The Department of Labor has brought a lawsuit against Macy’s Inc. and subsidiaries of Anthem and Cigna over what it says is mismanagement of the tobacco cessation program in Macy’s employee wellness plan.
Pension & Benefits Daily reports that in the suit, Acosta v. Macy’s Inc., S.D. Ohio, No. 1:17-cv-00541, the DOL alleges that Macy’s tobacco cessation program hasn’t met the regulatory requirements to be a nondiscriminatory wellness program under the Employee Retirement Income Security Act since 2011.
The suit says that the program failed to provide a reasonable alternative standard to avoid a surcharge that ranged from $35–$45 for individuals who couldn’t meet the program’s standards. Also, since 2011, participants who joined the tobacco cessation program were still obliged to fork over a surcharge ranging from $35–$45 per month, with the money deposited into Macy’s welfare benefits plan trust and used to pay medical claims and plan expenses.
But at some point, and following instructions from Macy’s, Cigna and Anthem began to use a less-favorable reimbursement rate to process out-of-network claims, which caused participants to overpay certain claims, the suit says. Macy’s also did not update its plan documents to notify plan participants of the changes.
The report points out that American Lung Association statistics indicate that employers can save nearly $6,000 a year for every employee who quits smoking. And a 2015 paper by Johns Hopkins Bloomberg School of Public Health has found that comprehensive tobacco cessation programs can cost an average of $1.20 to $4.80 per person per year.
While the Equal Employment Opportunity Commission has previously brought lawsuits challenging wellness programs adopted by Honeywell International Inc., Flambeau Inc., and Orion Energy, in 2014, the report says the Macy’s suit could be one of the first by the DOJ against a large employer’s wellness plan.
The EEOC’s results were mixed, with a federal judge in Minneapolis denying the EEOC’s request to block Honeywell from penalizing workers who didn’t participate in a corporate wellness program and a federal appeals court affirming a district court decision that dismissed the lawsuit against Flambeau. Orion agreed to pay $100,000 to settle the lawsuit it faced.
Employers providing health insurance plans to employees are required by the Affordable Care Act to cover tobacco cessation plans as a preventive service.