Ruling lands amid a growing wave of similar lawsuits against major US employers
A federal court just handed employers a win in the escalating fight over workplace wellness program surcharges – and HR teams should take note.
On March 20, 2026, Judge David A. Ruiz of the U.S. District Court for the Northern District of Ohio dismissed all five claims brought by current and former Progressive Corporation employees who challenged the company's tobacco and COVID-19 vaccine surcharges under its health benefits plan. The case tackled questions that sit at the center of how HR departments design and communicate wellness incentives.
The dispute centered on Progressive's wellness program, which reduced health insurance premiums for employees who were tobacco-free or, during 2022, vaccinated against COVID-19. Tobacco-free workers paid $15 less per pay period, while vaccinated employees paid $25 less per pay period that year. Plaintiffs Andrea D. Greene and James M. Vaughan argued these premium differences were not wellness incentives but discriminatory surcharges that violated the Employee Retirement Income Security Act.
Their case rested on two main arguments. First, they claimed the plan failed to deliver what ERISA calls the "full reward" because employees who quit smoking or got vaccinated midyear were not retroactively reimbursed for the higher premiums they had already paid. Progressive's plan required employees to stay tobacco-free for twelve months before qualifying for the discount going forward, with no refund of past surcharges. Second, the employees alleged that plan materials did not properly inform them about alternative ways to earn the reward.
The court rejected both arguments. On the notice issue, Progressive's Summary Plan Description included a wellness program notice telling employees that rewards were available to all, that those who could not meet a standard might qualify for an alternative, and that they could call the HR Service Center to work out a suitable program with the help of a personal physician. The court found this language effectively mirrored the sample disclosure published by the Department of Labor in its own regulations and met the legal standard.
The retroactive reimbursement question placed the court in the middle of a widening disagreement among federal judges. The employees pointed to a Department of Labor preamble example suggesting that surcharges should be refunded for earlier months once an employee satisfies a wellness standard. The court declined to treat that agency interpretation as binding, finding that the regulation simply repeated the statutory language without adding independent meaning. Reading the statute on its own terms, the court concluded that fully removing the surcharge going forward satisfies the "full reward" requirement – there is no obligation to refund what was charged before.
The fiduciary duty claim fell away on separate grounds. The court found that Progressive was acting as a plan designer, not a plan administrator exercising discretion, when it built the surcharge structure. Under established law, employers making decisions about how a plan is set up are not held to the fiduciary standard that applies to those managing plan assets or making benefit determinations.
The ruling matters for HR professionals because it arrives alongside a string of similar lawsuits against major employers including PepsiCo, Whole Foods, Bally's, and Performance Food Group. Courts remain split on the retroactive reimbursement question, meaning the legal landscape is still shifting. HR teams managing wellness programs should ensure their plan notices closely track the Department of Labor's sample language, document how alternative standards are communicated, and stay aware that this issue may eventually be resolved at the appellate level.
