Disability Law Index - Public Accommodations: Insurance


28 C.F.R. § 36.212 - Insurance

(a) This part shall not be construed to prohibit or restrict--

(1) An insurer, hospital or medical service company, health maintenance organization, or any agent, or entity that administers benefit plans, or similar organizations from underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law; or

(2) A person or organization covered by this part from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law; or

(3) A person or organization covered by this part from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that is not subject to State laws that regulate insurance.

(b) Paragraphs (a) (1), (2), and (3) of this section shall not be used as a subterfuge to evade the purposes of the Act or this part.

(c) A public accommodation shall not refuse to serve an individual with a disability because its insurance company conditions coverage or rates on the absence of individuals with disabilities.

Case Law:

Possible barriers:

Courts are divided over whether Title III protections extend beyond access to physical structures to encompass (a) transactions with insurers/health plans however mediated, and/or (b) the contents (terms and conditions) of an insurance policy or health plan contract.  

Finding contents of insurance policy within the scope of Title III: (roughly by circuit)
Carparts Distribution Center v. Automotive Wholesalers Assn, 37 F.3d 12 (1st Cir. 1994).

  • Background: Case involving health plan secured by employer through trade association. Plan imposed special, lower lifetime cap for AIDS-related medical expenses, allegedly after learning of plaintiff’s diagnosis with HIV/AIDS. District Court dismissed claims under Titles I and III of the ADA.
  • Without deciding whether plaintiffs have a viable theory (“we think it is unwise to go beyond the possibility that the plaintiff may be able to develop some kind of claim under Title III”), court gives rationale for interpreting definition of “public accommodation” in Title III to include the substance of an insurance policy.
    • In including “travel service” in list of examples, Congress clearly contemplated services that do not require a person to physically enter an actual physical structure, and neither Title III nor the implementing regulations make any mention of physical boundaries or physical entry.
    • It would be irrational, and inconsistent with the purposes of the ADA, to conclude that persons who enter an office to purchase services are protected by the ADA, but persons who purchase the same services over the telephone or by mail are not.
    • In some areas, distinction between merely providing access to whatever product or service is offered, and shaping the substance of what is being offered, may prove illusory (i.e., meaningful access may require changes in substance).

Pallozzi v. Allstate Life Ins. Co., 204 F.3d 392 (2nd Cir. 2000).

  • Background: Allstate initially granted a joint insurance policy to husband and wife but canceled after learning of their history of mental disabilities. Allstate refused their requests to furnish the Pallozzis with specific reasons for the denial.
  • Title III's mandate that the disabled be accorded "full and equal enjoyment of the goods, [and] services... of any place of public accommodation," suggest that the statute was meant to guarantee them more than mere physical access.
  • An entity covered by Title III is not only obligated by the statute to provide disabled persons with physical access, but is also prohibited from refusing to sell them its merchandise by reason of discrimination against their disability.
  • Title III does regulate the sale of insurance policies in insurance offices, subject to the limitations of the safe harbor provision in Section 501(c) of Title V.

Doukas v. Metropolitan Life Ins. Co., 950 F. Supp. 422 (D.N.H. 1996).

  • Background: Mortgage disability insurance case; plaintiff, a woman with bipolar disorder, was denied policy due to her medical history.
  • Title III extends to the substance of an insurance policy including underwriting practices.
  • Court looks at state law to determine whether underwriting practices are “not inconsistent,” rejects argument that ADA requires reliance on
  • actuarial data alone; however, plaintiff is not required to show conscious intent to discriminate to establish “subterfuge.”

    Accord, e.g., Conners v. Maine Medical Center, 42 F.Supp.2d 34 (D. Me. 1999).

    See Boots v. Northwestern Mut. Life Ins. Co., 77 F.Supp.2d 211 (D.N.H. 1999) (Allowed claim to proceed under Title III following Carparts and Doukas; rejecting 3rd and 6th Circuits' treatment of issue).

Lewis v. Aetna Life Ins. Co., 982 F. Supp. 1158 (E.D. Va. 1997).

  • Background: Disability insurance case; insurance was offered through employer; claims under Titles I and III concerned different levels of coverage for mental and physical disabilities.
  • Title III prohibits insurer from discriminating on the basis of disability, regardless of how policy is acquired.
  • Distinctions that target particular disabilities require actuarial justification or other competent factual basis in order to be valid under the ADA.

Winslow v. IDS Life Insurance Co., 29 F.Supp.2d 557 (D. Minn. 1998).

  • Background: Disability insurance case; person treated for dysthymia (mild depression) was refused based on insurer’s policy of automatically denying long-term disability insurance to applicants who report receiving treatment for mental/nervous condition, regardless of seriousness, in prior 12 months.
  • Based on legislative history, DOJ interpretation, and reasoning adopted by growing number of courts, court finds Title III applicable to insurance policies and not limited to access to physical structures; ADA statutory language that would be rendered irrelevant under opposite reading considered especially relevant.[2]
  • Concludes that McCarran-Ferguson does not preclude application of ADA to insurance.

World Ins. Co. v. Branch, 966 F. Supp. 1203 (N.D. Ga. 1997), vacated, 13 NDLR 250 (11th Cir. 1998) (insurance company rescinded policy on appeal rendering decision as moot).

  • Background: Health insurance case; policy had special, lower maximum benefit for AIDS. Applicability of Title III to insurers not disputed by parties.
  • Insurance practices are protected to the extent they are in accord with sound actuarial principles, reasonably anticipated experience, or bona fide risk classification; in the absence of evidence establishing the basis for a discriminatory practice, court will find violation of ADA.

Limiting Title III to physical structures

Ford v. Schering-Plough Corporation, 145 F.3d 601 (3d Cir. 1998).

  • Title III claim against employer fails because terms and conditions of employment are governed by Title I.
  • Title III claim against insurer fails because benefits received via employment created no nexus with any physical office of the insurer.

McNeil v. Time Ins. Co., 205 F.3d 179 (5th Cir. 2000).

  • Background: Employer bought policy which limited coverage for AIDS to 10,000 the first two years and then allowed maximum benefits beyond that. Employer was diagnosed with AIDS two months later and died within the year.
  • Title III prohibits an owner of a place of public accommodation from denying the disabled access to the good or service and from interfering with the disabled’s full and equal enjoyment of the goods and services offered. But the owner need not modify or alter the goods and services that it offers in order to avoid violating Title III.
  • The plaintiff is in effect challenging the good (the insurance policy). As long as the insurance company offered the same terms to other applicants, Title III is not violated

Parker v. Metropolitan Life Ins. Co., 121 F.3d 1006 (6th Cir. 1997).

  • Background: Disability insurance case; employee sued employer and insurer claiming that shorter benefit period for disability caused by mental illness vs. physical illness violated ADA.
  • Holding: A public accommodation is a physical place; a disability policy not obtained in an office transaction, offered solely to a business (the employer), is not a service or good offered by a place of public accommodation subject to Title III of the ADA.
  • Dicta: Title III does not extend to the contents of insurance policies.
  • Dicta: The ADA only governs discrimination between the disabled and the nondisabled.
  • Dissent: Majority holding leaves persons with disabilities unprotected in a category of transactions that is (a) increasing generally, and (b) particularly convenient for many persons with disabilities, e.g., those with mobility impairments.
  • Note: The District Court held that the plaintiff did not have standing to sue under Title I because she was not a “qualified individual with a disability” when her disability benefits were terminated (e.g., she was at that time unable to work).This ruling was affirmed by the Third Circuit panel in the original Parker decision, and the plaintiff did not seek a rehearing on the issue.

See also Lenox v. Healthwise of Kentucky, Ltd., 149 F.3d 453 (6th Cir. 1998) (following Parker).

  • Title III requirements relate to physical access, not the mix of goods and services offered.

Doe v. Mutual of Omaha Ins. Co., 179 F.3d 557 (7th Cir. 1999).

  • Core meaning of anti-discrimination provision of Title III is that owner or operator of facility (whether in physical or electronic space) cannot exclude disabled persons from entering or using facility in the same way as nondisabled, and this means insurance company cannot (without pleading special defense) refuse to sell an insurance policy to a person with AIDS on equal terms with a nondisabled person.
  • However, no requirement that policy have the same value to persons with AIDS as they would to persons with other diseases or disabilities; offer to sell is not illusory because people with AIDS have medical needs unrelated to AIDS which are covered.
  • The “common sense” of the statute is that the content of good or services offered by a place of public accommodation is not regulated.
  • In sum “we cannot find anything in the Americans with Disabilities Act or its background, or the nature of the AIDS and AIDS caps, to justify so radically expansive an interpretation as would be required to bring these cases under section 302(a) without making an unprincipled distinction between AIDS caps and other product alternatives—unless it is section 501(c)(1) of the Act.”[not the singling out of a particular, stigmatized disability for inferior treatment?]
  • Section 501(c)(1) likely obtained by the insurance industry to “to backstop its argument that section 302(a) regulates only access and not content.” [why then the qualifiers re consistency with state law, etc.?]
  • If this is wrong, suit must fail anyway because it is barred by the McCarran-Ferguson Act: “if federal courts are not to determine whether caps on disabling conditions...are actuarially sound and consistent with principles of state law they will be stepping on the toes of state insurance commissioners”; if caps are non consistent with state law and sound actuarial practices, plaintiffs can obtain all the relief to which they are entitled at state level.

Weyer v. Twentieth Century Fox Film Corp., 198 F.3d. 1104 (9th Cir. 2000).

  • Background: Former employee alleged that long-term disability insurance's differing treatment of physical and mental disability violated Title III.
  • Dicta: "But this case is not about such matters as ramps and elevators so that disabled people can get to the office. The dispute in this case, over terms of a contract that the insurer markets through an employer, is not what Congress addressed in the public accommodations provisions."
  • Agreed with Third and Sixth Circuits and held that an insurance company administering an employer- provided disability policy is not a "place of public accommodation" under Title III.

Is a managed care organization (MCO) a public accommodation?

Finding MCO subject to Title III due to control over providers:

Zamora-Quezada v. HealthTexas Medical Group of San Antonio, 34 F.Supp.2d 433 (W.D. Tex. 1998).

  • Background: Allegation that defendants (four HMOs, a medical group contracting with the HMOs, and an administrative company responsible for negotiating contracts between the medical group and the HMOs) have created financial arrangements that result in discrimination against the disabled; plaintiffs are two physicians who contend they were terminated by the group for advocating for their patients and 13 patients; ruling on motion to dismiss/for summary judgment.
  • The ADA applies to entities that “operate” a public accommodation; the term operate for ADA purposes means a right to control the allegedly discriminatory conditions, hence the inquiry is whether the defendant had control over the actions alleged to have resulted in discrimination.
  • Plaintiff's allegation that the defendants were participants in the system that controlled the delivery of health care and caused the acts of alleged discrimination is sufficient on the issue of control; the court cites evidence concerning the HMO's adoption of a payment scheme that gave the medical group an incentive to give patients less care and notes that there is a fact question as to whether the HMOs regulated healthcare decisions made by the medical group including referrals, admissions and LOS, and attempted to monitor and influence physicians’ utilization patterns.

Cause of Action against providers (and MCO under vicarious liability theory)

Woolfolk v. Duncan, 872 F. Supp. 1381 (E.D. Pa. 1995).

  • Background: Allegation that physician, among others, refused to treat enrollee with HIV.
  • Where MCO has right and authority to interfere with and control a provider’s treatment of enrollees, there is a genuine issue of material fact as to whether MCO is vicariously liable for provider’s conduct under Title III of the ADA (and the Rehabilitation Act)