Sedgwick Settles Lawsuit Over Health Plan's Tobacco Penalties

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Sedgwick Claims Management Services Inc. has agreed to settle a proposed class action lawsuit that challenged the company's decision to charge tobacco-using employees an additional $1,300 per year for their health care coverage. The parties are currently drafting the settlement paperwork, which they expect to submit to the court by mid-April, though the specific terms of the agreement have not yet been disclosed.

Why it matters

This settlement highlights the ongoing legal and regulatory scrutiny over employer wellness programs that impose financial penalties on workers who use tobacco products. Such programs have faced criticism for potentially discriminating against employees and violating privacy rights.

The details

The lawsuit accused Sedgwick of failing to retroactively reimburse the tobacco penalties paid by certain employees who subsequently completed a quit-smoking program. The lawsuit also alleged that Sedgwick failed to properly inform workers that recommendations from their personal physicians could exempt them from the tobacco surcharge.

• The parties expect to submit the settlement paperwork to the court by mid-April 2026.

What’s next

The court will need to review and approve the settlement terms once the paperwork is submitted by the parties.