ERIC Urges Appeals Court to Uphold Dismissal favoring Progressive in Surcharge Case

The ERISA Industry Committee filed an amicus brief urging the U.S. 6th Circuit Court of Appeals to support the district court’s dismissal of claims that Progressive’s employee health plan violated ERISA.

In Greene v. Progressive Corp., two plan participants sued Progressive in 2024, alleging that the company improperly charged higher health plan premiums to employees who used tobacco or declined to receive a COVID-19 vaccine.

According to the brief, Progressive offered employees premium discounts for remaining tobacco-free and, in 2022, provided similar incentives to employees who received a COVID-19 vaccine through its wellness program. In the lawsuit, the plaintiffs claimed the Employee Retirement Income Security Act required a full retroactive refund of the surcharge and better education on how to avoid it.

In March, a federal judge in Ohio disagreed with the participants and dismissed the case, ruling that dropping a surcharge in the case an employee quits smoking or gets vaccinated satisfies ERISA and that Progressive’s notices already matched the Department of Labor’s own model language. The March ruling also mentioned that such wellness programs are decided by plan sponsors, not fiduciaries.

In its amicus brief, ERIC argued that the plaintiffs’ interpretation of ERISA conflicts with Congress’ intent to encourage employer wellness programs and could expose plan sponsors to significant liability.

The organization asserted that a 2013 federal regulation requiring broader alternatives to wellness programs conflicts with the statute’s plain language and should not control the outcome.

ERIC also warned that allowing the claims to proceed could expand employer liability, undermine wellness program incentives and increase costs across employer-sponsored health plans.

“Congress wrote ERISA to encourage employers to offer wellness programs, not to punish them for it,” said Doug Hinson, the ERIC Legal Center’s executive director, in a statement accompanying the filing. “Tobacco cessation incentives help employees live healthier lives and help keep coverage affordable for everyone in the plan. Nothing in the statute requires an employer to erase a surcharge retroactively once someone quits smoking or attends a class to help them do so, and courts should not read that requirement into the law.”

The case is among the first challenges to employer wellness program surcharges to reach a federal appeals court on the merits and the first to reach the 6th Circuit. In a filing last month before the 2nd Circuit, ERIC urged the dismissal of a challenge to PepsiCo’s tobacco-surcharge wellness program.

Similarly, in an appeal before the 8th Circuit, ERIC and the American Benefits Council sought review in June of a class certification order involving Compass Group USA, arguing that similar lawsuits could reshape the administration of employer-sponsored wellness programs.