A federal judge has ruled that a food company tobacco surcharge lawsuit against Compass Group USA Inc. may proceed, rejecting the company’s attempt to dismiss the case. The proposed class action, led by former employees Richard Mehlberg and Angela Deibel, alleges that Compass unlawfully charged tobacco users additional fees to access health insurance, in violation of federal law.
In a decision issued Tuesday, U.S. District Judge Stephen R. Bough denied Compass Group’s motion to dismiss the complaint, which was filed under the Employee Retirement Income Security Act (ERISA). The plaintiffs claim that the company’s tobacco surcharge violated ERISA’s nondiscrimination provision, which mandates that wellness programs must offer a reasonable alternative standard — including full reimbursement — to avoid discriminatory premiums based on health factors.
Compass argued that federal law does not require retroactive reimbursement for employees who later completed a cessation program. However, Judge Bough cited a prior 2021 ruling in Lipari-Williams v. Missouri Gaming Co. LLC, affirming that a wellness program must provide the “full reward” — including reimbursement — to be considered compliant under ERISA.
“Under this precedent, plaintiffs have adequately alleged that defendant’s tobacco surcharge violated ERISA because it did not offer a retroactive reimbursement,” Judge Bough stated.
Compass Group, headquartered in Charlotte, North Carolina, is one of the world’s largest food service providers, operating across college campuses, hospitals, stadiums, airports, and senior living communities.
According to the complaint, Mehlberg and Deibel were employed by Compass in 2022 and 2023 and were required to disclose their tobacco usage in order to enroll in the company’s healthcare plan. Because both acknowledged using tobacco, they were charged an additional $48 per biweekly paycheck — totaling nearly $1,250 annually.
The plaintiffs further claim that Compass’ health plan documentation failed to inform participants that full reimbursement of the surcharge could be obtained by completing a cessation program or that a physician’s recommendations for wellness alternatives would be honored, as required by law.
While Compass contended that the 2022 enrollment guide provided sufficient disclosure, Judge Bough ruled that the company did not meet legal standards regarding physician accommodation and full transparency.
“This decision allows these workers to take a meaningful step toward their day in court and a resolution on the merits,” said attorney Alexander T. Ricke of Stueve Siegel Hanson LLP, representing the plaintiffs.
In a statement, a spokesperson for Compass said, “While we are disappointed by the court’s decision, we recognize it is very early in the process. We will continue to vigorously defend this matter and remain confident in our ability to ultimately prevail.
