Number range CHAPTER

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JOHN DOE AND RICHARD SMITH )

)

Plaintiffs ) Case No. 98 C 0325

> v\. )

) Judge Conlon

MUTUAL OF OMAHA INSURANCE )

COMPANY, ) Magistrate Judge Guzman

)

Defendant )

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

[IN RESPONSE TO DEFENDANT'S MOTION TO DISMISS]{.underline}

> BILL LANN LEE
>
> Acting Assistant Attorney\
> General Civil Rights Division
>
> JOHN L. WODATCH
>
> L. IRENE BOWEN
>
> PHILIP L. BREEN
>
> ALYSE S. BASS
>
> Attorneys
>
> Civil Rights Division
>
> Department of Justice
>
> P.O. Box 66078
>
> Washington, D.C. 20035-6078
>
> \(202\) 616-9511

**TABLE OF CONTENTS**

**PAGE**

FACTS 1

SUMMARY OF ARGUMENT 1

ARGUMENT:

I. THE TERMS AND CONDITIONS UNDER WHICH INSURANCE COVERAGE IS OFFERED
ARE SUBJECT TO TITLE III'S BAN ON DISABILITY-BASED DISCRIMINATION 4

> A. The Plain Language and Underlying Purpose of Title III Make Clear
> That Terms and Conditions of Insurance Coverage are Covered 5
>
> B. The Department Of Justice Has Consistently Interpreted Title III To
> Cover Unjustified Disability-Based Discrimination In The Terms And
> Conditions Of Insurance Policies 9
>
> C. The Department Of Justice's Interpretation Of Title III Is Entitled
> To Controlling Weight 10
>
> D. The Department Of Justice's Interpretation Of Title III Is
> Consistent With The Legislative History Of The ADA 11
>
> E. The Department\'s Interpretation Of Title III Does Not Conflict
> With The McCarran-Ferguson Act 12

II\. PLAINTIFFS HAVE ALLEGED FACTS SUFFICIENT TO SUPPORT A CLAIM OF
DISCRIMINATION UNDER TITLE III OF THE ADA BY ALLEGING THAT TERMS AND
CONDITIONS IN MUTUAL'S POLICIES DENY THEM, BECAUSE OF A DISABILITY, AIDS
OR ARC, PRIVILEGES OR BENEFITS AVAILABLE TO OTHERS 14

CONCLUSION 20

FACTS

This case concerns terms and conditions in certain health insurance
policies offered by Mutual of Omaha Insurance Company (Mutual) to
members of the public. Specifically, the complaint alleges that Mutual
sells policies that contain two terms and conditions that single out
persons with AIDS or AIDS-Related Conditions (ARC) and provide them with
a lower level of coverage than is provided to others. First, Mutual's
policies contain a maximum lifetime benefit cap for expenses incurred
for AIDS and ARC; the lifetime maximum is \$25,000 or \$100,000,
depending upon the Mutual policy (hereinafter "AIDS Cap"). In virtually
all other situations, Mutual provides benefits to a lifetime maximum of
\$1,000,000.[^1] Second, Mutual will not reinstate benefits for AIDS or
ARC related treatment once an individual with AIDS or ARC has reached
the maximum benefit cap. By contrast, other than for persons with AIDS
or ARC related expenses, Mutual will restore the lifetime maximum
benefit cap for an insured person when the insured person does not incur
any expenses for two consecutive calendar years.

SUMMARY OF ARGUMENT

Defendant has filed a motion to dismiss Plaintiffs' complaint, arguing
that title III of the ADA does not cover the content of insurance
policies. Defendant also has asked this Court to find that Defendant's
AIDS Caps do not constitute discrimination on the basis of disability.
Defendant's motion should properly be denied.

Plaintiffs have alleged facts sufficient to support a prima facie case
of discrimination under title III of the ADA. The plain language and
underlying purposes of Title III make clear that the statute covers the
terms and conditions of insurance coverage. Further, the Department of
Justice has consistently interpreted Title III of the ADA to prohibit
unjustified disability-based discrimination in the terms and conditions
of insurance policies. Because Congress has expressly delegated
authority to the Attorney General to issue regulations interpreting
Title III, the Department\'s reading of the statute is controlling
unless it is arbitrary, capricious or clearly contrary to the statutory
language. This Court should defer to the Department\'s interpretation
because it comports with the plain language, legislative history and
underlying purposes of Title III. Section 501(c) of the ADA confirms
that Title III\'s broad language reaches discrimination in the terms and
conditions of insurance policies. The Department\'s Interpretation of
title III does not conflict with the McCarran-Ferguson Act.

Terms or conditions in a health insurance policy that deny, because of
disability, benefits and privileges that are available to others,
discriminate on the basis of disability in violation of title the ADA.
The Americans with Disabilities Act prohibits unjustified
disability-based discrimination in insurance against individuals who
have AIDS or ARC, all of whom have a disability covered by the ADA.
Plaintiffs have alleged that, on the basis of disability, they, as
individuals with AIDS or ARC, are being denied the opportunity to
receive benefits up to \$1,000,000 that Mutual provides to other insured
persons. Plaintiffs have also alleged that, on the basis of their
disability, Mutual will not reinstate benefits for AIDS or ARC related
treatment once they, as individuals with AIDS or ARC, have reached the
AIDS cap. Plaintiffs' complaint is sufficient to state a claim pursuant
to title III of the ADA, and Defendant's motion to dismiss should
properly be denied.

ARGUMENT

In ruling on this motion to dismiss, this Court should accept the
factual allegations in the Complaint as true. [Hishon]{.underline} v.
[King & Spaulding]{.underline}, 467 U.S. 69, 73 (1983). The court must
then determine if those factual allegations, or any set of facts that
are consistent with those allegations and might be developed during the
discovery process, could justify a court granting relief.
[Id.]{.underline} "\[A\] complaint should not be dismissed for failure
to state a claim unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle him to
relief." [Conley v. Gibson]{.underline}, 355 U.S. 41, 45-46 (1957).

I

THE TERMS AND CONDITIONS UNDER WHICH\
INSURANCE COVERAGE IS OFFERED ARE SUBJECT TO\
TITLE III\'S BAN ON DISABILITY-BASED DISCRIMINATION

Title III of the ADA prohibits unjustified disability-based
discrimination in the terms and conditions of insurance. This
interpretation is consistent with the plain language, legislative
history and underlying purpose of the statue. Further, several courts
have correctly held that Title III reaches disability-based
discrimination in the terms and conditions of insurance coverage. [World
Ins. Co.]{.underline} v. [Branch]{.underline}, 966 F. Supp. 1203,
1207-1209 (N.D. Ga. 1997); [Cloutier]{.underline} v. [Prudential Ins.
Co. of America]{.underline}, 964 F. Supp. 299, 301-302 (N.D. Cal. 1997);
[Doukas]{.underline} v. [Metropolitan Life Ins. Co.]{.underline}, 950 F.
Supp. 422, at 425-426 (D. N.H. 1996); [Kotev]{.underline} v. [First
Colony Life Ins. Co.]{.underline}, 927 F. Supp. 1316, 1321-1323 (C.D.
Cal. 1996); [Attar]{.underline} v. [Unum Life Ins. Co.]{.underline}, No.
CA3-96-CV-0367-R, 1997 WL 446439 at \*10-\*12 (N.D. Tex. July 19, 1997);
[Baker]{.underline} v. [Hartford Life Ins. Co.]{.underline}, 1995 WL
573430 at \*3, No. 94-C-4416 (N.D. Ill. Sept. 28, 1995).[^2] See also
[Carparts Distribution Ctr., Inc.]{.underline} v. [Automotive
Wholesaler's Ass'n of New England]{.underline}, 37 F.3d 12, at 20 (1st
Cir. 1994) (instructing district court to consider plaintiff\'s Title
III challenge to insurance plan\'s limitation on health benefits for
AIDS-related illnesses).

> A. The Plain Language of the Statute Supports the Position that Title
> III Covers Discrimination in the Terms and [Conditions of
> Insurance]{.underline}

The general prohibition of discrimination in Title III provides, in
relevant part, that

> 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.

42 U.S.C. § 12182(a).

It is well settled that remedial statutes are to be interpreted broadly
to further their underlying purposes. [Jefferson County Pharmaceutical
Ass\'n]{.underline} v. [Abbott Labs.]{.underline}, 460 U.S. 150, 159
(1983); [Gomez]{.underline} v. [Toledo]{.underline}, 446 U.S. 635, 639
(1980). This rule of statutory construction applies with special force
here in view of the sweeping goals that Congress announced when it
enacted the ADA. See [City of Edmonds]{.underline} v. [Oxford House,
Inc.]{.underline}, 514 U.S. 725, 731 (1995) (giving \"\'generous
construction\'\" to the

Fair Housing Act in light of the \"\'broad and inclusive\'\" goals of
that statute). See also [Arnold]{.underline} v. [United Parcel
Service]{.underline} 1998 WL 63505 \*7 (1^st^ Cir., Feb. 20, 1998)
(interpreting the ADA in light of Congress' broad remedial purposes).
Congress stated that the ADA was designed to \"invoke the sweep of
Congressional authority \* \* \* in order to address the major areas of
discrimination faced day-to-day by people with disabilities,\" 42 U.S.C.
§ 12101(b)(4), and that its purpose is to \"provide a clear and
comprehensive national mandate for the elimination of discrimination
against individuals with disabilities.\" 42 U.S.C. § 12101(b)(1). The
legislative history confirms that Title III is designed \"to bring
individuals with disabilities into the economic and social mainstream of
American life.\" H.R. Rep. No. 485, pt. 2, 101st Cong., 2d Sess (1990).

Title III's prohibition of discrimination applies with respect to \"the
full and equal enjoyment of the goods, services, facilities, privileges,
advantages, or accommodations of any place of public accommodation \* \*
\*.\" 42 U.S.C. § 12182(a). The statute defines \"public accommodation\"
to include an \"insurance office\" whose operations affect commerce. 42
U.S.C. § 12181(7). An insurance policy is one of the \"goods, services,
\* \* \* privileges, \[or\] advantages\" offered by an insurance office.
See [Doukas]{.underline} v. [Metropolitan Life Ins. Co.]{.underline},
950 F. Supp. 422, at 426 (D. N.H. 1996). Therefore, discrimination on
the basis of disability in the terms or conditions of an insurance
policy constitutes denial of \"the full and equal enjoyment of the
goods, services, \* \* \* privileges, \[or\] advantages\" of a \"place
of public accommodation\" within the plain meaning of 42 U.S.C. §
12182(a).

Insurance discrimination falls within the plain language of at least
three subsections of Title III. Section 302(b) provides, in part, that:

> It shall be discriminatory to afford an individual or class of
> individuals, on the basis of a disability, \* \* \* 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.

42 U.S.C. § 12182(b)(1)(A)(ii). An insurance provider who offers an
individual with a disability less favorable insurance coverage than that
offered to other customers is plainly providing that person with a
\"good \[or\] service\" that is \"not equal to that afforded to other
individuals.\" [Ibid.]{.underline} In addition, outright rejection of a
person with a disability for insurance coverage would constitute a
\"denial of the opportunity\" to \"benefit from the goods \[or\]
services\" of a public accommodation, within the meaning of 42 U.S.C. §
12182(b)(1)(A)(i). Moreover, an insurance company that has a policy of
excluding persons with particular disabilities from insurance coverage
would be using \"eligibility criteria that screen out\" individuals
\"from fully and equally enjoying\" the \"goods \[and services\" of a
public accommodation. 42 U.S.C. § 12182(b)(2)(A)(i).

Section 501(c) of the ADA confirms that Title III\'s broad language
reaches discrimination in the terms and conditions of insurance
policies. That section, entitled \"Insurance,\" creates a limited
exception for certain insurance practices that would otherwise violate
Titles I, II, and III of the ADA. Section 501(c) states, in part, that:

> Subchapters I through III \[[i.e.]{.underline}, Titles I through III
> of the ADA\] \* \* \* shall not be construed to prohibit or restrict
> \* \* \* an [insurer]{.underline} \* \* \* or any agent, or entity
> that administers benefit plans \* \* \* from underwriting risks,
> classifying risks, or administering such risks that are based on or
> not inconsistent with State law.

42 U.S.C. § 12201(c) (emphasis added). See also 28 C.F.R. 36.212. If the
broad language of Title III did not otherwise cover insurance policies,
there would have been no need for Congress to emphasize in Section
501(c) that certain insurance practices were excepted from the scope of
Title III. [Kotev]{.underline} v. [First Colony Life Ins.
Co.]{.underline}, 927 F. Supp. 1316, at 1322 (C.D. Cal. 1996),
[accord]{.underline}, [Chabner]{.underline} v. [United of Omaha Life
Insurance Co.]{.underline} 1998 WL 37750 (N.D. Cal. Jan. 16, 1998).

Although Section 501(c) creates a limited exemption for certain
practices, it does not completely nullify Title III\'s prohibitions
against discrimination in the terms and conditions of insurance
policies. Section 501(c) states that the this section \"shall not be
used as a subterfuge to evade the purposes of subchapter I and III
\[Titles I and III of the ADA\].\" 42 U.S.C. § 12201(c). See also 28
C.F.R. § 36.212(b). And as we explain below, the legislative history of
Section 501(c) makes clear that, despite the limited exemption provided
for certain practices, the ADA prohibits insurance companies from
discriminating against individuals with disabilities in insurance
coverage unless such differential treatment is justified. Section 501(c)
thus confirms that Congress understood Title III to prohibit certain
types of disability-based discrimination in the terms and conditions of
insurance policies.

B.  The Department Of Justice Has Consistently Interpreted Title III To
    Cover Unjustified Disability-Based Discrimination In [The Terms And
    Conditions Of Insurance Policies]{.underline}

In the commentary to its Title III regulation, the Department emphasized
that the statute \"reach\[es\] insurance practices by prohibiting
differential treatment of individuals with disabilities in insurance
offered by public accommodations unless the differences are justified.\"
Preamble To Regulation On Nondiscrimination On The Basis Of Disability
In Public Accommodations And In Commercial Facilities (July 26, 1991),
reprinted at 28 C.F.R. Ch. 1, pt. 36, App. B at 619 (1996). The
Department\'s commentary further emphasized that Title III covers
\"unjustified discrimination in all types of insurance provided by
public accommodations.\" [Id.]{.underline} at 620.[^3] The Department
adopted the same interpretation of the statute in its Technical
Assistance Manual:

> Insurance offices are places of public accommodation and, as such, may
> not discriminate on the basis of disability in the sale of insurance
> contracts or in the terms or conditions of the insurance contracts
> they offer.

Title III Technical Assistance Manual § III-3.11000 (Nov. 1993).[^4]

C. The Department Of Justice\'s Interpretation Of Title III Is [Entitled
To Controlling Weight]{.underline}

Congress expressly delegated authority to the Department of Justice to
promulgate binding regulations interpreting Title III, 42 U.S.C. §
12186(b), and to issue a technical assistance manual providing guidance
about the statute\'s requirements. See 42 U.S.C. § 12206(c)(3). The
Attorney General is also the only federal official with authority to
enforce the provisions of Title III. See 42 U.S.C. § 12188(b)(1)(B). In
view of Congress\'s delegation, the Department of Justice\'s regulations
must be given \"legislative and hence controlling weight unless

they are arbitrary, capricious, or clearly contrary to the statute.\"
[United States]{.underline} v. [Morton]{.underline}, 467 U.S. 822, 834
(1984); accord [ABF Freight Sys., Inc.]{.underline} v.
[NLRB]{.underline}, 510 U.S. 317, 324 (1994), citing [Chevron U.S.A.,
Inc.]{.underline} v. [Natural Resources Defense Council,
Inc.]{.underline}, 467 U.S. 837, 844 (1984). The same is true of the
preamble or commentary accompanying the regulations since both are part
of a department\'s official interpretation of legislation.
[Stinson]{.underline} v. [United States]{.underline}, 508 U.S. 36, 45
(1993); see also [Thomas Jefferson Univ.]{.underline} v.
[Shalala]{.underline}, 512 U.S. 504, 512 (1994). The Department of
Justice\'s Technical Assistance Manual is also entitled to substantial
deference. See [Innovative Health Sys., Inc.]{.underline} v. [City of
White Plains]{.underline}, 117 F.3d 37, 45 n.8 (2d Cir. 1997);
[Ferguson]{.underline} v. [City of Phoenix]{.underline}, 931 F. Supp.
688, 694-696 (D. Ariz. 1996); [Fiedler]{.underline} v. [American
Multi-Cinema, Inc.]{.underline}, 871 F. Supp. 35, 36-37 n.4 (D.D.C.
1994). Cf. [Paralyzed Veterans of America]{.underline} v. [D.C. Arena
L.P.]{.underline}, 117 F.3d 579, 587 (D.C. Cir. 1997) (Technical
Assistance Manual represents \"authoritative departmental position\").

D. The Department Of Justice\'s Interpretation Of Title III Is
[Consistent With The Legislative History Of The ADA]{.underline}

The Department of Justice\'s interpretation of Title III is also
supported by the legislative history of the ADA. Various committee
reports and floor debates make clear that Title III prohibits insurance
companies from discriminating against individuals with disabilities in
insurance coverage unless such differential treatment is justified. For
example, committee reports from both the House of Representatives and
the Senate emphasize that, under Titles I through III of the ADA, \"a
person with a disability cannot be denied insurance or be subject to
different terms or conditions of insurance based on disability alone, if
the disability does not pose increased risks.\" H.R. Rep. No. 485, pt.
2, [supra]{.underline}, at 136; S. Rep. No. 116, [supra]{.underline}, at
84.

E. The Department\'s Interpretation Of Title III Does Not [Conflict With
The McCarran-Ferguson Act]{.underline}

Defendants suggest that the McCarran-Ferguson Act, 15 U.S.C. §§ 1012
[et]{.underline} [seq.]{.underline}, precludes interpreting Title III to
prohibit discrimination in the terms and conditions of insurance
policies. That argument is meritless.

The McCarran-Ferguson Act provides, in relevant part, that \"\[n\]o Act
of Congress shall be construed to invalidate, impair, or supersede any
law enacted by any State for the purpose of regulating the business of
insurance \* \* \* unless such Act specifically relates to the business
of insurance.\" 15 U.S.C. §1012(b). That statute does not preclude the
Department\'s interpretation of Title III for two independent reasons.
First, the ADA expressly states that insurance underwriting practices
shall not be used to evade the purposes of Title III. 42 U.S.C. §
12201(c). The ADA therefore \"specifically relates to the business of
insurance,\" 15 U.S.C. § 1012(b), and is not covered by the
McCarran-Ferguson Act. See [Barnett Bank of Marion County,
N.A.]{.underline} v. [Nelson]{.underline}, 116 S. Ct. 1103, 1111-1113
(1996). Second, even if the ADA did not specifically relate to the
insurance business, McCarran-Ferguson would not support Defendant's
position because Defendant has failed to identify any state law that our
interpretation of Title III would \"invalidate, impair, or supersede.\"
The mere fact that a state has adopted a scheme for regulating insurance
practices \"does not show that any particular state law would be
invalidated, impaired or superseded\" by the federal statute.
[Mackey]{.underline} v. [Nationwide Ins. Co.]{.underline}, 724 F.2d 419,
421 (4th Cir. 1984); accord [Nationwide Mut. Ins. Co.]{.underline} v.
[Cisneros]{.underline}, 52 F.3d 1351, 1363 (6th Cir. 1995), cert.
denied, 116 S. Ct. 973 (1996). Rather, there must be a showing of a
specific conflict between some particular state law and the federal
statute at issue. See [Merchants Home Delivery Serv., Inc.]{.underline},
v. [Frank B. Hall & Co.]{.underline} 50 F.3d 1486, 1491-1493 (9th Cir.),
cert. denied, 116 S. Ct. 418 (1995); [NAACP]{.underline} v. [American
Family Mut. Ins. Co.]{.underline}, 978 F.2d 287, 295-297 (7th Cir.
1992), cert. denied, 508 U.S. 907 (1993). Mutual has failed to identify
any state law that would either authorize or require it to discriminate
against persons with AIDS or ARC in issuing insurance policies.

II

PLAINTIFFS HAVE ALLEGED FACTS SUFFICIENT TO SUPPORT A CLAIM OF
DISCRIMINATION UNDER TITLE III OF THE ADA BY ALLEGING THAT TERMS AND
CONDITIONS IN MUTUAL'S POLICIES DENY THEM, BECAUSE OF A DISABILITY, AIDS
OR ARC, PRIVILEGES OR BENEFITS AVAILABLE TO OTHERS

Plaintiffs have stated a prima facie case of discrimination under title
III of the ADA. First, Defendant is a public accommodation covered by
title III of the ADA.[^5] Second, Plaintiffs have alleged that they are
"disabled" within the meaning of the ADA because they are infected with
the human immunodeficiency virus ("HIV"); and, for purposes of this
motion, Defendant has assumed that the Plaintiffs are disabled within
the meaning of the ADA. [^6] Third, Plaintiffs have alleged that
Mutual's policies include terms and conditions that discriminate on the
basis of disability, AIDS, by imposing a lower maximum benefit limit on
treatment for AIDS and related conditions than for virtually all other
conditions.[^7] Plaintiffs have also alleged that Mutual's policies
provide its insureds, but not individuals with AIDS or ARC, the benefit
of restoration of the maximum lifetime cap after two years of no claims
experience. Mutual's AIDS caps single out persons with AIDS and deny
them benefits afforded to others because of AIDS, a disability.
Defendant admits the existence of the challenged AIDS Caps.[^8]
Accordingly, Plaintiffs have stated a prima facie case of
disability-based discrimination under title III of the ADA and
Defendant's Motion to Dismiss should properly be denied.[^9]

Title III of the ADA prohibits discrimination on the basis of disability
in the full and equal enjoyment of the privileges of a place of public
accommodation. 42 U.S.C. § 12182(a). The title III regulation makes
clear that the ADA reaches "insurance practices by prohibiting
differential treatment of individuals with disabilities in insurance
offered by public accommodations unless the differences are justified.\"
Preamble To Regulation On Nondiscrimination On The Basis Of Disability
In Public Accommodations And In Commercial Facilities (July 26, 1991),
reprinted at 28 C.F.R. Ch. 1, pt. 36, App. B at 619 (1996). This
application of the statute is consistent with the legislative history,
which makes clear that an insurer, such as Mutual, may not "limit the
[amount, extent, or kind of coverage available to an
individual]{.underline}, \... solely because of a physical or mental
impairment, except where the refusal, limitation, or rate differential
is based on sound actuarial principles, or is related to actual or
reasonable anticipated experience." H.R. Rep. No. 485, pt. 3, 101st
Cong., 2d Sess. 71 (1990); S. Rep. No. 116, [supra]{.underline}, at 85
(emphasis added). [See also]{.underline} 136 Cong. Rec. H4623 (July 12,
1990) (Rep. Owens); 136 Cong. Rec. H4624-4625 (July 12, 1990) (Rep.
Edwards); 136 Cong. Rec. S9697 (July 13, 1990) (Sen. Kennedy).
[See]{.underline} [also]{.underline} 28 CFR § 36.212. Further, terms and
conditions in a health insurance policy may not "be used as a subterfuge
to evade the purposes of subchapters I and III \[Titles I and III of the
ADA\]." 42 U.S.C. § 12201(c). [See also]{.underline} 28 C.F.R. §
36.212(b). Mutual's AIDS caps limit the amount and extent and kind of
coverage available to individuals because of disability.

By definition, Mutual's AIDS Caps are disability-based discrimination
because they provide less favorable coverage to individuals with a
disability, AIDS, than to others without a disability.[^10] This Court
should not dismiss Plaintiffs' complaint for failure to state a claim
unless "it appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief."
[Conley]{.underline} v. [Gibson]{.underline} , 355 U.S. 41, 45-46
(1957). Plaintiffs should be allowed to show that, because of
disability, Mutual's AIDS Caps treat one group of individuals --- those
with AIDS --- differently than another group --- all others. For
example, Plaintiffs may be able to show that under Mutual's policy an
individual with AIDS, who has incurred \$25,000 worth of expenses for
AIDS related treatment and has reached Mutual's AIDS Cap, could be
refused coverage for treatment for a particular type of cancer because
his cancer is related to, or "associated with", AIDS or is considered
one of these opportunistic illnesses. However, an individual covered by
the same policy who does not have AIDS would be covered for treatment
for that identical type of cancer because in his case, the cancer was
not related to or associated with AIDS. Under these circumstances,
Mutual's AIDS Cap dictates disparate treatment based upon AIDS.

In support of its contention that the AIDS Cap is not discrimination on
the basis of disability, Defendant relies primarily upon cases
concerning employer provided long-term disability benefits.
[EEOC]{.underline} v. [CNA Ins. Cos.,]{.underline} 96 F.3d 1039 (7^th^
Cir. 1996)(finding that a former employee lacked standing under Title I
of the ADA to challenge his former employer's long-term disability plan
which provided benefits to age 65 for physical problems and for two
years if the problem was mental or nervous); and [Parker]{.underline} v.
[Metropolitan Life Ins. Co.,]{.underline} 121 F.3d 1006 (6^th^ Cir.
1997)(holding that title III does not govern the content of a long-term
disability policy provided by an employer). Even assuming that those
cases are correctly reasoned and decided, they are of little assistance
to Defendant because the Plaintiffs in those cases challenged
discrimination between two categories of individuals with disabilities
\-- those with physical disabilities and those with mental or nervous
disabilities \-- not discrimination between persons with and without
disabilities.[^11] By stark contrast, the AIDS Caps challenged by
plaintiffs treat individuals with a single disability differently from
others without a disability. AIDS Caps do not provide different levels
of benefits to different categories of persons with disabilities; they
provide different levels of benefits to persons with AIDS than to
persons without disabilities. All individuals with AIDS who seek to
purchase a policy from Mutual will be subject to less favorable terms
and conditions of coverage.

Defendant also will find little support in [Modderno]{.underline} v.
[King]{.underline}, 82 F.3d 1059 (D.C. Cir. 1996), [cert.
denied]{.underline}, 117 S. Ct. 771 (1997) (rejecting a challenge under
Section 504 of the Rehabilitation Act to a \$75,000 limit on mental
health benefits where there was no similar limit on other health
benefits) because that case concerned a limit on mental health coverage
that applied to participants both with and without disabilities. In
[Modderno,]{.underline} each participant was entitled to only \$75,000
in mental health benefits regardless of whether he or she had a
disability. By contrast, Mutual defines its Cap specifically in terms of
disability; it applies only to individuals who have a disability, AIDS.

CONCLUSION

This Court should deny Mutual's motion to dismiss and find that: 1) the
terms and conditions under which insurance coverage is offered are
subject to Title III's ban on discrimination and 2) Plaintiffs can
establish a prima facie case of discrimination if they show the
allegations in the complaint to be true.

> Respectfully Submitted,

SCOTT R. LASSAR BILL LANN LEE

United States Attorney Acting Assistant Attorney Northern District of
Illinois General

Civil Rights Division

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

JOAN LASER JOHN L. WODATCH

Assistant United States Attorney L. IRENE BOWEN

Northern District of Illinois PHILIP L. BREEN

219 S. Dearborn Street ALYSE S. BASS

Chicago, Illinois 60604 Attorneys

Civil Rights Division

Department of Justice

P.O. Box 66078

Washington, D.C. 20035-6078

\(202\) 616-9511

March \_\_\_, 1998

[^1]: ^?^ Mutual also imposes a lower lifetime maximum benefit cap for
    treatment of alcoholism and drug addiction.

[^2]: ^?^ [But see]{.underline} [Parker]{.underline} v. [Metropolitan
    Life Ins. Co.]{.underline}, 121 F.3d 1006 (6th Cir. 1997), [cert
    denied]{.underline} 118 S. Ct. 871 (1998); [Leonard F.]{.underline}
    v. [Israel Discount Bank of New York]{.underline}, 967 F. Supp. 802,
    805 (S.D.N.Y. 1997). The Court in [Parker]{.underline} held that
    title III does not govern the content of a long-term disability
    policy offered by an employer; however, in dicta the court
    distinguished insurance purchased from a public accommodation, as is
    the case presented here, from employer-provided long-term disability
    benefits. "While Title IV (sic) of the ADA, 42 U.S.C. § 12201(c),
    may address the contents of insurance policies provided by a public
    accommodation, Title IV (sic) does not address the contents of a
    long-term disability plan offered by an employer because it is not
    place of public accommodation." [Id.]{.underline} at 1012.

[^3]: ^?^ Mutual attempts to rely upon 28 C.F.R. 36.307(a), which states
    that a public accommodation is not required \"to alter its inventory
    to include accessible or special goods that are designed for, or
    facilitate use by, individuals with disabilities.\" See also 28
    C.F.R. Ch. 1, pt. 36, App. B at 630-631 (1996). But that regulation
    is perfectly consistent with the Department\'s interpretation of
    Title III as reaching discrimination in the terms and conditions of
    insurance policies. For example, an insurance company that
    traditionally sells only life insurance need not change the scope of
    its business by also offering disability insurance policies, even
    though persons with disabilities may have a great need for such
    coverage. However, once a company decides to sell disability
    insurance, it must avoid unjustified discrimination in deciding
    which customers it will cover and the conditions under which it will
    offer such coverage to persons with disabilities.

[^4]: ^?^ Section III-3.11000 of the Technical Assistance Manual is
    reproduced in the addendum to this brief.

[^5]: ^?^ The statute defines \"public accommodation\" to include an
    \"insurance office\" whose operations affect commerce. 42 U.S.C. §
    12181(7). See discussion supra, beginning at p. 8.

[^6]: ^?^ See Mutual's Memorandum of Law In Support of Its Motion to
    Dismiss fn. 2. (hereafter Defendant's Memorandum). It is also the
    position of the Department of Justice that AIDS, ARC and
    asymptomatic HIV infection are disabilities under the ADA, either
    because these conditions substantially limit a major life activity
    of infected individuals or because these individuals are "regarded
    as" having a disability and included in the third prong of the ADA's
    definition of disability. 42 U.S.C. § 12102 (2)(C). See also,
    [Sidney Abbott, et al.]{.underline} v. [Randon Bragdon]{.underline},
    107 F.3d 934, (1^st^ Cir. 1997), [cert granted]{.underline}, 118 S.
    Ct. 554.

[^7]: ^?^ [See]{.underline} footnote 1, [supra]{.underline}.

[^8]: ^?^ "The policies issued by Mutual to Plaintiffs contain
    provisions that limit benefits [associated with]{.underline}
    Acquired Immune Deficiency Syndrome ("AIDS") or AIDS-Related
    Conditions ("ARC"). Specifically, the policy issued to Doe limits
    benefits to a lifetime maximum of \$100,000 while the policy issued
    to Smith limits benefits to a lifetime maximum of \$25,000. The
    policies limit benefits for other, but not all, medical conditions
    to a lifetime maximum of \$1,000,000." Defendant's Memorandum p.
    1-2, emphasis added.

[^9]: ^?^ Defendant will of course have an opportunity, at a later point
    in these proceedings, to present evidence to support a defense that
    its AIDS Caps are justified or otherwise permitted under the ADA.

[^10]: ^?^ In accord, [See]{.underline} EEOC: Interim Guidance on
    Application of ADA to Health Insurance, 8 F.E.P. Manual (BNA) 405
    (June 8, 1993).

[^11]: ^?^ In fact in [EEOC]{.underline} v. [CNA Ins. Cos.,]{.underline}
    96 F.3d 1039 (7^th^ Cir. 1996), this Circuit distinguished the facts
    before it from a situation where an insurer would choose to "vary
    the terms of its plan depending on whether the employee was
    disabled." [Id.]{.underline} at 1045. Mutual does just that. All
    individuals with AIDS who seek to purchase a health insurance policy
    from Mutual will receive less desirable terms and conditions of
    coverage because of disability, AIDS.