Did You Pay a Compass Group Tobacco Surcharge?
Current and former employees who paid tobacco surcharges through the Compass Group Medical Plan may be affected by a federal court ruling under the Employee Retirement Income Security Act (ERISA).
Federal Court Rules for Plan Participants
On October 16, 2026, the U.S. District Court for the Western District of Missouri granted in part the plaintiffs’ motion for summary judgment and denied Compass Group USA, Inc.’s motion in Mehlberg et al. v. Compass Group USA, Inc., No. 2:24-cv-04179-SRB. The court ruled in plaintiffs’ favor on all six ERISA claims but did not determine a damages amount.
Compass Group charged medical plan participants who identified as tobacco users an additional $12 per week in 2016 and $24 per week beginning in 2017, according to the Order.
What Did the Court Find?
The court ruled that Compass Group violated ERISA by failing, from 2016 through 2023, to refund earlier tobacco surcharges when participants completed an alternative requirement, such as a tobacco cessation course. The court also found that plan materials lacked required information about ways to avoid the surcharge or physician accommodations, depending on the plan year.
The court also found that the payroll deductions were plan assets and that Compass Group breached its fiduciary duties by keeping the funds in its general assets instead of holding them in trust. Plaintiffs also prevailed on claims involving the medical plan’s terms.
What Does This Mean for Plan Participants?
ERISA does not ban all tobacco surcharges. Employers may impose them through wellness programs that meet federal requirements, including rules about alternatives to avoid the surcharge and required disclosures.
The parties agreed that Compass Group collected $47,960,937.87 in tobacco surcharges from January 1, 2016, through May 20, 2026. That figure is not a damages award; the court deferred deciding the amount of monetary relief.
What Employees Should Know About Tobacco and Nicotine Surcharges
If you paid a tobacco surcharge through an employer-sponsored health plan, contact Kehoe Law Firm to learn about your potential rights under ERISA.
Paying a surcharge does not, by itself, establish a legal violation. Whether a particular surcharge may warrant legal review depends on the plan documents and disclosures, whether ERISA’s wellness-program requirements were satisfied, including requirements concerning a reasonable alternative standard, and how the program was administered.
For a free, no-obligation legal evaluation, contact:
Michael Yarnoff, Esq.
(215) 792-6676, Ext. 804
[email protected]
[email protected]
About Kehoe Law Firm, P.C.
Kehoe Law Firm, P.C. is a nationally-recognized, plaintiff-side class action law firm representing investors and consumers in matters involving securities fraud, corporate misconduct, mergers and acquisitions, antitrust violations, whistleblower claims, data breaches, consumer fraud, employment law violations, as well as ERISA and retirement plan litigation. Its attorneys have served as lead or co-lead counsel in major securities cases, recovering more than $10 billion for institutional and individual investors.
Kehoe Law Firm’s class action legal services are provided on a contingency-fee basis, meaning plaintiffs are not responsible for attorneys’ fees or litigation expenses. Any request for attorneys’ fees and expenses will be subject to court approval.
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