Honeywell Fends Off EEOC Bid to Bar Wellness Penalty

By Beth Hawkins and Andrew Harris
Nov. 3, 2014 - Bloomberg

Honeywell International INc. defeated the Equal Employment Opportunity Commission's bid for a court order preventing it from penalizing workers who don't participate in acorporate wellness program.

After hearing arguments today, U.S. District Judge Ann Montgomery in Minneapolis denied the agency's request to block the company from assessing the health insurance-related surcharges.

Montgomery was asked to decide whether the wellness program, which Honeywell said was enacted in furtherance of President Barack Obama�fs Affordable Care Act, conflicts with other federal laws. Saying she wasn�ft ready to make even a preliminary determination, she allowed the company�fs practices to continue.

Honeywell, a maker of products including life support systems for human space travel and home thermostats, is one of many U.S. businesses that use such incentives to encourage employees to submit to medical examinations and receive advice on fitness, nutrition and other behaviors.

While 80 percent of workers support wellness programs that promote healthy behaviors, according a June survey by the Menlo Park, California-based Kaiser Family Foundation, 62 percent don�ft approve of requiring non-participants to pay more for their health insurance.

51 Percent

In September, Kaiser said 51 percent of businesses with more than 200 employees offer some sort of biometric screening and 8 percent of those come with an incentive to participate or a penalty for opting out. Bloomberg LP offers such a program.

In Honeywell�fs program workers and their spouses are asked to undergo a biometric screening that includes drawing blood to test cholesterol levels and a determination of body mass index by measurement of height, weight and circumference.

Holdouts are assessed a $500 surcharge on their 2015 medical plan costs, can lose as much as $1,500 in company contributions to health savings accounts and be docked as much as $2,000 more in tobacco-related surcharges, according to the EEOC�fs complaint.

Medical Examinations

�gHoneywell�fs medical examinations are unlawful,�h the agency said in court papers, contending they violate the federal Americans With Disabilities Act, which bars employers from compelling medical examinations that aren�ft job related.

The biometric screening may also breach a federal law prohibiting discrimination based on genetic information, according to the EEOC.

�gWe are not seeking to stop testing and not seeking to stop the assessment of the smoking surcharge,�h Laurie Vasicheck, an EEOC attorney, told the judge today. �gWhat they can�ft do is penalize employees who do not want to go through it.�h

She said the testing would be acceptable if it was voluntary, but the size of the fine meant that it wasn�ft.

�eFrivolous�f Complaint

Honeywell, a self-insurer, called the complaint �gfrivolous�h in a statement issued Oct. 28. The Morristown, New Jersey-based company said the EEOC is �gwoefully out of step with the health-care marketplace and with the core intent�h of Obama�fs health-care initiative.

�gThe incentives we provide are specifically sanctioned by two separate federal statutes,�h including the ACA, and in strict compliance with them, it said. �gWe don�ft believe it�fs fair to the employees who do work to lead healthier lifestyles to subsidize the health-care premiums for those who do not.�h

All employees and spouses who use tobacco are assessed $1,000 per head, according to an Oct. 30 Honeywell court filing. The company said its intent is to reward non-users by charging them less for coverage.

Those who decline the biometric screening are presumed to use tobacco, according to that filing. The surcharge can be avoided by enrolling in a cessation program -- without having to actually quit use -- or by submitting to biometric screening by a personal physician who reports non-use.

There�fs no requirement that employees partake in the biometric screening program and those who opt out face no risk of dismissal for doing so, Michael Burkhardt, a Honeywell attorney, told Montgomery today. About 30,000, or 55 percent, of the company�fs employees, including three whose complaints were cited by the EEOC, already have been screened, he said. The final day to do so is Nov. 14.

No Penalty

Last year, when there was no penalty, 77 percent of its workers participated, Burkhardt said.

The judge said she believed the company was better positioned to refund money improperly collected if she ultimately rules against it than to assess penalties after being blocked from doing so if she decides the policy is OK.

�gWhat is better public policy and who is likely to succeed are not measures this court is prepared to decide,�h Montgomery told the lawyers. �gThere are a number of fascinating issues for debate at a later time.�h

The EEOC filed its first-ever legal challenge to such a program under the ADA in August, targeting Orion Energy Systems Inc. (OESX), a Wisconsin-based high-efficiency lighting company. It sued another Wisconsin company, Duncan Yo-Yo-maker Flambeau Inc., on Sept. 30. The Honeywell complaint was filed Oct. 27.

The case is Equal Employment Opportunity Commission v. Honeywell International Inc. 14-cv-4517, U.S. District Court, District of Minnesota (Minneapolis).

To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg