The D.C. Circuit Court of Appeals ruled last week that the EEOC’s final wellness regulations which address the impact of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) on employer-sponsored wellness programs are arbitrary and capricious and sent them back to the agency for review. This ruling is significant because it is the first judicial challenge to the EEOC’s new wellness rules.
For the time being, the EEOC wellness rules as we know them remain in effect; however, the EEOC has been judicially ordered to review them because the D.C. Circuit Court of Appeals determined there is no reasonable basis to support how the EEOC determined the voluntariness of the 30% incentives in terms of the ADA and GINA.
In AARP v. EEOC, Civ. No. 16-2113 (D.D.C., Aug. 22, 2017), AARP challenged the EEOC’s wellness rules on the grounds that the 30% incentives allowed by the rules negates the voluntariness requirements of wellness participation under the ADA and GINA. AARP reasoned that employees who cannot afford to pay a 30% increase in premiums would be forced to disclose their protected health information when they would otherwise choose not to do so. The Court agreed and sent the rules back to the EEOC for further review.
During the case, the EEOC raised three arguments in support of the rule: (1) the new rules, including the 30% incentive, were necessary to harmonize its regulations with the HIPAA regulations governing wellness programs to induce more people to participate in wellness programs; (2) because the incentive is a reasonable interpretation of voluntary based on current insurance rates; and (3) the 30% incentive was supported by a comment letter from the American Heart Association.
The Commission failed to persuade the Court on any of its arguments. The Court took special notice of many letters the EEOC received from other associations and business groups that advocated against the 30% incentive in finding that the EEOC failed to demonstrate a reasonable basis to justify its conclusion that a 30% incentive level is a reasonable interpretation of voluntariness.
The Court stated, the "EEOC does not appear to have considered any factor that actually speaks to whether a given incentive level is voluntary or coercive. (Id). Because of this, the Court concludes that EEOC's interpretation of the ADA 's voluntariness requirement is neither reasonable nor supported by the administrative record.... EEOC's explanation for its chosen interpretation of 'voluntary' in the GINA rule fares no better than its explanation in the ADA rule -- principally because EEOC relies primarily on its decision in the ADA rule as the basis for its decision here.... It is far from clear that it would be possible to restore the status quo ante if the rules were vacated; rather, it may well end up punishing those firms -- and employees -- who acted in reliance on the rules.... Thus, for the present, the Court will remand the rules to EEOC for reconsideration.” (Id).
As far as the case is concerned, the court's order also directed the EEOC to file a status report by September 21, 2017, proposing a schedule for review of the rules, including any further administrative proceedings with pre-filing disclosure of the proposed schedule to AARP. We will keep you posted on relevant updates with the case as they occur.