Cascades Tobacco Surcharge Lawsuit: Workers Allege Discrimination

Case Overview: A class action lawsuit alleges Cascades USA, Inc. unfairly penalized workers who use tobacco by charging them more for health insurance, violating federal benefits law by failing to follow wellness program rules.

Consumers Affected: U.S. employees who were enrolled in Cascades’ health plan since 2014 and had to pay the tobacco surcharge.

Court: U.S. District Court for the Northern District of New York

Cascades USA, Inc. unfairly penalizes workers who use tobacco and violates the law by charging them more for health insurance, a new lawsuit alleges.

The case centers on a $10 weekly surcharge added to employees’ health insurance premiums, which the lawsuit argues violates federal benefits law by discriminating against tobacco users and failing to follow strict wellness program rules.

Employee Says Surcharge Violated Federal Law

The complaint was filed by Marc T. Adamberger, an employee in New York who has been paying the surcharge to keep his health coverage. According to the lawsuit, Adamberger and others in the company’s health plan were required to pay about $520 extra per year simply because they used nicotine products.

The problem, the lawsuit claims, is that Cascades never provided employees with a “reasonable alternative standard,” such as a smoking cessation program, that would allow them to avoid the fee, as required by federal law. 

Employees were also not notified of any such option. As a result, Adamberger says the company forced tobacco users to shoulder an unlawful financial burden while retaining the extra money for itself.

Lawsuit Explains How Wellness Programs Are Supposed to Work

Under the Employee Retirement Income Security Act of 1974 (ERISA), employers can only impose tobacco-related surcharges as part of a compliant wellness program. That means they must give workers an alternative route to avoid the penalty and reimburse employees who complete it. 

Cascades, the lawsuit argues, ignored those requirements and instead created a system that punished workers for their health status.

Regulators designed these safeguards to ensure wellness programs promote genuine health improvements rather than functioning as disguised cost-shifting schemes. Without offering an alternative or providing notice, Cascades’ program, the lawsuit claims, is a penalty masquerading as a health initiative.

Cascades Joins Other Companies Facing Labor Disputes

Cascades is not alone in facing this type of challenge. Car parts manufacturer UGN, Inc. is being sued for allegedly charging employees who use tobacco an additional $96 per month, more than $1,100 a year, in violation of ERISA. 

Meanwhile, Hormel Foods is battling a separate lawsuit claiming it illegally withheld paid sick leave from hundreds of meatpacking employees, forcing them to use vacation time instead of receiving legally mandated benefits under Minnesota law.

Adamberger wants to represent all employees who were in Cascades’ health plan since 2014 and paid the tobacco surcharge. He’s asking the court to order Cascades to repay those charges, compensate workers, stop using the surcharge in its current form, and cover interest, legal costs, and attorneys’ fees.

The lawsuit argues Cascades should return the money it improperly charged and be barred from penalizing tobacco users in a way that breaks the rules.

Case Details

• Lawsuit: Adamberger v. Cascades USA Inc.
• Case Number: 1:25-cv-01116-MAD-TWD 
• Court: U.S. District Court for the Northern District of New York

Plaintiffs' Attorneys

• Marina Rescinit (Siri & Glimstad LLP)

Let us know in the comments if you or anyone you know has had to pay a tobacco surcharge to obtain health insurance coverage through their job.