Judge narrows tobacco-surcharge suit facing Travelers

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Travelers Insurance faces a putative class action regarding the tobacco surcharge in its employer-sponsored health plan. However, a recent ruling in U.S. District Court in Minnesota reduced the number of claims the insurer faces.

Carlie Chirinian is a former employee of Travelers who was enrolled in its employer-sponsored health plan. Under the plan, participants must pay a surcharge for tobacco use. The surcharge can be avoided either by not having used tobacco in the past six months or by completing a tobacco cessation program.

Chirinian was surcharged.

She argued that the wellness program violated federal regulations by having “arbitrary deadlines” to enroll in the tobacco cessation program, that there was no “legally compliant reasonable alternative standard” for compliance, and that there was no statement that an individual’s personal physician’s recommendations would be accommodated.

Under the Public Health Service Act, wellness programs must “be reasonably designed to promote health or prevent disease,” make the “full reward” (full benefits or incentives) available to all similarly situated people, make that full reward available at least once a year, and disclose the terms of a reasonable alternative standard to qualify for the reward.

Chirinian alleged a violation of the Employee Retirement Income Security Act’s nondiscrimination rule. She initiated a putative class action on behalf of similarly situated Travelers employees. Chirinian sought “declaratory relief, injunctive relief, and various other forms of equitable relief, including disgorgement, restitution, and surcharge.”

Travelers moved to dismiss the complaint.

While U.S. District Judge Laura Provinzino found that the Chirinian largely had standing to press the claims, and that the claims were not completely time-barred, she reduced the number of claims to which Travelers must respond.

Reviewing the timing restrictions of enrollment in the tobacco cessation program—that participants enroll by March 31 and complete it by December 15 of the same year— Provinzino found that plan recipients had reasonable opportunity to enroll, and nothing else was required.

Provinzino’s opinion notes, “According to Chirinian, a plan does not offer a ‘reasonable alternative standard’ for obtaining the ‘full reward’ unless plan participants are allowed to enroll in and complete a tobacco cessation program at any point in the year.” However, the court concluded that acceding to this solution would defeat the “frequency of opportunity” requirement under the Code of Federal Regulations, specifically 29 C.F.R. § 2590.702(f)(4)(i).

“Chirinian evidently disagrees with the propriety of this bright-line standard, but it is this Court’s job to say what the law is, not what the law should be,” Provinzino wrote.

The judge also noted that “there is no indication in the complaint that Chirinian enrolled in, attempted to enroll in, or even knew about Travelers’ tobacco cessation program.”

The court also granted the motion to dismiss the claim that Travelers did not disclose a legally compliant reasonable alternative. As the court found that the complaint did not adequately allege that the plan violated the “full reward” requirement, it concluded that the derivative disclosure claim fails as well.

However, the court did permit one claim to survive. Chirinian alleged that Travelers’ plan material did not include a statement that the recommendations of a personal physician would be accommodated. The court found that it could not find any language informing plan participants of their ability to involve their personal doctors.

“Indeed, no mention of a Plan participant’s personal physician is made when discussing the tobacco cessation program,” wrote Provinzino.

“To impose a tobacco surcharge on plan participants without running afoul of ERISA‘s antidiscrimination rules, Travelers must satisfy “all of the [regulatory] requirements” of an outcome-based wellness program under 29 C.F.R. § 2590.702(f)(4),” Provinzino wrote. “All means all. This is the case no matter how small the requirement may be.”

Chirinian’s claims are dismissed, with the exception that the court will review the failure to notify plan participants about the recommendation of their own personal physicians.