Kutak Rock partner Brian Bartels was recently quoted in a Law 360 article titled “Surge In Nicotine Fee Suits Shows Wellness Program Risks”. The article discusses a recent rise in lawsuits and highlights the risks employers face when using tobacco surcharges or similar wellness programs to offset healthcare costs.

Over a dozen suits filed in September and October claim companies like Walmart, Target, and 7-Eleven imposed nicotine surcharges that violate the Employee Retirement Income Security Act of 1974, as amended (ERISA), which generally prohibits health-related discrimination. Although certain surcharges are permissible under compliant wellness programs, plaintiffs allege (among other things) that the wellness programs were not compliant and that they were not provided proper notices, including notices of reasonable alternative standards.

A number of lawsuits have been filed challenging wellness programs.  For example, a lawsuit was recently filed against Sodexo, where employees challenged a $1,200 nicotine fee, and GardaWorld, which faces charges over both nicotine and vaccine penalties. Other major employers, such as PepsiCo and The Campbell’s Company, are also involved in similar lawsuits.

In the article, Brian said he’s keeping an eye on the case against GardaWorld. The lawsuit “shows that employees and plaintiff’s attorneys aren't just focused on tobacco surcharges, but on all other types of wellness programs, including programs that require vaccinations or other types of health outcomes.”  He recommends that employers take a close look at their wellness programs to ensure they are documented, operated, and administered in a compliant manner.

Read the full article here.(Subscription Required)

Brian  leads the firm’s national health and welfare benefits practice. He works with clients on employee benefit plan issues and advises on group health plans, wellness programs, cafeteria plans, health savings accounts, and other health and welfare plans. He regularly advises clients on the ACA, HIPAA, ERISA, COBRA, mental health parity, and the Consolidated Appropriations Act, 2021. He drafts and negotiates service agreements, pharmacy benefit management agreements, and business associate agreements for employee benefit plans, as well as HIPAA policies and procedures. Brian also advises plan fiduciaries, prepares plan-related documents and employee communications, and counsels clients on benefit plan design and administration issues.