AARP v. U.S. Equal Emp't Opportunity Comm'n

• Decision Date: 22 August 2017
• Docket Number: Civil Action No. 16–2113 (JDB)
• Citation: 267 F.Supp.3d 14
• Parties: AARP, Plaintiff, v. UNITED STATES EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Defendant.
• Court: U.S. District Court — District of Columbia

267 F.Supp.3d 14

AARP, Plaintiff,

v.UNITED STATES EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Defendant.

Civil Action No. 16–2113 (JDB)

United States District Court, District of Columbia.

Signed August 22, 2017

Daniel Benjamin Kohrman, Dara S. Smith, Washington, DC, for Plaintiff.

Steven A. Myers, Tamra Tyree Moore, United States Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION

JOHN D. BATES, United States District Judge

This case concerns AARP's Administrative Procedure Act (APA) challenge to two regulations promulgated by the U.S. Equal Employment Opportunity Commission (EEOC) related to incentives and employer-sponsored wellness programs. See Regulations Under the Americans with Disabilities Act ("the ADA rule"), 81 Fed. Reg. 31,126 (May 17, 2016) ; Regulations Under the Genetic Information Nondiscrimination Act ("the GINA rule"), 81 Fed. Reg. 31,143 (May 17, 2016). In December 2016, this Court denied AARP's motion for a preliminary injunction to stay applicability of the rules, and the new regulations became applicable on January 1, 2017. See generally AARP v. EEOC, 226 F.Supp.3d 7 (D.D.C. 2016) ( AARP I ). EEOC has now filed [31] a motion to dismiss/motion for summary judgment, and AARP has filed [35] a cross-motion for summary judgment. For the reasons that follow, EEOC's motion to dismiss/motion for summary judgment will be denied, and AARP's motion for summary judgment will be granted.¹

I. BACKGROUND

This case deals with the incentives—financial or otherwise—that may be offered to employees in connection with employer-sponsored wellness programs, which have become popular in many work places in the last several years as a means of promoting employee health and reducing healthcare costs. The central issue here results from the tension that exists between the laudable goals behind such wellness programs, and the equally important interests promoted by the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). EEOC is tasked with reconciling these competing concerns, and this case arises out of its most recent attempt to do so.

In its previous opinion, the Court discussed at length the complex regulatory and statutory framework that governs this case; thus, a shorter review will suffice here. See AARP I, 226 F.Supp.3d at 11–15. Wellness programs are regulated in part by the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA), as well as by HIPAA's implementing regulations. HIPAA prevents health plans and insurers from discriminating on the basis of "any health status related factor," but allows covered entities to offer "premium discounts or rebates" on a plan participant's copayments or deductibles in return for that individual's compliance with a wellness program. See 29 U.S.C. § 1182(b)(2)(B) ; 26 U.S.C. § 9802(b) ; 42 U.S.C. § 300gg–4(b). A "reward" or incentive may include a discount on insurance costs or a penalty that increases the plan participant's costs because of non-participation in the wellness program. See 26 C.F.R. § 54.9802–1(f)(1)(i). The ACA's amendments to HIPAA, and the accompanying implementing regulations, allow plans and insurers to offer incentives of up to 30% of the cost of coverage in exchange for an employee's participation in a health-contingent wellness program, a kind of wellness program in which the reward is based on an insured individual's satisfaction of a particular health-related factor. See Incentives for Nondiscriminatory Wellness Programs in Group Health Plans ("the 2013 HIPAA regulations" or "2013 HIPAA rule"), 78 Fed. Reg. 33,158, 33,180. Neither the ACA nor the 2013 HIPAA regulations impose a cap on incentives that may be offered in connection with participatory wellness programs, which are programs that do not condition receipt of the incentive on satisfaction of a health factor. Id. at 33,167.

However, because employer-sponsored wellness programs often involve the collection of sensitive medical information from employees, including information about disabilities or genetic information, these programs often implicate the ADA and GINA as well. As both the ADA and GINA are administered by EEOC, this brings wellness programs within EEOC's purview. The ADA prohibits employers from requiring medical examinations or inquiring whether an individual has a disability unless the inquiry is both job-related and "consistent with business necessity." 42 U.S.C. § 12112(d)(4)(A). But the ADA makes some allowances for wellness programs: it provides that an employer may conduct medical examinations and collect employee medical history as part of an "employee health program," as long as the employee's participation in the program is "voluntary". Id. § 12112(d)(4)(B). The term "voluntary" is not defined in the statute. Similarly, GINA prohibits employers from requesting, requiring, or purchasing "genetic information" from employees or their family members. Id. § 2000ff–1(b). The definition of genetic information includes an individual's genetic tests, the genetic tests of family members such as children and spouses, and the manifestation of a disease or disorder of a family member. See id. § 2000ff(4)(A). Like the ADA, GINA contains an exception that permits employers to collect this information as part of a wellness program, as long as the employee's provision of the information is voluntary. Id. §§ 2000ff–1(b)(2)(A)–(B). Again, the meaning of "voluntary" is not defined in the statute.

Thus, while HIPAA and its implementing regulations expressly permit the use of incentives in wellness programs, uncertainty existed as to whether the "voluntary" provisions of the ADA and GINA permit the use of incentives in those wellness programs that implicate ADA- or GINA-protected information. EEOC previously took the position that in order for a wellness program to be "voluntary," employers could not condition the receipt of incentives on the employee's disclosure of ADA- or GINA-protected information. See EEOC Enforcement Guidance on Disability–Related Inquiries and Medical Examinations, No. 915.002 (July 27, 2000), 2000 WL 33407181, at *16–17 ; Regulations Under the Genetic Information Nondiscrimination Act of 2008 ("the 2010 GINA rule"), 75 Fed. Reg. 68,912, 68,935 (Nov. 9, 2010), codified at 29 C.F.R. § 1635. However, in 2016 EEOC promulgated new rules reversing this position. Those are the rules at issue in this case. The new ADA rule provides that the use of a penalty or incentive of up to 30% of the cost of self-only coverage will not render "involuntary" a wellness program that seeks the disclosure of ADA-protected information. See ADA Rule, 81 Fed. Reg. at 31,133 –34. Likewise, the new GINA rule permits employers to offer incentives of up to 30% of the cost of self-only coverage for disclosure of information, pursuant to a wellness program, about a spouse's manifestation of disease or disorder, which, as noted above, falls within the definition of the employee's "genetic information" under GINA.² See GINA Rule, 81 Fed. Reg. at 31,144. Unlike the 2013 HIPAA regulations, which place caps on incentives only in health-contingent wellness programs, the incentive limits in the new GINA and ADA rules apply both to participatory and health-contingent wellness programs.

AARP filed this suit on behalf of its members in October 2016, challenging both rules under the APA, 5 U.S.C. §§ 702 – 06. AARP argues principally that the 30% incentives permitted by the new rules are inconsistent with the "voluntary" requirements of the ADA and GINA, and that employees who cannot afford to pay a 30% increase in premiums will be forced to disclose their protected information when they otherwise would choose not to do so. AARP sought a preliminary injunction, which the Court denied, finding that AARP had associational standing, but that it had not at that stage shown either irreparable harm or a likelihood of success on the merits. See AARP I, 226 F.Supp.3d at 15, 20–26. Because of the short timeline on which the motion for a preliminary injunction was briefed and decided, the administrative record was not then available for the Court's review. The administrative record has now been produced, EEOC has now moved to dismiss for lack of jurisdiction, and both parties have also moved for summary judgment.

II. DISCUSSION

EEOC asks the Court to revisit its ruling regarding AARP's standing, again challenging AARP's status as a membership organization, and arguing that Declarant A, the member-declarant on whom the Court relied in finding that AARP had standing at the preliminary injunction stage, lacks standing based on new factual information that was not previously available. See Gov't Mot. for Summ. J. [ECF No. 31] at 10–15. EEOC also argues that the new rules survive the deferential standard of review afforded agency decisions in APA cases, and therefore asks for summary judgment in its favor. See, e.g., id. at 15. AARP counters that the incentives allowed by the new rules are inconsistent with the meaning of "voluntary" as used in the statutes, and that EEOC failed to adequately explain its departure from its previous position on incentives. See Pl.'s Mot. for Summ. J. [ECF No. 35–1] at 1, 24, 39. The Court will address each issue in turn.

A. STANDING

EEOC has filed a motion to dismiss for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(1), arguing that AARP has not sufficiently established that it has associational standing to bring suit on behalf of its members in this case. A plaintiff "bears the burden of showing that he has standing for each type of relief sought." Summers v. Earth Island Inst., 555 U.S. 488, 493, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009). A lack of standing constitutes "a defect in [the Court's] subject matter jurisdiction." Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987). In evaluating a motion to dismiss under Rule 12(b)(1), a court must take as true all factual...