Unequal Benefits for Mental Disability Not in Violation of ADA

October 1, 1997

The Americans with Disabilities Act of 1990 (ADA) was to have ushered in a new age of equal opportunity for individuals suffering from physical and mental infirmities. But rather than providing "a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities," the ADA often becomes the legal battleground upon which individuals' rights clash with the economic interests of businesses that bear the brunt of the costs associated with equality.

No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.-Title III, Americans with Disabilities Act

The Americans with Disabilities Act of 1990 (ADA) was to have ushered in a new age of equal opportunity for individuals suffering from physical and mental infirmities. But rather than providing "a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities," the ADA often becomes the legal battleground upon which individuals' rights clash with the economic interests of businesses that bear the brunt of the costs associated with equality.

In a ruling that will have a profound impact on efforts to achieve benefits parity for mental illnesses, the full 6th Circuit Court of Appeals ruled in August that an employer and its insurance company may offer unequal long-term disability benefits for physical and mental disabilities. The decision overturned an earlier ruling by a three-judge panel of the appeals court that would have allowed the plaintiff to proceed with a lawsuit that charged an insurance company with violating the ADA because it offered fewer benefits for mental disabilities than for physical ones.

After Ouida Sue Parker became totally disabled due to severe depression in October 1990, she began to receive disability payments under a Metropolitan Life Insurance Company (MetLife) policy offered through her employer, Schering-Plough Corp. Since her disability was attributed to a "nervous/mental" disorder, Parker's benefits were limited to 24 months. Had she suffered a physical disability, however, she would have continued to receive benefits until age 65.

In an 8-5 decision, however, the appeals court ruled that neither Schering-Plough nor MetLife violated the ADA. The majority upheld a Tennessee federal district court's dismissal of the complaint against Schering-Plough, agreeing that Parker no longer had standing to sue following her termination from employment. In what has become known among lawyers as the "QID" issue, the court of appeals determined that since the ADA only protects "qualified individuals with a disability," the fact that Parker's disorder prevented her from performing the "essential functions of her employment position" meant that the ADA no longer applied to her case.

Then, in a stunning blow against parity, the appeals court also ruled that MetLife's disparate treatment of physical and mental conditions in its disability policies did not violate the ADA's Title III "public accommodations" provisions, holding that the purpose of the law was to ensure accessibility to the goods, but not to alter their nature or mix. For example, the court stated, a bookstore must make its facilities and sales operations available to people with disabilities, but the law does not require it to stock brailled or large-print books.

In addition, the appeals court said that as long as all individuals within the workplace, both disabled and able-bodied, were provided the same disability policy, the fact that the contents of the policy differentiated between various forms of illness did not constitute discrimination.

"[The] ADA does not mandate equality between individuals with different disabilities. Rather the ADA prohibits discrimination between the disabled and the nondisabled," the court wrote. "Because all employees at Schering-Plough, whether disabled or not, received the same access to the long-term disability plan, neither the defendants nor the plan discriminated between the disabled and the able-bodied."

The ruling bodes ill for similar cases wending their way through other jurisdictions, and may set the stage for a decision by the U.S. Supreme Court within the next several years.

In March, the American Psychiatric Association teamed up with the New York State Psychiatric Association to pay some of the legal expenses for a former employee of Israel Discount Bank of New York who became disabled after a mental breakdown brought on by chronic depression (PT May). One of the lawsuits supported by the APA's $1 million litigation fund, Leonard F's case has a fact pattern nearly identical to Parker's-challenging the legality of a MetLife disability policy that provides only two years of benefits for mental and nervous disorders but which does not limit coverage for other disabilities.

The U.S. District Court in New York hearing that case has already dismissed the complaint against MetLife, agreeing that the ADA does not prohibit its sale of a disability policy with unequal benefits. And it is too early to tell whether the case will proceed to trial against Israel Bank, since according to the plaintiff's attorney, Robert Schonfeld, the bank is planning on bringing additional motions that could forestall a hearing on the merits.

Schonfeld also said that even if he is successful in overcoming the threshold obstacles presented by the QID and public accommodations issues that would make the ADA applicable, he will at some point have to contend with "safe harbor" provisions of the act. Under the terms of the ADA, discrimination in insurance policies is permissible if there is an actuarial basis for the differentiation in benefits.

"We could end up litigating the threshold issues of QID, or whether insurance policies qualify as accommodations, but it doesn't mean we'll get relief," Schonfeld said. "It's theoretically possible that there is proof, at the end of the day, that all of this has an actuarial basis."

In addition to the 6th Circuit Court of Appeals, cases decided in the 3rd, 7th, and 11th Circuit Courts have also cast doubts on whether the ADA will ever be interpreted broadly enough by the courts to ensure parity of disability benefits.

As a result a legislative fix may be necessary, something the APA hopes to generate. Jay Cutler, the association's director of the government relations division, told Psychiatric Times that he intends to work toward parity both in Congress and in the courts. But he conceded that the current political climate may not be conducive to change.

"The difficulty will be the tendency of the Congress of the United States to say it's being handled by the courts," Cutler said. "Why fight the [political] fight when it can allow the courts to make the decision."

Jeremy Lazarus, M.D., the APA assembly speaker, said that he intends to explore whether a dialogue with the insurance industry is still possible. "I don't know if any of the advocacy groups have tried to meet with the insurance industry to try to work out some kind of understanding whereby the companies would not go belly-up by taking an adverse risk, but they in turn would look at the realities of the facts we know about mental illness and not treat these patients unfairly."