Health plans charging so-called “tobacco surcharges” to increase health insurance premiums for smokers have increasingly come under fire through a series of class action lawsuits alleging violations of the Employment Retirement Income Security Act (ERISA). The lawsuits, which are currently pending in federal district courts in Connecticut, Pennsylvania, New Jersey, New York, and other states, claim that ERISA requires employers to offer smokers alternatives to paying tobacco surcharges, such as participation in tobacco cessation programs. Defendants in the suits include Target Corp., 7-Eleven Inc., Tractor Supply Co., Walmart Inc., and Campbell Soup Co.
Counsel for several plaintiffs alleges employers may not penalize employees for lifestyle choices by charging them higher fees for health insurance coverage. While the tobacco surcharges are not a direct ERISA violation, the plaintiffs claim that the surcharges violate the anti-discrimination provisions of ERISA. According to the plaintiff, employers routinely use ERISA provisions encouraging wellness programs as a justification for penalizing workers who use tobacco products.
The plaintiffs claim that the only potential remedy is to avoid the tobacco surcharges for the entire plan year, not just for part of the plan year when employees take certain steps. Some of the tobacco surcharges charged by employers amounted to $100 per month.
In 2021, Stueve Siegal Hanson and McClelland Law Firm were the first law firms to obtain class certification in ERISA suits based on tobacco surcharges in the U.S. District Court for the Western District of Missouri. They also obtained a class settlement in the Lipari-Williams v. Missouri Gaming Company LLC lawsuit. These law firms, as well as others, have continued to file ERISA tobacco surcharge lawsuits nationwide.
The U.S. Department of Labor has joined this movement by filing similar lawsuits against companies in Illinois and Ohio. In September 2023, an Illinois District Court judge ordered Flying Food Group LLC to reimburse employees almost $135,00 for tobacco surcharges assessed under the company’s health plan.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and H.R./employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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