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Home > Resources > PAF Publications > PAF Guides & Major Publications > First My Illness... > How Can PAF Help You? > Section 3

Issues Involving Anti-Discrimination Statutes

The prohibitory language in the ADA reads:
"(i) Denial of participation
It shall be discriminatory to subject an individual or class of individuals on the basis of a disability or disabilities of such individual or class, directly, or through contractual, licensing, or other arrangements, to a denial of the opportunity of the individual or class to participate in or benefit from the goods, services, facilities, privileges, advantages, or accommodations of an entity.
(ii) Participation in unequal benefit
It shall be discriminatory to afford an individual or class of individuals, on the basis of a disability or disabilities of such individual or class, directly, or through contractual, licensing, or other arrangements with the opportunity to participate in or benefit from a good, service, facility, privilege, advantage, or accommodation that is not equal to that afforded to other individuals.
(iii) Separate benefit
It shall be discriminatory to provide an individual or class of individuals, on the basis of a disability or disabilities of such individual or class, directly, or through contractual, licensing, or other arrangements with a good, service, facility, privilege, advantage, or accommodation that is different or separate from that provided to other individuals, unless such action is necessary to
provide the individual or class of individuals with a good, service, facility, privilege, advantage, or accommodation, or other opportunity that is as effective as that provided to others."

The ADA contains some language that health insurers believe protects them. 42 U.S.C. §12201©. However, the Preamble to the Rules issued by DOJ (28 C.F.R. Part 36), suggests that insurers may face some difficult tasks in attempting to fall within the exception, and the legislative history may also have some effect on the breadth of this exception. See 29 C.F.R. §1630.5:

"In addition, it should also be noted that this part is intended to require that employees with disabilities be accorded equal access to whatever health insurance coverage the employer provides to other employees. This part does not, however, affect pre-existing condition clauses included in health insurance policies offered by employers. Consequently, employer may continue to offer policies that contain such clauses, even if they adversely affect individuals with disabilities, so long as the clauses are not used as a subterfuge to evade the purposes of this part.

"So, for example, it would be permissible for an employer to offer an insurance policy that limits coverage for certain procedures or treatments to a specified number per year. Thus, if a health insurance plan provided coverage for five blood transfusions a year to all covered employees, it would not be discriminatory to offer this plan simply because a hemophiliac employee may require more than five blood transfusions annually. However, it would not be permissible to limit or deny the hemophiliac employee coverage for other procedures, such as heart surgery or the setting of a broken leg, even though the plan would not have to provide coverage for the additional blood transfusions that may be involved in these procedures. Likewise, limits may be placed on reimbursements for certain procedures or on the types of drugs or procedures covered (e.g. limits on the number of permitted X-rays or non-coverage of experimental drugs or procedures), but that limitation must be applied equally to individuals with and without disabilities. See Senate Report at 28-29; House Labor Report at 58-59; House Judiciary Report at 36."

The ADA provides it should not be construed to prohibit or restrict "a covered person or organization" from "establishing, sponsoring, observing, or administering the terms of a bona fide benefit plan." While changes made effective now or since enactment under the ADA may defeat claims of "bona fide" now, what about plan terms pre-existing the ADA? This is an issue presented in the ADA case brought by a self-insured benefit plan. Mason Tenders Dist. Council Welfare Fund v. Donaghey, 2 AD Cases 1745 (S.D. N.Y. 1993). In that case the welfare benefit plan was amended the end of 1991 to exclude benefits for HIV-positive members. That case once believed to be destined for the Supreme Court, was recently settled in 1995 by reinstatement of the benefit.
The 8th Circuit in Krauel, supra, emphasized the "sub-terfuge" exception of 501© in a Title I case. See also Ford v. Schering-Plough Corp., supra, for the like view of the Third Circuit. One district court seems to put the proof burden on this issue, on the insurer/plan. Schroeder v. Connecticut General Life Ins. Co., supra.
Anticipated issues in future cases in those circuits still prohibiting discrimination in insurance provisions, will be who bears—or ought to bear—the burden of proof on this issue? Mrs. Krauel obviously bore the burden in her case. Does the fact that the insurer/plan has not conducted risk analysis or lacks actuarial support, and usually decides coverage questions solely on a subjective basis, shift any burden on subterfuge to it? If there is some disparate impact possibilities, would this affect the subterfuge question? And as to new coverages or new exclusionary language occurring after the enactment of the ADA, would this also not change the equation? Not according to the Third Circuit in Schering-Plough. Krauel may be tainted in light of the recent Supreme Court holding that procreation is a substantive function.

Advantages of ADA over ERISA for claimant
In Henderson v. Bodine Aluminum, Inc., supra, the appellate court expected the employer to come forward with its insurer’s evidence to support validity of claim procedure is experimental. But the patient should not rely exclusively on using the ADA or other protective laws, and should request of the plan and its insurer information that will determine to what extent other medical procedures that are paid for, are "proven," and what procedures that are paid for are performed under protocols and IRB’s. This is a relevant area of inquiry. Although not a disclosure case, see Ravenscraft v. Hy-Vee Employee Benefit Plan and Trust, (8th Cir. 1996) ("unreasonable inconsistency" in paying benefits is evidence of arbitrary and capricious conduct).
No claim brought under the ADA has been subjected to internal administrative exhaustion. One reason for this is that the Courts do not defer to plan administrators and fiduciaries on questions of law or give such persons the right to determine whether plan provisions or policies are sustainable under other laws as the ADA and Title VII. In effect, the claim to violation of other antidiscrimination statutes, as the ADA, is directly against the employer and the benefit plan itself.
But please be aware the courts were beginning to impose ADR procedures written into employment contracts, on claimants. However, see Wright v. Universal Maritime Service Corp., 525 U.S.70 (1998)(ADR clause that did not "clearly and unmistakably" cover dispute involving statutory discrimination, cannot prevent direct access; Supreme Court left for another day issues of direct access where language was clear and unmistakable).

The U.S. Department of Labor has offered the information in this book. Every effort has been made to make this guide as up-to- date as possible, however, change is inevitable. If you find any information that is not current or correct in this publication, please notify us and we will correct it in the next printing. Furthermore, if there are organizations that are not listed here that you feel would be helpful to others, we welcome your suggestions. Contact us at 1-800-532-5274 or by email at