ADA: Does Not Apply to Insurance Companies

      A federal appeals panel ruled last week that the "Americans with Disabilities Act does not apply to insurance policies," reversing a lower court ruling that found that Mutual of Omaha "wrongly limited health care benefits" for patients with HIV. The suit, brought by two anonymous Chicago-area HIV-positive men, sought to invalidate clauses in two of the company's policies - one that limited payments for AIDS or AIDS-related treatments to $100,000, and another that placed the limit at $25,000. For all other ailments, the payment limits are $1 million (Jordon, Omaha World-Herald, 6/4). Plaintiffs' attorneys asserted that the discrepancy violated the ADA, "which provides that no individual will be discriminated against or excluded from the goods and services provided by a public accommodation because of their disability." But Mutual of Omaha said the statute's scope does not include the content of insurance policies. The three-judge panel of the Seventh U.S. Circuit Court of Appeals agreed (Chicago Tribune, 6/4). Writing for the 2-1 majority, Chief Justice Richard Posner wrote that the act "does not require a seller to alter his product to make it equally valuable to the disabled and to the non-disabled, even if the product is insurance." He noted that a furniture store does not have to sell wheelchairs in addition to regular chairs, "even if that means its services are less valuable to some disabled people." He also said that the law bars federal courts from ruling on insurance policies, which are subject to state control, and suggested that the plaintiffs appeal to their state insurance commissioner. But Judge Terence Evans, in his dissent, wrote that Mutual of Omaha's policies do in fact violate the ADA. Noting that both parties agreed that treatment for AIDS-related pneumonia is subject to the payment cap, but pneumonia unrelated to AIDS is not, he said, "In my view, that is more than enough to trigger an ADA violation" (Omaha World-Herald, 6/4).

Reax
      Ann Fisher, executive director of the AIDS Legal Council of Chicago, which provided plaintiff's co-counsel, said the decision "legalizes irrational discrimination by health insurers" (Los Angeles Times, 6/4). The company had temporarily lifted the caps while the suit was litigated. Co-counsel Heather Sawyer of the Lambda Legal Defense and Education Fund said reinstating them "would seem purely mean- spirited and a blatant act of discrimination against people with HIV." But company spokesperson Jim Nolan said no decision had been made, adding, "If we did, it would not be out of mean- spiritedness." He said the limitation of risk that the caps provide "translate into lower premiums for the broad base of policy owners" (Omaha World-Herald, 6/4). Sawyer said Lambda is considering asking the appeals court to reconsider, or possibly appealing to the Supreme Court, although no final decision has been made (Chicago Tribune, 6/4).