Disability Law Index - Employment: Insurance

Statute:

42 U.S.C. § 12201(c) - Insurance

Subchapters I through III of this chapter and title IV of this Act 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 chapter 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 chapter from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that is not subject to State laws that regulate insurance.

Paragraphs (1), (2), and (3) shall not be used as a subterfuge to evade the purposes of subchapter I and III of this chapter.

Regulation:

29 C.F.R. § 1630.16(f) - Specific activities permitted - Health insurance, life insurance, and other benefit plans

(1) An insurer, hospital, or medical service company, health maintenance organization, or any agent or entity that administers benefit plans, or similar organizations may underwrite risks, classify risks, or administer such risks that are based on or not inconsistent with State law.

(2) A covered entity may establish, sponsor, observe or administer 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.

(3) A covered entity may establish, sponsor, observe, or administer the terms of a bona fide benefit plan that is not subject to State laws that regulate insurance.

(4) The activities described in paragraphs (f)(1), (2), and (3) of this section are permitted unless these activities are being used as a subterfuge to evade the purposes of this part.

Case Law:

Cases dealing with employer-provided health plan; problem concerns limits on coverage that adversely affect people with disabilities/a particular category of disability.

Possible barriers:

If one is drawing on health or disability benefits, one may no longer be able work, raising the issue of standing to sue under Title I.

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

  • Title I allows disabled employees to sue their former employers regarding their benefits (here, disability benefits) so as to effectuate the full panoply of rights guaranteed by the ADA.

Castellano v. City of New York, 142 F.3d 58 (2d Cir. 1998).

  • Former employees who had retired with disability pensions were "qualified individuals with a disability" within meaning of ADA, so long as they had performed essential functions of their jobs for period sufficient to establish entitlement to benefits.

Accord, e.g., Lewis v. Aetna Life Ins. Co., 982 F. Supp. 1158 (E.D. Va. 1997), Conners v. Maine Medical Center, 42 F.Supp.2d 34 (D. Me. 1999). But see, e.g., EEOC v. CNA Ins. Co., 96 F.3d 1039 (7th Cir. 1996); Gonzales v. Garner Food Services, Inc., 89 F.3d 1523 (11th Cir. 1996).

An employer may not be in best position to effect remedy

Carparts Distribution Center v. Automotive Wholesaler’s Assn, 37 F.3d 12 (1st Cir. 1994).

  • Given appropriate circumstances, insurer may be “employer” subject to suit under Title I. But see, e.g., Good v. Blue Cross & Blue Shield of Maryland, Inc., 1996 WL 815373 (D. Md. Nov. 19, 1996); Nearhood v. Freestate Health Plan, Inc., 10 NDLR 244 (D. Md. 1997); Allen v. Cub Foods Corp., 1997 WL 566365 (N.D. Ill. Sept. 4, 1997) (disagreeing with Carparts).

Plaintiffs who wait to file administrative charge until after they have exhausted insurer's internal grievance/appeals process may find that their claims are time-barred:

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

  • Background: Disability insurance case; challenge to disparity in duration of benefits for mental versus physical disabilities under Titles I and III.
  • Court found that claim under Title I accrued when plaintiff was notified that his disability had been classified as mental and that 2-year limitation applied.
  • Pendency of grievance does not toll running of limitations period (here, 300-day administrative filing requirement).

See also Dodd v. Blue Cross & Blue Shield Ass'n, 835 F. Supp. 888 (E.D. Va. 1993) (illustrating difficulty of pursuing Rehabilitation Act/ADA claim with FEHB plan)

Article:

EEOC Guidance on application of the ADA to employer-provided health insurance