No retroactive reimbursement for completing smoking cessation plan
Fifteen hundred casino ERISA plaintiffs claim that the gambling conglomerate charged them at least an extra $25 per month in health insurance premiums, collecting $2,300,000 in unlawful tobacco surcharges to offset its own costs. Adding injury to insult, many of those subject to the tobacco surcharge were also required to work in smoke-filled casinos.
They had the option of participating in a tobacco cessation program in order to avoid the surcharge. When health plan participants completed the program, however, they did not receive retroactive reimbursement of the monthly surcharge already paid. They argue that the casino’s failure to reimburse them for the amount of the surcharge violated ERISA's “reasonable alternative” standard for outcome-based wellness programs.
When smokers may be charged more
Insurance companies can no longer base premium rates on an applicant's medical history or reject an applicant based on pre-existing conditions or overall health history. However, the ACA does permit employer-sponsored health plans to add a tobacco surcharge of up to 50 percent of the standard premium, unless the state adopts a lower limit. Missouri has not adopted a lower limit.
When employers impose a tobacco surcharge, they must offer a tobacco cessation program and can only apply the tobacco surcharge if the employee opts not to participate in the program. The complaining casino workers did not opt out.
A 2018 Department of Labor consent order and judgment required an employer who had assessed the tobacco surcharge to pay restitution to workers who were not offered a “reasonable alternative” to paying the extra premium. It does not appear to address the situation in which the surcharge was not reimbursed on completion of the program.
The question posed by the Lipari-Williams ERISA claimants is whether an outcome-based wellness program that does not provide retroactive reimbursement is a reasonable alternative to paying the surcharge. Retroactive reimbursement appears to be a new issue and is not yet settled.
The wage law and ERISA claims in the lawsuit must stand on their own, but there does seem to be evidence of compensation and benefit irregularities at the casino. The wage claims describe an illegal tip pool and allege that wages were deducted to pay casino fees associated with renewing or obtaining a state-issued gaming license.
That, however, is not the problem immediately in front of the ERISA claimants. Before the merits of their case can be heard, they will need to be certified as class, eligible to proceed in a class action lawsuit. That depends on the Western District’s approach to Rule 23 of the Federal Rules of Civil Procedure (FRCP).
FRCP Rule 23
READ MORE ERISA VIOLATION LEGAL NEWS
- the class is so numerous that joinder of all members is impracticable (numerosity);
- there are questions of law or fact common to the class (commonality);
- the claims or defenses of the representative parties are typical of the claims or defenses of the class (typicality); and
- the representative parties will fairly and adequately protect the interests of the class (adequacy of representation).
Class certification is very important because employment lawsuits are often impractical to pursue except as class actions. The ERISA claimants may not have the opportunity to have their case heard unless the class is certified.