New Addition to S&D and Recent Health and Welfare Settlement Further Demonstrates Need for Compliance

We wanted to alert you to a recent addition we have made at Smith & Downey in order to continue to provide best-in-class legal support to the wonderful clients we serve. As always, we are grateful to continue to be a valued legal resource to so many of you who have embraced our model of providing “Wall Street” level services at “Main Street” rates. We have made the following addition:

Lisa Shallue. Lisa has joined the firm as a partner. Lisa has many years of experience in large law firms, including one of the largest law firms in Baltimore, and most recently, one of the largest law firms in the country. Among other qualities, Lisa has tremendous expertise in all areas of health and welfare law. We view Lisa’s skill set to be critical as we believe the changing health and welfare landscape demands compliance and risk management more so now than ever (see commentary below and see our recent alerts here on things that employers should be doing to ensure compliance). Lisa will be located in Baltimore, Maryland.

We look forward to introducing Lisa to our clients and friends in the coming months! You can see her bio here.

*****

Earlier this month, Yale University agreed to settle a class action lawsuit against its wellness program for approximately $1.3 million. This settlement comes at an extremely inopportune time in light of the continuing surge of ERISA lawsuits, the recent Supreme Court opinion which makes it harder to dismiss plaintiffs’ ERISA lawsuits at an early stage, and the Consolidated Appropriations Act’s “retirement-like” compliance mandates on health and welfare plan sponsors.

Yale’s wellness program charged participants up to $25 per week ($1,300 a year) if they failed to submit to certain medical inquiries and exams which purported to improve overall health and wellness. EEOC guidance at the time allowed this type of fee. The plaintiffs claimed that the fee was “unusually punitive” to those who did not want to participate, and thus, rendered the program “involuntary”. The plaintiffs also argued that Yale violated HIPAA by partnering and sharing protected health information with a “health coach”.

As part of the settlement, Yale agreed to discontinue the fees for a four-year period, or earlier if there is a change in the law that permits the collection of fees. Yale also agreed to change its practices with respect to transmitting health information to vendors, and to ensure purging of any data that was circulated to third parties improperly.

In light of this settlement, employers should:

-Review their wellness programs to ensure compliance with applicable laws (such as HIPAA, GINA, ADA, and the like);

-Review any offered incentives/penalties to determine if they are appropriate in type and amount;

-Ensure HIPAA compliance in applicable service agreements;

-Ensure proper governance procedures to make decisions and appropriately monitor third parties with respect to the above items; and

-Keep an eye out for regulatory guidance (note: guidance was last proposed by the EEOC in early 2021, but it was quickly rescinded by the Biden Administration).

Please contact us if you would like to discuss any of these items.