Class Action Challenges ERISA Compliance of Tobacco Cessation Program

One exception outlined in ERISA regulations is that health plans can impose surcharges that would otherwise be discriminatory (i.e., requiring participants to pay a monthly surcharge if they use tobacco) if the surcharge can be reimbursed when the participant completes a wellness program (i.e., completing a smoking cessation program makes a participant eligible for reimbursement of the monthly tobacco surcharge). But these surcharges, specifically tobacco surcharges, are the subject of frequent litigation.

A putative class action filed in the Western District of Michigan alleges that Meijer, Inc. violated ERISA’s nondiscrimination rules related to a wellness program. As alleged, Meijer charged participants using tobacco products $20 per week, which was retroactively reimbursable if paid while the participant was completing the cessation program. However, the class action alleges that the program failed to meet ERISA’s regulatory requirements. The suit seeks plan-wide equitable relief, restitution of surcharges, disgorgement, and injunctive relief.

Alleged ERISA Violations

The class-action plaintiffs contend Meijer’s smoking cessation wellness program did not satisfy ERISA § 702 and implementing regulations because participants who completed the program mid-year received only prospective relief rather than the “same, full reward” of retroactive reimbursements for the entire plan year. According to the complaint, the timing-based limitations, enrollment “deadlines,” and prospective-only refunds violate 29 C.F.R. § 2590.702(f)(4)(iv) and related guidance.

The complaint further alleges that the plan’s “Benefit Guides,” relied on by participants during enrollment, failed to include clear instructions to access the cessation program. It further faults the use of conditional language (e.g., refunds “may” be provided) and discrepancies between the Summary Plan Document and guides, arguing that notice of the program was not provided “in all plan materials” as required by ERISA. The complaint seeks injunctive relief, declarations that the surcharges and program are unlawful, and refunds for surcharges imposed on participants.

Why This Matters

The complaint emphasizes that the wellness-program exception functions as an affirmative defense. Employers must prove full compliance with all elements, including reasonable alternative standards and full-year rewards regardless of the timing of completion of the program. Even minor design or disclosure gaps can constitute ERISA violations. 

Participant-facing materials carry equal weight compared to full plan documents. Disclosures must appear “in all plan materials describing the terms of the wellness program.” Burying complete language only in a Summary Plan Document while omitting it from enrollment guides could risk noncompliance, particularly where the guides drive participant decision-making.