Court Denies Injunction of EEOC Wellness Program Rules

A federal court has denied AARP’s move for a preliminary injunction of Equal Employment Opportunity Commission (EEOC) wellness programs to enjoin the applicability of these regulations pending the court’s resolution of the merits.

The AARP filed a lawsuit alleging that the EEOC’s final wellness program rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) are arbitrary, capricious, an abuse of discretion, and not in accordance with law. The AARP asked that the rules be invalidated.

The AARP started its complaint by saying that the EEOC rightly argued in 2014 in a lawsuit against Honeywell International that because an employer imposed heavy penalties on employees through a coercive wellness program, employees stood to “lose the fundamental privilege under the ADA and GINA to keep private information private.” Yet, the complaint says, in 2016, the EEOC issued regulations under the ADA and GINA that allow employers to impose heavy financial penalties on employees who do not participate in employee wellness programs. On average, these penalties would double or even triple those employees’ individual health insurance costs, the AARP claims.

The EEOC argues that AARP has failed to establish that it has associational standing to bring this challenge on behalf of its members. It also argues that AARP has failed to satisfy the requirements for a preliminary injunction.

NEXT: AARP has standing, but doesn’t show irreparable harm

U.S. District judge John D. Bates of the U.S. District Court for the District of Columbia first concluded that AARP has sufficiently demonstrated its status as a membership organization. Bates notes that associational standing cases are unspecific about what it means to “play a role in” the  leadership  of  an  organization,  the  financing  of  an  organization,  and  in “guiding”  the  organization’s activities. However, he found that AARP’s members play a role in all of these activities, and although they could play a stronger role, the government points to no cases, and the court can find none, that suggest that what AARP’s members do is insufficient to qualify AARP as a “membership” organization for associational standing purposes.

Regarding the second argument, Bates noted that a plaintiff seeking a preliminary injunction must establish: (1) that he or she is likely to suffer irreparable harm in the absence of injunctive relief; (2) a likelihood of success on the merits; (3) that the balance of equities tips in his or her favor; and (4) that an injunction is in the public interest.

AARP claims that its members will suffer irreparable harm because many of them will be unable to afford the premium increase permitted under both the ADA and GINA rules, and so will be forced to disclose confidential medical information they would not otherwise choose to disclose. But, Bates noted that the goal of each rule is to prevent employers from being able to use information disclosed as part of wellness programs to discriminate against employees, which, of course, would violate the ADA and/or GINA. Thus, the regulations, as well as HIPAA, are designed to guard against the discrimination that plaintiff fears.

Bates also said none of the three member declarations that AARP has submitted in support of its claim indicates that irreparable harm from this disclosure is in fact likely to occur, as a result of either the ADA rule or the GINA rule. “That failing is indicative of the ultimate weakness of AARP’s irreparable harm argument,” he wrote in his opinion. In addition, Bates found AARP’s unexplained delay in bringing the suit weighs against a finding of irreparable harm. Citing other cases, he wrote in his opinion, “An unexcused delay in seeking extraordinary injunctive relief may be grounds for denial because such delay implies a lack of urgency and irreparable harm.” 

NEXT: AARP unlikely to succeed on merits of case

Bates also said, “Lacking the full administrative record, and given the deference the Court owes EEOC, the Court cannot conclude at this time that AARP is likely to succeed on the merits.”

AARP only objects to the specific incentives EEOC has adopted: 30% of the cost of self-only coverage under both the ADA and GINA rules, or 60% of the cost of self-only coverage if the incentives/penalties are stacked.  AARP’s position is that by permitting this level of incentives, EEOC is allowing coercion. Based on the record before it, Bates said he cannot conclude that AARP is likely to succeed in this argument. “The determination as to what level of incentives is permissible is exactly the kind of agency determination to which the Court owes some deference,” he wrote in his opinion. 

Bates says there is nothing in either the ADA or GINA to indicate that the particular incentive level EEOC selected is not permitted by the statute. “The new regulations may permit employers to offer a strong incentive to their employees to disclose health information, but as other courts, including the Supreme Court, have recognized, ‘[a] hard choice is not the same as no choice,’” he wrote.  

Bates also found that the public interest weighs against granting injunctive relief. Enjoining the rules at this late date will likely cause considerable disruption for employers and insurers who designed their 2017 health plans around the fact that these rules would be implemented. Enjoining the rules now will cause uncertainty for employers as to the lawfulness of their wellness programs—and uncertainty for employees as to the terms and cost of their health insurance.  

“Such a disruption across the entire national employment arena is not warranted based on the showing AARP has made here to date. And it would be particularly inappropriate to cause such widespread disruption given AARP’s unexplained delay in bringing this challenge,” Bates concluded.