Employer Wellness Program Legal Issues : Another Employee Wellness Program Lawsuit Emerges

As predicted by our law firm, more employees are starting to oppose workplace wellness programs as a result of the AARP v. EEOC lawsuit from 2016. The latest lawsuit involves employees of the City of Chicago in Williams, et. al v. City of Chicago, 20-cv-420 (N.D. Ill. 2020). City of Chicago employees, who are unionized, sued the City as their employer, as well as their union, for forcing them to participate in a workplace wellness program that includes health information collection through biometric screens and health history questionnaires. The complaint filed in federal court in 2020 is mammoth. Not only does it allege violations of the Americans with Disabilities Act (ADA) and the Genetic Information Discrimination Act (GINA), but also federal Racketeering and Conspiracy claims, breach of fiduciary duty claims against union leaders, and a request for accounting claim. The request for accounting claim asks the court to require the defendants to account for how the City of Chicago has used the penalty funds it has collected from employees who have not participated in the wellness program.

The City’s Wellness Program

The complaint alleges that the City of Chicago automatically enrolled 35,000 to 45,000 people in the Chicago Lives Healthy Wellness Program since 2012. The employees state that they were required to submit to a biometric medical screening and examination or face a $25.00 per month deduction from their bi-weekly paycheck. The complaint alleges that the penalty also applied if an employee’s spouse or partner did not participate in the wellness program, increasing the total penalty to $50.00 per biweekly paycheck, or $1200 per year. Some plaintiff employees complained that the threatened fines caused them mental anguish about losing their jobs if they refused to participate in the wellness program. Other plaintiff employees stated that the program is too intrusive and infringes on their right to privacy.

The employees allege that about 85% of the employees and spouses enrolled in the wellness program due to the threat of monetary penalties . As a result, those employees have had their personal health information shared with numerous companies without their knowledge or consent. Of the remaining employees and spouses who did not participate, the complaint alleges that the City has collected $1.9 million in non-participation charges.

ADA and GINA Claims

The ADA and GINA claims alleged in the complaint hinge on the “voluntary” requirement that each of those laws contain. Both ADA and GINA allow for the collection of employee (or family member) health information if the subject individual voluntarily provides such information. See https://wellnesslaw.com/meeting-employees-where-they-are-more-success-and-less-legal-risk/. The plaintiff employees take the view that the $50/month penalty amounts to an involuntary medical exam and inquiry and is therefore illegal under the ADA and GINA.

Racketeering, Conspiracy and Accounting Claims 

One of the most interesting and novel claims brought by the plaintiff employees are allegations that the City of Chicago, the wellness vendors and local unions created an “enterprise” that conspired to sell and market personal health information for a profit. “This is accomplished by coercing employees of the City of Chicago to join the [wellness program] by threatening a minimum of $50.00 per month payroll deduction from the City employee, and doubling that amount, if they are legally married and the employee or his/her spouse refuse to surrender their federally protected health, personal and private information.” Compliant, para. 97.

In other words, the employees who are suing the City of Chicago, the wellness vendors and their union leaders have lost trust in those entities and believe that all of them are working together to make a profit off the employee health information. This suspicion held by the employees explains their accounting claim, in which they ask the court to force the City to account for how it has used the $1.9 million it has collected in non-participation fees.

Breach of Fiduciary Duty Claim

Another interesting claim brought by the City employees is a breach of fiduciary responsibility of the union leaders. Specifically, the employee plaintiffs allege that the union leaders agreed to, sponsored, cooperated, participated and promoted the City of Chicago’s discriminatory practices by implementation of the City’s wellness program. Complaint, para. 135. The employees sought remedial action through the union, but the union refused to take action. The complaint further alleges that the union leaders breach their fiduciary duty to the union members by allowing the illegal wellness program to continue.

City of Chicago’s Response

In response to the employees’ complaint, the City of Chicago has filed a motion to dismiss the complaint on all counts. See Williams v. City of Chicago, 20-cv-420, dkt. #109 (N.D. Ill. 2020) (filed Aug. 17, 2021). The City argues that many of the plaintiffs’ claims should be dismissed for being filed too late or without the correct legal procedure. Without debating the merit of those defenses, it is important to highlight the other arguments the City makes in defense of its wellness program.

First, the City argues that because the Affordable Care Act (ACA) allows workplace wellness incentives (up to 30% of the total cost of coverage for health contingent programs and no incentive limit for participatory programs), then incentives should also be legal under the ADA and GINA. Motion to Dismiss, dkt. #109, at 13. Furthermore, the City argues that financial incentives do not undermine voluntary choice. In support, the City cites the EEOC v. Orion Energy case, in which the court concluded that “even a strong incentive is still no more than an incentive; it is not compulsion.” Id. at 15. The Orion court also notes that even if a choice is difficult, it is a choice nonetheless. Id.

The City also points to the 2016 EEOC wellness incentive rules and argues that the AARP case did “not dispute that some level of incentives may be permissible under the statues; rather, [the AARP] argued that the incentive level that EEOC chose is an unreasonable interpretation of the term ‘voluntary’.” Id. at 17.

The City refutes the plaintiffs’ illegal sharing of health information claims by arguing that it is legal to disclose insurance claims data and personal health information to wellness program vendors that have entered into business associate agreements with the City. Id. at 22 (citing GINA, ADA, and the Health Insurance Portability and Accountability Act (HIPAA)).

As for the plaintiffs’ claims of racketeering and conspiracy, the City argues that plaintiffs’ allegations are not specific enough to move forward. Moreover, the City contends that the City did not illegally obtain healthcare contributions from nonparticipants in the wellness program because the nonparticipants still received value from the contributions; they received health insurance benefits. Id. at 36. This last argument ties into a claim added later by the plaintiffs that the City’s $50/month penalty amounted to a Constitutional taking of property. Response to Motion to Dismiss, dkt. #185, at 13.

Status of City of Chicago Case

The City filed its reply brief to its Motion to Dismiss on May 9, 2022. Now, the parties must wait for the Northern District of Illinois court to decide the motion.

Lessons from the City of Chicago Case

Regardless of what happens to the lawsuit, those who are involved with workplace wellness programs should take note that some employees are willing to file lawsuits against employers who collect health information through workplace wellness programs. The one overarching theme in all the lawsuits that have come before is that employees felt like employers were violating their privacy when collecting health information and tying incentives to that information collection. Also, lawyers representing employees are getting creative with legal claims. Legal claims are not just about ADA, GINA and HIPAA/ACA violations, but also may involve claims of conspiracy, racketeering, fraud, accounting for revenue generated, fiduciary duty and if a government employer is involved, constitutional violations such as due process.

Call to Action

Now more than ever, employer wellness programs should be vigilant in auditing their wellness program for compliance with various laws, and making sure the employee population is on board with the proposed program. Our firm has developed a workplace wellness program auditing tool that should be an essential component of any workplace wellness programming process. Our firm is also here to give legal guidance as corporate wellness vendors, employers, insurance brokers, EAP programs and others decide how best to improve employee health while maintaining legal compliance and ethical integrity when implementing such programs. Contact us today for your free 15 minute consultation.