Weekly Health Compliance Briefing

April 8, 2026

Note to Subscribers

 

While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Health Notes

 

Federal Appeals Court Upholds Plan Exclusion for Weight-Loss Drugs
In Whittemore v. Cigna Health & Life Ins. Co., 2026 WL 777418 (1st Cir. 2026), the U.S. Court of Appeals for the First Circuit upheld the dismissal of a lawsuit challenging a group health plan’s exclusion of weight-loss drugs. The court found the participant did not plausibly allege she had a disability based only on a diagnosis of obesity and a prescription for weight-loss medication.

The participant brought a proposed class action and claimed disability discrimination under Affordable Care Act (ACA) Section 1557. She argued that obesity is a disability and that the insurer discriminated by offering and administering plans that categorically exclude prescription weight-loss medications. Section 1557 incorporates federal disability discrimination standards, including Section 504 of the Rehabilitation Act. The district court dismissed the case, concluding the complaint did not plausibly show the participant was disabled (or regarded as disabled) based on her body mass index alone. 

The First Circuit agreed the case should be dismissed, explaining that the participant had to plead a disability as defined by the Americans with Disabilities Act (ADA) — i.e., an impairment that “substantially limits one or more major life activities.” Although the complaint stated that obesity limited activities such as walking, standing, and sleeping, the court found those statements were conclusory and did not include supporting facts. The court also rejected the argument that every person diagnosed with obesity and prescribed medication is automatically substantially limited in major bodily functions. 

Takeaway: A diagnosis by itself does not automatically qualify as a disability under ACA Section 1557. A claimant must allege facts showing a substantial limitation of a major life activity under the ADA. While this decision may help defend against broad, factually unsupported challenges to plan exclusions, employers should still review plan terms for compliance with the ACA’s nondiscrimination rules and the ADA.

Tobacco Surcharge Litigation Update — Employer Wins
On March 20, 2026, a federal court in Ohio dismissed a lawsuit challenging a tobacco premium surcharge for failure to state a claim. This is the third federal decision to hold that ERISA does not require employers to retroactively reimburse participants for surcharges paid before they complete a tobacco cessation course under a HIPAA wellness program

More than 50 similar lawsuits have been filed nationwide against employer plan sponsors challenging tobacco-user premium surcharges under group health plans, and new cases continue to be filed. 

The key issue is timing: whether an employer may remove the surcharge prospectively after a participant completes the program’s “reasonable alternative standard” (usually a tobacco cessation course), or whether the employer must also provide retroactive reimbursement for surcharges already paid earlier in the plan year. Plaintiffs rely on their reading of the term “full reward” in the HIPAA wellness program rules.

In Greene v. Progressive Corp., the court rejected the challenge to the employer’s approach of removing the surcharge only prospectively.

The court held:

i. No retroactive reimbursement is required. The court joined decisions from the Southern District of New York and the District of Rhode Island in holding that providing the “full reward” can mean removing the surcharge on a going-forward basis after the participant completes the cessation course (or becomes vaccinated), without paying back earlier surcharges

ii. The employer was not acting as an ERISA fiduciary. Designing the wellness program terms was a settlor function, and carrying out those non-discretionary terms did not involve fiduciary discretion. The court therefore dismissed the breach of fiduciary duty and prohibited transaction claims.

iii. The wellness notice complied with ERISA. The summary plan description used language substantially similar to the Department of Labor’s model notice and explained that the employer would work with the participant (and the participant’s doctor) to identify an alternative standard if needed.

Takeaway: This decision adds to a growing body of court opinions holding that (a) employers generally are not ERISA fiduciaries when they apply nondiscretionary plan terms and (b) employers do not violate ERISA by removing tobacco surcharges prospectively when a participant completes the wellness program requirements.