Bass Pro Shops tobacco surcharge settlement

Remember the Bass Pro Shops ERISA Tobacco Case?

A settlement has been proposed to the courts.

Here’s what we know:

This class action revolves around allegations that Bass Pro Group violated the Employee Retirement Income Security Act (ERISA) by imposing an unlawful tobacco surcharge on employees’ health insurance premiums. The plaintiff argued that the surcharge failed to meet ERISA’s safe harbor requirements for wellness programs, particularly by not offering a reasonable alternative standard to avoid the surcharge.

Settlement Highlights:

• $4.95 Million Settlement Fund: Approximately 5,500 employees are eligible for compensation. After fees and costs, the average payout is estimated at $580 per person.

• No Claims Process Required: Checks will be automatically mailed to eligible employees unless they opt out.

• Class-Wide Impact: The settlement covers employees affected by the tobacco surcharge between 2018 and 2024.

• Mediation Success: The resolution was reached after a full day of mediation with a respected neutral mediator, underscoring the effort to avoid prolonged litigation.

The case increased scrutiny on key compliance issues for wellness programs under ERISA and highlights the increasing litigation risks tied to non-compliance with health plan requirements. For employers, it serves as a reminder of the importance of aligning wellness incentives with federal standards.

The settlement is awaiting court approval, with a final fairness hearing expected in the coming months.

Importantly, this was one of several tobacco cessation lawsuits filed in a wave of similar suits.

What are your thoughts on the rise of ERISA litigation over wellness programs? Will this settlement lead to settlements in the other cases? Will more employers focus on proactive compliance?

Only time will tell.