stored electronically.  The protections also apply whether the employee is at work or ranting on social media after hours.  

Breach Investigation and Reporting.  
Breaches of confidentiality should be reported to affected employees and should be investigated.  Recent guidance from the EEOC says reporting should be "immediate" and investigations should be "thoroughly" performed.  

Discipline.  
Employers should make clear that individuals responsible for disclosures of confidential medical information will be disciplined and should consider discontinuing relationships with vendors responsible for breaches of confidentiality.  Such discipline should include the potential dismissal for those that disclosed information improperly. 
​
Job Responsibilities, Vendors and Firewalls.
Individuals who handle medical information that is part of an employee health program should not be responsible for making decisions related to employment, such as hiring, termination, or discipline.

Use of a third-party vendor that maintains strict confidentiality and data security procedures may reduce the risk that medical information will be disclosed to individuals who make employment decisions, particularly for employers whose organizational structure makes it difficult to provide adequate safeguards. If an employer uses a third-party vendor, it should be familiar with the vendor’s privacy policies for ensuring the confidentiality of medical information.

Employers that administer their own wellness programs need adequate firewalls in place to prevent unintended disclosure. If individuals who handle medical information obtained through a wellness program do act as decision-makers (which may be the case for a small employer that administers its own wellness program), they may not use the information to discriminate on the basis of disability in violation of the ADA. 

Notice. 
Starting in 2017, in order to meet the "voluntary" requirement for a wellness program that includes a disability related inquiry or medical examination, a new ADA notice must be included explaining many of these points above.  This notice is required with or without an incentive to participate in the wellness program.  A sample notice is available from the EEOC, but we recommend some reasonable edits before using this sample.       

If you need help understanding these rules, please contact Kinney & Larson LLP.  

By Phil Larson

2014 will be a big year for health reform under the Affordable Care Act (ACA).  See the following chart for items under federal health reform that have at least a new effective date or change in 2014.  

A key to the chart below:

• Light Green - needed to be accomplished in 2014 so they are ready in 2015 
  
• Green - needed for group health plan design 
  
• Yellow - important in the health care industry and for individual taxpayers 
  
• Red - new taxes and fees
  
• Tan - areas we expect future guidance in 2014
  
• Blue - administrative requirements for health plans and industry   
  

If you need help understanding federal health reform including changes in 2014, please contact Kinney & Larson.   

by Phil Larson

Final regulations were released on the parity requirements for mental health and substance abuse last week.

The rules do not require mental health or substance abuse coverage, but if it is offered, it must follow these rules.  Merely complying with new federal preventive care requirements, which may include some of these benefits, does not mean a plan must meet these rules if that is all it offers.     

As before, the final rules require a lot of testing to make sure plans operate in a manner that puts mental health and substance abuse on level playing ground with other plan benefits.  This includes testing on 6 key areas within health plans that offer mental health or substance abuse coverage.  Those six categories include:

...inpatient in-network (with new sub-classes for multiple tiers of networks)

...inpatient out-of-network (with new sub-classes for multiple tiers of networks or office visits)

...outpatient in-network

...outpaitent out-of-network

...emergency care

...prescription drugs

In simple terms, the plan design, coverage, and processes related to claims must be in "parity" or "equal terms" across these areas (or better).  The new final rules took the requirements a step further to ensure that coverage and processes related to claims are on equal terms.  The rules clarify that all benefits are covered, even intermediate care like residential or outpatient treatment.  

As some examples, step therapy, provider reimbursement rates, facility type restrictions, network selection and restrictions (including georgraphic limits) should be on equal terms.  This will include several processes, stategy, and evidentiary factors within health plans.  Some locations previously excluded from coverage, may need to be included for coverage under these new rules.  Finally, new notice requirements will also apply with regards to medical necessity for any particular treatment or coverage.​ 

The final rules generally apply to group health plans for plan years beginning on or after July 1, 2014.  Until the applicability date of the final rules, plans and issuers subject to MHPAEA must continue to comply with the interim final rules.

If you have questions on these rules, please contact Kinney & Larson. 

by Phil Larson

​A Michigan Q&A on marketplace coverage reminds us that there is a nondiscrimination rule for providers in health reform.  Many plans are taking a wait and see approach for this rule but not all...

Question Can a carrier refuse to cover a required service based on who provides the service?
Answer No, a carrier may not refuse to cover a service as long as the service is provided by a health care provider who is acting under the scope of his or her license or certification.  Under Section 2706(a) of the Public Health Service Act (PHSA), issuers may not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider's license or certification under applicable state law.

Michigan Q&A

HHS, IRS, and DOL declined to provide more insight into this rule, stating that the rule is self implementing.  

Officials said Section 2706(a) will apply to all non-grandfathered individual and group health plans starting with plan or policy years beginning on or after Jan. 1, 2014.

Insurers should implement Section 2706(a) "using a good faith, reasonable interpretation of the law," officials said.​

CMS FAQ

Some groups that support providers and users of acupuncture, homeopathy, acupuncture, therapeutic massage, midwifery and other forms of care other than treatments provided by conventional medical doctors, stated they intend to do strategic state-by-state campaigns to support the correct implementation of Section 2706.

It appears various groups will have enforcement authority including state insurance departments and CCIIO for issuers and the DOL for employment based group health plan coverage.  

by Phil Larson

The Affordable Care Act (ACA) will add to the growing list of possible discrimination claims or requirements to treat some health plan participants the same (or similar).  Many of these rules are not published yet but plan design including eligibility, coverage levels, and administration may be impacted.  

A sampling of just some of these rules includes:

1.  ACA HIPAA Nondiscrimination.  Most people consider these rules with wellness programs and incentives but these rules broadly prohibit discrimination based on a medical condition.  New ACA rules will make it much easier for individuals to request alternatives for wellness programs and incentives.  

2.  ACA MHPAEA.  The Mental Health Parity and Addiction Equity Act will require similar benefits for mental health and substance abuse when compared to other medical coverage including pharmacy.  ACA will also ensure qualified health plans meet these rules.  

3.  ADA.  The Americans with Disabilities Act prevents discrimination based on a disability, which is broadly defined.

4.  ​​​ACA Civil Rights.  ​​ Section 1557 of the ACA (42 U.S.C. 18116) prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities​.  Government regulators asked how this may impact certain health activities.  

5.  ACA Whistleblower.  Section 1558 of the ACA also creates a new whistleblower right.  A new form of discrimination, this prevents employers from treating employees differently because of subsidy or participation in government investigations for ACA. 

6.  ACA 105h Tax Discrimination Rules.  A new requirement for insured plans that is expected in 2014, it remains to be seen how the new rules will impact self-insured plans under the old (and currently applicable) 105h tax rules. ​​

7.  ACA Provider Discrimination​.  PHSA 2706 has not had any guidance issued but some states are referring to this rule to prevent  plans from denying some providers payment.  Chiropractors also commonly refer to this rule.     

8.  ERI​SA 510 Retaliation.  This prevents discrimination for the purpose of interfering with the attainment of any right under the plan.    

9.  ACA Employer Fair Share Rules.  These rules often require individuals to be treated the same for measurement, stability and administrative periods unless it is based on an approved category. 

10.  ACA Pre-existing Condition Exclusions.  Plans are not allowed to treat participants differently based on prior medical conditions or history.   

11.  ACA Premium Rating.  Plans cannot rate differently for categories like male or female.   ​

12.  GINA.  Genetic Information Nondiscrimination Act will also apply to health plans as well as employer activities.  Among other things, this will prevent questions about employees family medical history.

If you need help navigating these rules, please contact Kinney and Larson.