Car Parts Manufacturer UGN Illegally Charges Tobacco Users Extra Fees for Health Coverage, Class Action Lawsuit Claims

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A proposed class action lawsuit claims car parts manufacturer UGN, Inc. has unlawfully charged tobacco users an additional monthly fee under its health plan.

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The 18-page amended complaint explains that under UGN’s health plan, employees who are tobacco users are required to pay an additional $96 monthly surcharge—$1,152 per year—in order to maintain insurance coverage. The lawsuit contends that this extra fee violates the federal Employee Retirement Income Security Act (ERISA), whose anti-discrimination provisions preclude any insurer or medical plan from assessing an additional charge based on a “health-status related factor,” which includes tobacco use, unless the surcharge is part of a bona fide “wellness program.”

To qualify as a legitimate “wellness program” under the ERISA, UGN must offer a reasonable alternative by which a plan participant can avoid the additional fee for the full year, such as by completing a smoking cessation program, the suit shares. The company must also notify participants that such an alternative method exists for tobacco users, the case says.

Although UGN employees can apparently evade the $96 surcharge by completing a smoking cessation program, the company’s health plan information documents make no mention of this alternative, the complaint alleges. In fact, the various benefits guides provided to participants are “silent” on the topic of smoking cessation programs or the possible reimbursement of the tobacco surcharge, the filing asserts.

As such, the class action lawsuit argues that UGN has failed to properly disclose how health plan participants can dodge the additional monthly fee, in violation of the ERISA’s strict notification requirements.

In addition, the suit claims that “[t]here is no evidence UGN employees who are smokers [can] avoid the tobacco surcharge at all.” According to the case, participants who completed the smoking cessation program within the last few years did not duck any part of the fee, through retroactive reimbursement or otherwise.

The complaint contends, therefore, that UGN has unlawfully collected the additional surcharge from tobacco users covered by its health plan.

The UGN lawsuit looks to represent anyone in the United States who paid the company’s tobacco surcharge in connection with any UGN plan at any time in the past six years.

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