By MATT CHANDLER
Buffalo Law Journal

The flyer hanging in the break room proclaims a great way for your employees to usher in spring: lose weight through a company sponsored, no-cost wellness initiative. It sounds perfect- healthier employees means more cash in the corporate coffers. A recent study showed a 30 percent reduction in comp claims among companies who implemented a wellness program, a 26 percent reduction in use of health care benefits and a 28 percent reduction in sick leave. Productivity equals profit, making a corporate wellness program a no-brainer right? Not so fast.

Wellness programs, part of the landscape in an estimated 50 percent of U.S. companies, may be fun and a great way to build office morale, but the question remains: are they legal? More specifically, are there elements, that could open your company up to a lawsuit?

The potential pitfalls of such wellness programs aren't limited to weight loss initiatives (although they are currently among the most popular programs out there). You can substitute weight loss for smoking cessation, lowering your cholesterol, or completing a 5K, and the issue remains the same; do these type of programs violate federal laws such as HIPAA?

According to the US Department of Labor, there is a distinction made between two types of wellness programs; those that offer rewards and incentives, and those that do not. The latter would be exempt from any claim of discrimination under current HIPAA laws.

The gray area comes when an employer begins to dangle gift cards, cash, days off with pay, even preferred parking spaces that are attached to performance in a wellness program. As soon as any reward is given, the HIPAA regulations kick into effect and those wellness programs are then required to meet five standards set forth by the Department of Labor (see box).

Ann Evanko is the president of Hurwitz & Fine PC, and the leader of their employment practice group. She specializes in employment-related legal issues and said that she doesn't see sponsoring a wellness program as inherently risky, providing the employer does their due diligence beforehand. "I have not personally dealt with any cases involving lawsuits related to wellness programs," she said. "But I do think anytime you deal with situations where people are being rewarded for participating, there is the potential to have an issue."

Evanko cautions employers that the HIPAA laws and other government regulations are complicated and can change, so before implementing an incentive-based wellness program, management should consider running the proposed plan past their attorney before proceeding.

"So much of this is complicated and not always as black and white as we might like it to be," she said. "There can be some gray areas when dealing with what is acceptable and what isn't, and employers need to protect themselves."

An example of the gray areas in the federal regulations governing corporate wellness programs can be found in requirement No. 2: "The program must be reasonably designed to promote health and prevent disease." The obvious question is, who decides what constitutes "reasonable?"

Tom Haney is the wellness administrator with Independent Health - it is his job to insure his wellness programs are "reasonably designed." He works closely with their clients to implement such programs. Haney said he has never seen a local case based on claims or threats from a wellness initiative.

"A lot of it has to do with the way you present the program," he said. "You (the employer) need to create a comfortable atmosphere with clear communication that doesn't require them to divulge personal medical information."

Haney said Independent Health has created a wellness program based on a points system, which offers participants multiple ways to qualify, thus satisfying the HIPAA requirements.

"Our program is very generous in how you can get the points because I don't want anyone to feel like they can't participate because they have a medical issue," Haney said. "We try to give them lots of ways to succeed, and that kind of approach may reduce the problems you mentioned."

Most companies we spoke with verified what Haney is seeing, no legal issues stemming from their wellness programs. Many credited it to the due diligence done ahead of time to make sure the programs are compliant, others credited a strong corporate culture where employees feel valued and respected as the best deterrent to litigation.

Julia Culkin is the vice president of human resources at Buffalo-based Synacor. She said the Internet portal provider, which employees 200 Western New Yorkers is currently transitioning into a new series of wellness offerings.

"We are going away from the standard corporate program like we had through our previous health care provider," Culkin said, citing poor participation for programs she said weren't interesting enough to hold the employees' attention.

"What really makes a wellness program effective, is when it is creative and fun," Culkin said, adding that it what drove Synacor to develop their own ideas, which they are preparing to kick off including a walking program and a "Biggest Loser" weight-loss challenge.

Does she worry that a program aimed at losing weight and requiring employees to reveal their current weight might open the door for a potential discrimination suit?

"I think there is some liability concerns with that (The Biggest Loser contest) in terms of confidentiality of information," Culkin said. "It is always difficult when you are talking about having people report in and record their weight, there is a little bit of uncomfortableness there."

Despite potential concerns, Culkin said they have no plans to clear their programs through their attorney, instead relying on their judgement when choosing programs.

"The best way to avoid problems, and the ultimate goal is to offer lots of different types of programs," she said.

Culkin said they have never had a legal issue arise from any of their wellness programs and in fact, most have been very well received by the staff at Syancor.

"The biggest thing we see as a benefit, is we want our employees to know that the company cares about their health and wellness."

 

 

 

The following guidelines govern any incentive-driven wellness programs:

 

•The program must be reasonably designed to promote health and prevent disease.

•It must give individuals eligible to participate the opportunity to qualify for the reward at least once per year.

•The reward must be available to all similarly situated individuals. It must allow a reasonable alternative standard for obtaining the reward to any individual for whom it is unreasonably difficult to satisfy the initial standard.

•The total reward for all of the plan's wellness programs that require satisfaction of a standard related to a health care factor is limited. It must not exceed 20 percent of the cost of employee-only coverage.

•The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard.

 

For a full explanation visit dol.gov