IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

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

)

THANDA WAI, et al., )

)

)

Plaintiffs, )

)

v\. ) Civil Action No. 1:97CV01551

)

ALLSTATE INSURANCE COMPANY, et al., ) Judge Harold H. Greene

)

Defendants. )

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
)

**BRIEF OF THE UNITED STATES AS [AMICUS]{.underline}
[CURIAE]{.underline}**

**IN OPPOSITION TO THE MOTIONS TO DISMISS**

**[BY DEFENDANTS ALLSTATE AND STATE FARM]{.underline}**

TABLE OF CONTENTS

I. [INTRODUCTION]{.underline} 1

II\. [FACTUAL ALLEGATIONS]{.underline} 3

III\. [ARGUMENT]{.underline} 4

A. Plaintiff Thanda Wai May Maintain Claims Under the Fair Housing Act
and\
the Americans with Disabilities Act 4

B. Plaintiffs\' Claims under the Fair Housing Act Are Not Barred by the\
McCarran-Ferguson Act 8

C. Plaintiffs Have Stated Claims that Defendants Have Discriminated\
in Violation of the Fair Housing Act 12

1\. Plaintiffs Have Stated a Claim that Defendants Have Made Housing
Unavailable in Violation of 42 U.S.C. § 3604(f)(1) 12

2\. Plaintiffs Have Stated a Claim that Defendants Have Discriminated in
the Provision of Services in Violation of 42 U.S.C. § 3604(f)(2) 19

3\. Plaintiffs Have Stated a Claim that Defendants Have Failed to Make a
Reasonable Accommodation in Violation of 42 U.S.C. § 3604(f)(3)(B) 22

D. Title III of the ADA Covers the Terms and Conditions\
of Insurance Policies 24

1\. Title III of the ADA Prohibits Disability-Based Discrimination\
Beyond the Denial of Physical Access to a Physical Facility 25

2\. The ADA Prohibits Discrimination in the Terms and\
Conditions of Insurance Contracts 31

a\. Coverage of the Terms And Conditions Of Insurance Policies Is
Evident From The ADA's Plain Language 31

b\. The Department of Justice's Title III Regulation and Technical
Assistance Manual Interpret Title III to Cover Disability-Based
Discrimination in the Terms and Conditions\
of Insurance Policies 35

c\. Defendants' Misconstrue the Title III Regulation 38

IV\. [CONCLUSION]{.underline} 40

**[TABLE OF AUTHORITIES]{.underline}**

**[CASES]{.underline}**

[ABF Freight Sys., Inc.]{.underline} v. [NLRB]{.underline}, 510 U.S. 317
(1994) 36

[Arnold]{.underline} v. [United Parcel Service, Inc.]{.underline}, 1998
WL 63505 (1^st^ Cir., Feb. 20, 1998) 31

[Attar]{.underline} v. [Unum Life Ins. Co.]{.underline}, No. CA
3-96-CV-0367-R, 1997 WL 446439 (N.D. Tx. Jul. 19, 1997) 25, 30, 33

[Baker]{.underline} v. [Hartford Life Ins. Co.]{.underline}, No. 94 C
4416, 1995 WL 573430 (N.D. Ill. Sept. 28, 1995) 25, 31

[Bangerter]{.underline} v. [Orem City Corp.]{.underline}, 46 F.3d 1491
(10^th^ Cir. 1995) 20

\*[Carparts Dist. Ctr., Inc]{.underline}. v. [Automotive Wholesaler's
Ass'n of New England]{.underline}, 37 F.3d 12 (1^st^ Cir. 1994) 24, 27,
30

[Chabner]{.underline} v. [United of Omaha Mut. Life Ins.
Co.]{.underline}, No. C-95-0447-MHP, 1998 WL 37750 (N.D. Cal. Jan. 26,
1998) 24, 29, 33, 34

\*[Chevron U.S.A. Inc.]{.underline} v. [Natural Resources Defense
Council, Inc.]{.underline}, 467 U.S. 837 (1984) 13, 19, 36

[City of Edmonds]{.underline} v. [Oxford House, Inc]{.underline}., 514
U.S. 725 (1995) 31

[City of Edmonds]{.underline} v. [Washington State Building Code
Council]{.underline}, 18 F.3d 802 (9^th^ Cir. 1994),
[aff'd]{.underline}, 115 S. Ct. 1776 (1995) 22

[Clifton Terrace Assoc.]{.underline} v. [United Technologies
Corp.]{.underline}, 929 F.2d 714 (D.C. Cir. 1991) . 5, 14, 15,

20, 21

[Cloutier]{.underline} v. [Prudential Ins. Co. Of America]{.underline},
964 F. Supp. 299 (N.D. Cal. 1997) 25, 26, 28, 30, 32,

37

[Cochran]{.underline} v. [Paco, Inc.]{.underline}, 606 F.2d 460 (5th
Cir. 1979) 9

\*[Doukas]{.underline} v. [Metropolitan Life Ins. Co.]{.underline}, 950
F. Supp. 422 (D.N.H. 1996) 25, 28, 30, 32

[Dunn]{.underline} v. [Midwestern Indemnity American Fire and
Casualty]{.underline}, 472 F. Supp. 1106 (S.D. Ohio\
1979) 8

[Equitable Life Assurance Society]{.underline} v. [Commission on Human
Relations]{.underline}, 290 Md. 333, 430 A.2d 60 (Md. 1981) 10, 11, 14

[Ferguson]{.underline} v.[ City of Phoenix]{.underline}, 931 F. Supp.
688 (D. Ariz. 1996) 36

[Fiedler]{.underline} v. [American Multi-Cinema, Inc]{.underline}., 871
F. Supp. 35 (D. D.C. 1994) 36

[Gomez]{.underline} v. [Toledo]{.underline}, 446 U.S. 635 (1980) 31

[Group Life & Health Ins. Co.]{.underline} v. [Royal Drug
Co.]{.underline}, 440 U.S. 205, (1979) 8

[Growth Horizons, Inc.]{.underline} v. [Delaware County]{.underline},
983 F.2d 1277 (3d Cir. 1993) 15, 16

[Heights Community Congress]{.underline} v. [Hilltop Realty,
Inc.]{.underline}, 774 F.2d 135 (6th Cir. 1985), [cert]{.underline}.
[denied]{.underline}, 475 U.S. 1019 (1986) 16

[Horizon House Dev. Serv., Inc.]{.underline} v. [Township of Upper
Southampton]{.underline}, 804 F. Supp. 683 (E.D. Pa. 1992),
[aff'd]{.underline} [mem.]{.underline}, 995 F.2d 217 (3d Cir. 1993) 20

[Hovsons, Inc.]{.underline} v. [Township of Brick]{.underline}, 89 F.3d
1096 (3d Cir. 1996) 22

[Innovative Health Systems, Inc]{.underline}. v. [City of White
Plains]{.underline}, 117 F.3d 37 (2d Cir. 1997) 5, 36

[Jefferson County Pharmaceutical Ass'n]{.underline} v. [Abbott
Labs]{.underline}., 460 U.S. 150 (1983) 31

[John Hancock Mut. Life Ins. Co.]{.underline} v. [Harris Trust & Savings
Bank]{.underline}, 114 S. Ct. 517 (1993) 8

[Kennedy Park Homes Ass\'n, Inc.]{.underline} v. [City of Lackawanna,
N.Y.]{.underline}, 436 F.2d 108 (2d Cir. 1970), [cert]{.underline}.
[denied]{.underline}, 401 U.S. 1010 (1971) 16

\*[Kotev]{.underline} v. [First Colony Life Ins. Co.]{.underline}, 927
F. Supp. 1316 (C.D. Cal. 1996) 6, 25, 26, 28, 29, 30, 34,

37

[Leonard F.]{.underline} v. [Israel Discount Bank of New
York]{.underline}, 967 F. Supp. 802 (S.D.N.Y. 1997) 32

[Lewis]{.underline} v. [Aetna Life Ins. Co.]{.underline}, 982 F. Supp.
1158 (E.D. Va. 1997) 25, 30, 33

[Mackey]{.underline} v. [Nationwide Insurance Co]{.underline}., 724 F.2d
419 (4th Cir. 1984) 8, 9

[Magan]{.underline} v. [Medical Mutual Liability Insurance
Society]{.underline}, 81 Md. App. 301, 567 A.2d 503 (1989)

11

[McDiarmid]{.underline} v. [Economy Fire & Casualty Co]{.underline}.,
604 F. Supp. 105 (S.D. Ohio) 8, 9

[McDonald]{.underline} v. [Verble]{.underline}, 622 F.2d 1227 (6^th^
Cir. 1980) 17

[Merchants Home Delivery Serv., Inc.]{.underline} v. [Frank B. Hall &
Co., Inc.]{.underline}, 50 F.3d 1486 (9th Cir. 1995),
[cert]{.underline}. [denied]{.underline}, 116 S. Ct. 418 (1995) 9

[Michigan Protection and Advocacy Service, Inc.]{.underline} v.
[Babin]{.underline}, 18 F.3d 337 (6^th^ Cir. 1994) 15, 16

\*[NAACP]{.underline} v. [American Family Mutual Insurance
Co]{.underline}., 978 F.2d 287 (7th Cir. 1992), [cert]{.underline}.
[denied]{.underline}, 113 S. Ct. 2335 (1993) 2, 8, 9, 11, 12, 13, 14,
18, 19

\*[Nationwide Mutual Insurance Co]{.underline}. v.
[Cisneros]{.underline}, 52 F.3d 1351, 1360-63 (6th Cir. 1995),
[cert]{.underline}. [denied]{.underline}, 116 S. Ct. 973 (1996) 2, 7,
11, 12, 13, 16, 18, 19

\*[Oak Ridge Care Center, Inc.]{.underline} v. [Racine
County]{.underline}, 896 F. Supp. 867 (E.D. Wis. 1995) 6

[Pappas]{.underline} v.[ Bethesda Hosp. Ass'n]{.underline}, 861 F. Supp.
616 (S.D. Ohio 1994) 25

[Paralyzed Veterans of America]{.underline} v. [D.C. Arena
L.P.]{.underline}, 117 F.3d 579 (D.C. Cir. 1997), [cert]{.underline}.
[denied]{.underline}, [Pollin]{.underline} v. [Paralyzed Veterans of
America]{.underline}, 118 S. Ct. 1184 (1998) 36

[Parker]{.underline} v. [Metropolitan Life Ins. Co.]{.underline},121
F.3d 1006 (6^th^ Cir. 1997), [cert]{.underline}. [denied]{.underline},
118 S. Ct. 871 (1998) 25, 32, 33

[Patterson]{.underline} v. [McClean Credit Union]{.underline}, 491 U.S.
164, (1989) 14

[Pension Benefit Guaranty Corp.]{.underline} v. [LTV Corp.]{.underline},
496 U.S. 633 (1990) 13

[Samaritan Inns, Inc.]{.underline} v. [District of
Columbia]{.underline}, 114 F.3d 1227 (D.C. Cir. 1997) 15

[Smith & Lee Assoc., Inc.]{.underline} v. [City of Taylor]{.underline},
102 F.3d 781 (6^th^ Cir. 1996) 22, 23

[Southend Neighborhood Improvement Assoc.]{.underline} v. [County of St.
Clair]{.underline}, 743 F.2d 1207 (7^th^ Cir.

1984\) 15, 16

[Stinson]{.underline} v. [United States]{.underline}, 508 U.S. 36 (1993)
36

[Strange]{.underline} v. [Nationwide Mutual Insurance Co]{.underline}.,
867 F. Supp. 1209, 1212 (E.D. Pa. 1994) 12, 13

[Thomas Jefferson Univ.]{.underline} v. [Shalala]{.underline}, 512 U.S.
504 (1994) 36

[Trafficante]{.underline} v. [Metropolitan Life Ins. Co.]{.underline},
409 U.S. 205 (1972) 4, 7, 15

\*[United Farm Bureau Mutual Insurance Co., Inc]{.underline}. v.
[Cisneros]{.underline}, 24 F.3d 1008, 1016 (7th Cir. 1994)

7, 11, 17

[United States Dep\'t of Treasury]{.underline} v. [Fabe]{.underline},
113 S. Ct. 2202 (1993) 8

[United States]{.underline} v. [Alaska]{.underline}, 117 S. Ct. 1888
(1997) 27

[United States]{.underline} v. [City of Hayward]{.underline}, 36 F.2d
832 (9^th^ Cir. 1994), [cert]{.underline}. [denied]{.underline}, 116 S.
Ct. 65 (1995)

6, 18

[United States]{.underline} v. [City of Taylor]{.underline}, 872 F.
Supp. 423 (E.D. Mich. 1995), [aff'd in relevant part]{.underline}, 102
F.3d 781 (6^th^ Cir. 1996) 23

[United States]{.underline} v. [Morton]{.underline}, 467 U.S. 822 (1984)
36

[World Ins. Co.]{.underline} v. [Branch]{.underline}, 966 F. Supp. 1203
(N.D. Ga. 1997) 25, 30

**[STATUTES]{.underline}**

\*Americans with Disabilities Act, 42 U.S.C. §§ 12101 [et]{.underline}
[seq]{.underline} [passim]{.underline}

42 U.S.C. § 12101 25, 26

42 U.S.C. § 12102 28

42 U.S.C. § 12181 27, 31

42 U.S.C. § 12182 4, 5, 26, 27, 28, 29, 31, 32

42 U.S.C. § 12186 35

42 U.S.C. § 12188 36

42 U.S.C. § 12201 29, 33, 34, 35

42 U.S.C. § 12206 35

\*Fair Housing Act, 42 U.S.C. §§ 3601 [et]{.underline}
[seq]{.underline}. [passim]{.underline}

42 U.S.C. § 3604(b) 18

42 U.S.C. § 3604(f)(1) 1, 2, 4, 5, 7, 12, 14, 15, 16, 18, 20, 22

42 U.S.C. §§ 3604(f)(2) 1, 2, 7, 8, 10, 11, 12, 13, 14, 17, 18, 21, 31,
39

42 U.S.C. § 3604(f)(3) 1, 2, 4, 5, 7, 18, 20, 21, 22, 23

McCarran-Ferguson Act, 15 U.S.C. §§ 1011 [et]{.underline}
[seq]{.underline}. 10, 11

Md. Code Ann. Art. 48A, § 25(4)(a) 9, 10

Md. Code, Insurance, § 27-501 9, 10

**[REGULATIONS]{.underline}**

\*24 C.F.R. § 100.70(d)(4) 13, 19

28 C.F.R. pt. 36, App. B 35, 38

28 C.F.R. § 36.104 27

28 C.F.R. § 36.307 38

**[LEGISLATIVE HISTORY]{.underline}**

136 Cong. Rec. H4623 (July 12, 1990) (Rep. Owens) 37

136 Cong. Rec. H4624 (July 12, 1990) (Rep. Edwards) 37

136 Cong. Rec. S9697 (July 13, 1990) (Sen. Kennedy) 37

141 Cong. Rec. S14355 14

141 Cong. Rec. S14363 (Sept. 27, 1995) 14

143 Cong. Rec. S10741-42 (Oct. 9, 1997) 14

H.R. Rep. No. 485 (II), 101^st^ Cong., 2d Sess., pt. 2 (1990) 29, 37

S. Rep. No. 116, 101^st^ Cong., 2d Sess. (1990) 29, 37

**[MISCELLANEOUS]{.underline}**

Title III Technical Assistance Manual (Nov. 1993) 35

I. [INTRODUCTION]{.underline}

The United States submits this brief as [amicus]{.underline}
[curiae]{.underline} in support of Plaintiffs\' opposition to the
Motions to Dismiss filed by Defendants Allstate and State Farm. In this
case, Plaintiffs allege that Defendants have refused to provide home
insurance on the basis of disability, in violation of the Fair Housing
Act, 42 U.S.C. §§ 3601 [et]{.underline} [seq]{.underline}., and the
Americans with Disabilities Act, 42 U.S.C. §§ 12101 [et]{.underline}
[seq]{.underline}.

This brief addresses four of the arguments raised by the Defendants: (1)
whether Plaintiff Thanda Wai may state claims under the Fair Housing Act
and the Americans with Disabilities Act; (2) whether Plaintiffs' Fair
Housing Act claims are barred by the McCarran-Ferguson Act; (3) whether
Plaintiffs have failed to state any claim under the Fair Housing Act;
and (4) whether the Americans with Disabilities Act covers the terms of
insurance policies.^1^[^1] As explained in detail below, none of
Defendants' arguments have merit.

First, Plaintiff Thanda Wai, as the landlord for a group home for
persons with disabilities, may assert claims under both the Fair Housing
Act, 42 U.S.C. §§ 3601 [et]{.underline} [seq]{.underline}., and the
Americans with Disabilities Act, 42 U.S.C. §§ 12101 [et]{.underline}
[seq]{.underline}. It is irrelevant that Ms. Wai is a landlord and is
not herself disabled. The Fair Housing Act prohibits discrimination on
the basis of the disabilities of persons residing in the home, 42 U.S.C.
§§ 3604(f)(1)(B), (f)(2)(B), and both Acts prohibit discrimination on
the basis of the disabilities of persons "associated" with Ms. Wai. 42
U.S.C. §§ 3604(f)(1)(C), 3604(f)(2)(C), and 12182(b)(2)(E).

Second, all courts which have considered the argument that the
McCarran-Ferguson Act, 15 U.S.C. §§ 1011 [et]{.underline}
[seq]{.underline}., bars claims under the Fair Housing Act have rejected
this contention. [See]{.underline}, [e.g.]{.underline}, [Nationwide
Mutual Insurance Co]{.underline}. v. [Cisneros]{.underline}, 52 F.3d
1351, 1360-63 (6th Cir. 1995), [cert]{.underline}. [denied]{.underline}
116 S. Ct. 973 (1996); [NAACP]{.underline} v. [American Family Mutual
Insurance Co]{.underline}., 978 F.2d 287, 293-97 (7th Cir. 1992),
[cert]{.underline}. [denied]{.underline}, 113 S. Ct. 2335 (1993).
Defendants have not provided any rationale which would justify a
departure from the weight of authority on this issue.

Similarly, since 1989 when the United States Department of Housing and
Urban Development promulgated its Fair Housing Act regulations, every
court considering the issue has found that the Fair Housing Act applies
to discriminatory denials of home insurance. [See]{.underline},
[e.g.]{.underline}, [Nationwide]{.underline}, 52 F.3d at 1360; [American
Family]{.underline}, 978 F.2d at 301. Following this line of authority,
Plaintiffs' allegations in the present case state claims that Defendants
have violated the Fair Housing Act, 42 U.S.C. §§ 3604(f)(1), (f)(2), and
(f)(3)(B). As explained in detail below, the fact that the homeowner was
able to find less desirable substitute coverage from another insurance
company cannot protect Defendants from liability under the Act.

Finally, the plain language of the ADA and the goals behind it
demonstrate that the ADA would bar unjustified discrimination in
insurance practices like those alleged in Plaintiffs' complaint. Despite
Defendants' contentions, the ADA covers not only physical access to
insurance offices, but it also prohibits disability-based discrimination
in the terms and conditions of insurance policies.

II\. [FACTUAL ALLEGATIONS]{.underline}

As set forth in Plaintiffs' Complaint, Plaintiff Thanda Wai is the
co-owner of a single family home in Maryland. Complaint ¶ 15.^2^[^2] Ms.
Wai is required by the terms of her mortgage to carry insurance on this
house. Complaint ¶ 2. At the time she purchased her home in 1994, Ms.
Wai obtained homeowners insurance from Defendant Allstate Insurance
Company. Complaint ¶ 15. In 1995, Ms. Wai entered into an agreement to
rent the house to Christians for Assisted Living for the Mentally
Retarded Association (CALMRA), which placed into the home three women
with disabilities and a live-in counselor. Complaint ¶ 16.

Shortly thereafter, Ms. Wai contacted her Allstate agent and attempted
to change her home insurance policy to a standard landlord policy.
Complaint ¶ 17. After the Allstate agent inquired about the tenants of
the home and was told that they were three women with disabilities and a
live-in counselor, the Allstate agent stated that Allstate could not
provide a standard landlord policy or any other home insurance for Ms.
Wai. He advised Ms. Wai she would have to obtain commercial insurance
from another carrier. Complaint ¶ 18.

Ms. Wai subsequently contacted State Farm in an attempt to obtain a
standard landlord policy. The State Farm agent also refused to provide
Ms. Wai with any home insurance after learning that the residents of the
home were three women with disabilities and a live-in counselor. Like
Allstate, State Farm suggested that Ms. Wai contact another agency.
Complaint ¶ 19.

Ultimately, Ms. Wai was able to obtain a commercial insurance policy
from Hartford Fire Insurance Company. The premiums for this policy cost
significantly more than for standard landlord insurance, and the policy
provides less desirable and less extensive coverage. In particular, Ms.
Wai's present policy does not provide any liability coverage. Complaint
¶ 20.

III\. [ARGUMENT]{.underline}

A. Plaintiff Thanda Wai May Maintain Claims Under the Fair Housing Act
and\
[the Americans with Disabilities Act ]{.underline}

Defendants contend that Plaintiff Thanda Wai may not assert claims under
the Fair Housing Act or the Americans with Disabilities Act (ADA)
because she is a landlord and is not herself disabled. Defendants'
arguments misconstrue the scope of these Acts.

Ms. Wai alleges that Defendants Allstate and State Farm refused to
provide her with insurance coverage for her house after learning that
the occupants of her home would be three women with disabilities and
their live-in counselor. Complaint ¶¶ 17-19. Accordingly, Ms. Wai
alleges that Defendants have discriminated on the basis of disability in
violation of the Fair Housing Act, 42 U.S.C. §§ 3604(f)(1), (f)(2), and
(f)(3)(B), and the ADA 42 U.S.C. § 12182(b)(1)(E). Ms. Wai is a proper
plaintiff for each of these claims.^3^[^3]

First, Ms. Wai properly alleges that Defendants have discriminated on
the basis of the disabilities of the residents of her house. Under the
Fair Housing Act, both Section 3604(f)(1) (prohibits making housing
unavailable) and Section 3604(f)(2) (prohibits discrimination in the
provision of services) bar discrimination on the basis of "a handicap of
. . . [(B) a person residing in . . . that dwelling]{.underline}"
(emphasis added). To make such a claim, it does not matter that Ms. Wai
is not herself disabled. The alleged discrimination was due to the
disabilities of her residents, and Ms. Wai is an "aggrieved person"
within the meaning of 42 U.S.C. § 3602(i), because she has been injured
by Defendants' discriminatory acts. [Trafficante]{.underline} v.
[Metropolitan Life Ins. Co.]{.underline}, 409 U.S. 205, 208-12 (1972)
(white tenants were "persons aggrieved" by landlord's discrimination
against minorities); [United Farm Bureau Mutual Ins. Co.]{.underline} v.
[Metropolitan Human Relations Comm'n]{.underline}, 24 F.3d 1008, 1015
(7^th^ Cir. 1994) (white homeowner may bring claim that insurance
company engaged in redlining on the basis of race); [Secretary, U.S.
Dept. Housing and Urban Development]{.underline} v.
[Blackwell]{.underline}, 908 F.2d 864, 873 (11^th^ Cir. 1990) (white
tenants who suffered economic losses as a result of Defendants'
discrimination against black purchasers were "aggrieved
persons").^4^[^4]

Second, under both the Fair Housing Act and the ADA, Ms. Wai is
"associated with" the disabled residents of her house. Both Sections
3604(f)(1) and 3604(f)(2) of the Fair Housing Act also prohibit
discrimination on the basis of "a handicap of . . . (C) any person
associated with that buyer." Ms. Wai, who purchased and owns the house,
is associated with the people who live there. This is a common
situation, and "group home" cases under the Fair Housing Act are
frequently brought by the homeowners rather than or in addition to the
disabled residents. [See, e.g.,]{.underline} [Marbrunak,
Inc.]{.underline} v. [City of Stow]{.underline}, 974 F.2d 43 (6^th^ Cir.
1992); [Potomac Group Home Corp.]{.underline} v. [Montgomery
County]{.underline}, 823 F. Supp. 1285 (D. Md. 1993). The ADA has a
similar provision making it "discriminatory to exclude or otherwise deny
equal goods, services, facilities, privileges, advantages, or
accommodations, or other opportunities to an individual or entity
because of the known disability" of someone with whom the individual has
a "relationship or association." 42 U.S.C. § 12182(b)(2)(E); [Innovative
Health Systems, Inc]{.underline}. v. [City of White Plains]{.underline},
117 F.3d 37, 47-48 (2d Cir. 1997) (drug and alcohol rehabilitation
center discriminated against because of its association with its
clients); [Kotev]{.underline} v. [First Colony Life Ins.
Co.]{.underline}, 927 F. Supp. 1316, 1320 (C.D. Cal. 1996) (insurance
company excluded an individual from coverage based on his association
with an individual who is HIV-positive).

Defendants contend that Ms. Wai's connection with her tenants is too
attenuated to qualify under these provisions, because Ms. Wai leased her
house to the group home provider, CALMRA, which in turn contracted with
the disabled residents. This formality does not, however, change the
fact that Ms. Wai, as landlord, was allegedly injured by Defendants as a
result of the disabilities of the residents of her home. Nor does it
matter that Ms. Wai is a landlord. When landlords are injured by
discriminatory housing practices, the Fair Housing Act and the ADA
protect them as well. [See]{.underline} [United States]{.underline} v.
[City of Hayward]{.underline}, 36 F.2d 832 (9^th^ Cir. 1994) (Fair
Housing Act claim by owner of mobile home park who was penalized by City
after permitting families with children to reside in park),
[cert]{.underline}. [denied]{.underline}, 116 S. Ct. 65 (1995);
[cf.]{.underline} [Oak Ridge Care Center, Inc.]{.underline} v. [Racine
County]{.underline}, 896 F. Supp. 867 (E.D. Wis. 1995) (court upheld ADA
association claim of property owner, who was discriminated against when
prospective buyer, a drug and alcohol rehabilitation facility, was
denied zoning permits); H.R. Rep. No. 101-485, 101^st^ Cong., 2d Sess.,
pt. 2 at 62 (1990) (The ADA's "protection is not limited to those who
have a familial relationship with the individual. Indeed, one of the
amendments defeated by the Committee was an amendment that would have
limited the provision to only certain associations and relationships.").

Similar situations to Ms. Wai's were considered by the courts in [United
States]{.underline} v. [Scott]{.underline}, 788 F. Supp. 1555 (D. Kan.
1992), and [United States]{.underline} v. [Wagner]{.underline}, 940 F.
Supp. 972 (N.D. Tex. 1996). In both cases, non-disabled homeowners
sought to sell their homes to organizations that planned to establish
group homes for disabled persons in the houses, but the sales were
blocked by groups of neighbors. As with Ms. Wai who has rented to
CALMRA, in both [Scott]{.underline} and [Wagner]{.underline} the
homeowners dealt with organizations, and did not attempt to contract
directly with the disabled residents. Nonetheless, the homeowners in
both cases were found to be "aggrieved persons" under the Fair Housing
Act, 42 U.S.C. § 3604(i). [Scott]{.underline}, 788 F. Supp. at 1561;
[Wagner]{.underline}, 940 F. Supp. at 979. As the [Scott]{.underline}
court stated, although the sellers of the home were:

not themselves disabled, the Act allows them to be beneficiaries of the
proscription against handicap discrimination. . . . That plaintiffs may
sue under the Fair Housing Act for injuries they have suffered as a
result of housing discrimination against third parties is a well
established principle. \[citing [Trafficante]{.underline}, 409 U.S.
205(1972)\].

788 F. Supp. at 1561; [see]{.underline} [also]{.underline} [Oak
Ridge]{.underline}, 896 F. Supp. at 872 ("standing for associational
suits must be as broad under the ADA as the FHA").

Accordingly, Ms. Wai may state claims under the Fair Housing Act because
the alleged acts of discrimination were taken "because of the handicap
of . . . (B) a person residing in" her home, 42 U.S.C. §§ 3604(f)(1)(B),
3604(f)(2)(B), and under both Acts because Ms. Wai is associated with
the disabled residents of her home. 42 U.S.C. §§ 3604(f)(1)(C),
3604(f)(2)(C), and 12182(b)(2)(E).

B. Plaintiffs\' Claims under the Fair Housing Act Are Not Barred by the\
[McCarran-Ferguson Act ]{.underline}

Defendants contend that the McCarran-Ferguson Act, 15 U.S.C. §§ 1011
[et]{.underline} [seq]{.underline}., bars Plaintiffs' claims under the
Fair Housing Act, 42 U.S.C. §§ 3601 [et]{.underline} [seq]{.underline}.
However, [every]{.underline} court which has addressed the issue, has
refused to bar such claims. [See]{.underline} [Nationwide Mutual
Insurance Co]{.underline}. v. [Cisneros]{.underline}, 52 F.3d 1351,
1360-63 (6th Cir. 1995), [cert]{.underline}. [denied]{.underline} 116 S.
Ct. 973 (1996); [United Farm Bureau Mutual Insurance Co.,
Inc]{.underline}. v. [Cisneros]{.underline}, 24 F.3d 1008, 1016 (7th
Cir. 1994); [NAACP]{.underline} v. [American Family Mutual Insurance
Co]{.underline}., 978 F.2d 287, 293-97 (7th Cir. 1992),
[cert]{.underline}. [denied]{.underline}, 113 S. Ct. 2335 (1993);
[Mackey]{.underline} v. [Nationwide Insurance Co]{.underline}., 724 F.2d
419, 420-21 (4th Cir. 1984); [McDiarmid]{.underline} v. [Economy Fire &
Casualty Co]{.underline}., 604 F. Supp. 105, 108-09 (S.D. Ohio 1984);
[Dunn]{.underline} v. [Midwestern Indemnity American Fire and
Casualty]{.underline}, 472 F. Supp. 1106, 1111-12 (S.D. Ohio 1979). This
Court, too, should find that McCarran-Ferguson poses no bar to Fair
Housing Act claims.

In enacting the McCarran-Ferguson Act, Congress\'s \"primary concern\"
was to \"ensure that the States would continue to have the ability to
tax and regulate the business of insurance.\" [Group Life & Health Ins.
Co.]{.underline} v. [Royal Drug Co.]{.underline}, 440 U.S. 205, 217-218
(1979). To that end, Congress protected state laws regulating insurance
from inadvertent preemption by federal statutes:

No 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).

As the statutory language makes clear, the McCarran-Ferguson Act does
not dictate \"unqualified deferral to state law.\" [John Hancock Mut.
Life Ins. Co.]{.underline} v. [Harris Trust & Savings Bank]{.underline},
114 S. Ct. 517, 525 (1993). The mere fact that a state regulates
insurance does not prevent the application of a general federal statute
to insurance practices; rather, the McCarran-Ferguson Act applies only
where the federal statute\'s application would \"invalidate, impair, or
supersede\" some specific state law regulating insurance. The Supreme
Court has at least implicitly recognized that the statutory text
requires a showing of a specific conflict between some particular state
law and the federal statute at issue. [See]{.underline} [United States
Dep\'t of Treasury]{.underline} v. [Fabe]{.underline}, 113 S. Ct. 2202,
2211 (1993) (McCarran-Ferguson Act imposes \"a rule that state laws
enacted \`for the purpose of regulating the business of insurance\' do
not yield to [conflicting]{.underline} federal statutes unless a federal
statute specifically requires otherwise\") (emphasis added). The lower
courts have made that recognition explicit. [See]{.underline},
[e.g.]{.underline}, [Merchants Home Delivery Serv., Inc.]{.underline} v.
[Frank B. Hall & Co., Inc.]{.underline}, 50 F.3d 1486, 1489 (9th Cir.
1995), [cert]{.underline}. [denied]{.underline}, 116 S. Ct. 418 (1995);
[American Family]{.underline}, 978 F.2d at 295-297;
[Mackey]{.underline}, 724 F.2d at 421; [Cochran]{.underline} v. [Paco,
Inc.]{.underline}, 606 F.2d 460, 464 (5th Cir. 1979).

There is no such conflict in the present case. Like many states,
Maryland regulates insurance and prohibits discrimination by insurers on
the basis of disability. Among other provisions, Maryland's insurance
law prohibits discrimination on the basis of "race, creed, color, sex,
religion, national origin, place of residency, blindness, or other
physical handicap or disability." Md. Code, Insurance, § 27-501 .
However, this fact does not preclude application of the Fair Housing Act
to discriminatory insurance practices in that state. As the United
States Court of Appeals for the Seventh Circuit observed in [American
Family]{.underline}, 978 F.2d at 295, regarding similar insurance
statutes in Wisconsin, \"\[d\]uplication is not conflict.\"
[See]{.underline} [also]{.underline} [McDiarmid]{.underline}, 604 F.
Supp. at 109 (noting that \"allowing Plaintiffs\' Title VIII claim to
proceed will not invalidate, impair, or supersede § 3901.21 \[of the
Ohio Code pertaining to insurance\], since Title VIII does not permit
anything that § 3901.21 prohibits and Title VIII does not prohibit
anything that §3901.21 permits.\").

Defendants contend that this Court should not follow the numerous other
courts considering this issue, because under Maryland law, the Insurance
Commissioner has exclusive jurisdiction over insurance matters.^5^[^5]
Defendants maintain that permitting claims of discrimination to be
litigated in another forum, namely in Fair Housing Act lawsuits, would
disturb "the finely calibrated regulatory structure" that Maryland has
established by conferring exclusive jurisdiction on the Insurance
Commission. Allstate Br. at 16. However, the State of Maryland itself
has determined that the Insurance Commissioner's jurisdiction is not
exclusive in discrimination cases, and thus, the enforcement provisions
cited by Defendants fail to demonstrate that Fair Housing Act lawsuits
would "invalidate, impair, or supersede" any state law.

Specifically, in a passage of Maryland's Insurance Code actually quoted
by Allstate in its brief, the State of Maryland has provided that
"\[t\]he Human Relations Commission has concurrent jurisdiction with the
\[Insurance\] Commissioner over alleged discrimination on the basis of
race, creed, color or national origin." Md. Code, Insurance, § 2-202,
quoted in Allstate Br. at 15.^6^[^6] Moreover, the Court of Appeals of
Maryland has held that the Human Relations Commission has jurisdiction
to enforce the state statute barring discrimination in public
accommodations against insurance companies. [Equitable Life Assurance
Society]{.underline} v. [Commission on Human Relations]{.underline}, 290
Md. 333, 430 A.2d 60 (Md. 1981). This statute prohibits discrimination
in "accommodations, advantages, facilities, privileges, sales, or
service because of the race, sex, creed, color, national origin, marital
status, or [physical or mental handicap]{.underline} of any person." Md.
Code Ann., Art. 49B, § 8 (emphasis added). In [Equitable Life
Assurance]{.underline}, the Court of Appeals of Maryland found that the
fact that the Insurance Commissioner is responsible for regulating
insurance in the state:

is not inconsistent with the legislature assigning to the \[Human
Relations\] Commission the responsibility of ferreting out unfair
discrimination (as provided within Section 8) by those licensed to
engage in the insurance industry. We find that the activities of the
Insurance Commissioner and the Commission in exposing and correcting
unfair discrimination in insurance may co-exist, each agency having been
authorized to act by the legislature.

290 Md. At 338, 430 A.2d at 63. This analysis applies equally well to
the present situation, and demonstrates that Fair Housing Act lawsuits
may co-exist with the Insurance Commissioner's jurisdiction without
impairing Maryland's insurance scheme.^7^[^7]

Nor have Defendants demonstrated any other conflict between application
of the Fair Housing Act and the operation of state insurance law.
Accordingly, the McCarran-Ferguson Act should not bar the Plaintiffs'
Fair Housing Act claims in this suit.

C.  Plaintiffs Have Stated Claims that Defendants Have Discriminated\
    [in Violation of the Fair Housing Act ]{.underline}

[Every]{.underline} court which has addressed whether the Fair Housing
Act applies to discriminatory denials of homeowners insurance has upheld
such application, since the Department of Housing and Urban Development
(HUD) issued its regulation in 1989 expressly stating that the Act
covers such denials. [See]{.underline} [Nationwide Mutual Insurance
Co]{.underline}. v. [Cisneros]{.underline}, 52 F.3d 1351, 1360 (6th Cir.
1995), [cert]{.underline}. [denied]{.underline} 116 S. Ct. 973 (1996);
[United Farm Bureau Mutual Insurance Co., Inc]{.underline}. v.
[Cisneros]{.underline}, 52 F.2d 1351 (7th Cir. 1994);
[NAACP]{.underline} v. [American Family Mutual Insurance
Co]{.underline}., 978 F.2d 287, 301 (7th Cir. 1992), [cert]{.underline}.
[denied]{.underline}, 113 S. Ct. 2335 (1993); [Strange]{.underline} v.
[Nationwide Mutual Insurance Co]{.underline}., 867 F. Supp. 1209, 1212,
1214-15 (E.D. Pa. 1994). Although each of the above cases involved
insurance discrimination on the basis of race rather than disability,
the Plaintiffs' allegations in this suit similarly state proper claims
for relief under the Fair Housing Act.

1\. Plaintiffs Have Stated a Claim that Defendants Have Made Housing\
[Unavailable in Violation of 42 U.S.C. § 3604(f)(1) ]{.underline}

Defendants argue that Plaintiffs cannot state a claim under Section
3604(f)(1) because no disabled person was actually denied a place to
live as a result of Defendants' refusal to provide Ms. Wai with
insurance coverage. However, Defendants cannot escape liability due to
the fact that Ms. Wai was able to find less desirable substitute
coverage and did not lose her house.

First, a denial of homeowners insurance does indeed make housing
unavailable. As the United States Court of Appeals for the Seventh
Circuit explained, "\[l\]enders require their borrowers to secure
property insurance. No insurance, no loan; no loan, no house; lack of
insurance thus makes housing unavailable." [N.A.A.C.P.]{.underline} v.
[American Family Mut. Ins. Co.]{.underline}, 978 F.2d 287, 297 (7^th^
Cir. 1992), [cert.]{.underline} [denied]{.underline}, 113 S. Ct. 2335
(1993); [accord]{.underline} [Nationwide Mut. Ins. Co.]{.underline} v.
[Cisneros]{.underline}, 52 F.3d 1351, 1359 (6^th^ Cir. 1995) (noting
"the direct connection of availability of property insurance and ability
to purchase a house"), [cert.]{.underline} [denied]{.underline}, 116 S.
Ct. 973 (1996). Here, Plaintiffs allege that the individual Plaintiffs
must carry landlord insurance "because mortgage lenders require it and
because it is necessary to protect against financial losses." Complaint
at ¶ 2. Accordingly, Ms. Wai could lose her house if she were unable to
obtain insurance, and thus the housing would be unavailable, both to Ms.
Wai and to the disabled residents.

As noted above, all courts that have considered this issue since 1989,
have held that the Fair Housing Act covers insurance discrimination;
they have done so largely in reliance on HUD's Fair Housing Act
regulations which were promulgated that year. HUD's regulations provide
that unlawful discrimination under the Act includes "\[r\]efusing to
provide . . . property or hazard insurance for dwellings or providing
such . . . insurance differently because of race, color, religion, sex,
handicap, familial status or national origin." 24 C.F.R. § 100.70(d)(4).
Courts have uniformly held that HUD's interpretation is reasonable and
entitled to deference under [Chevron U.S.A. Inc.]{.underline} v.
[Natural Resources Defense Council, Inc.]{.underline}, 467 U.S. 837
(1984). [See]{.underline}, [e.g.]{.underline}, [Nationwide]{.underline},
52 F.3d at 1359; [American Family]{.underline}, 978 F.2d at 300;
[Strange]{.underline} v. [Nationwide Mutual Insurance Co]{.underline}.,
867 F. Supp. 1209, 1214 (E.D. Pa. 1994).

Under [Chevron]{.underline}, HUD\'s construction need not be \"the
reading the court would have reached if the question initially had
arisen in a judicial proceeding.\" [Chevron]{.underline}, 467 U.S. at
843 n.11. Rather, the Secretary\'s regulation outlawing discriminatory
insurance practices must be upheld if it is \"based on a permissible
construction of the statute.\" [Id.]{.underline} at 843. Here, HUD's
construction not only is permissible but is supported by the broad and
inclusive statutory text and the over-arching purpose of the Act.
Obtaining homeowners\' insurance is an integral part of the process of
buying a house. Further, a judgment as to whether the availability of
property insurance \"otherwise makes unavailable or denies housing\" is,
as the Supreme Court has noted in another context, precisely the type of
\"judgment\[\] about the way the real world works . . . that agencies
are better equipped to make than courts.\" [Pension Benefit Guaranty
Corp.]{.underline} v. [LTV Corp.]{.underline}, 496 U.S. 633, 651 (1990).
Thus, as the Seventh Circuit has held, "Section 3604 is

sufficiently pliable that its text can bear the Secretary's
construction. Courts should respect a plausible construction by an
agency to which Congress has delegated the power to make substantive
rules." [American Family]{.underline}, 978 F.2d at 300.^8^[^8]

Defendants contend that nonetheless, this Court should not follow the
unanimous position of federal courts considering insurance
discrimination cases under the Fair Housing Act since 1989, because the
United States Court of Appeals for the District of Columbia Circuit has
interpreted the Fair Housing Act differently in [Clifton Terrace Assoc.
Ltd.]{.underline} v. [United Technologies Corp.]{.underline}, 929 F.2d
714 (D.C. Cir. 1991). However, Defendants' reliance on [Clifton
Terrace]{.underline} is misplaced. In that case, the D.C. Circuit held
that an apartment complex owner's complaint that an elevator
manufacturer refused to provide elevator service for the complex failed
to state a claim under Section 3604(f)(1) of the Fair Housing Act. The
Court reasoned that "elevator service is a matter of habitability, not
availability, and does not fall within the terms" of Section
3604(f)(1)'s prohibition of making housing unavailable. 929 F.2d at 719.
Defendants contend that insurance coverage, like elevator service, is
simply a matter concerning habitability.

As explained above, however, because of the direct connection between
the ability to obtain and maintain property insurance and the ability to
maintain ownership of a house, insurance coverage does affect the
availability of housing. Moreover, as Plaintiffs point out, Br. at 27,
in the [Clifton Terrace]{.underline} decision itself, the D.C. Circuit
quoted the portion of HUD's regulations providing that discrimination
includes refusing to provide "property or hazard insurance for
dwellings," and the Court agreed that "the denial of certain essential
services relating to a dwelling" could make housing unavailable in
violation of Section 3604(f)(1). 929 F.2d at 719-20. Further, since
deciding [Clifton Terrace]{.underline}, the D.C. Circuit has recognized
that "the language of the \[Fair Housing\] Act is 'broad and inclusive'
and must be given a 'generous construction.'" [Samaritan Inns,
Inc.]{.underline} v. [District of Columbia]{.underline}, 114 F.3d 1227
(D.C. Cir. 1997) (quoting [Trafficante]{.underline} v. [Metro. Life Ins.
Co.]{.underline}, 409 U.S. 205, 209 (1972)).

Defendants further rely upon cases such as [Southend Neighborhood
Improvement Assoc.]{.underline} v. [County of St. Clair]{.underline},
743 F.2d 1207, 1210 (7^th^ Cir. 1984) (city's failure to repair and
maintain properties it owned did not make housing unavailable to
neighboring property owners); [Growth Horizons, Inc.]{.underline} v.
[Delaware County]{.underline}, 983 F.2d 1277, 1283 (3d Cir. 1993)
(refusing "to find that the County violated the statute by making
housing unavailable to itself"); and [Michigan Protection and Advocacy
Service, Inc.]{.underline} v. [Babin]{.underline}, 18 F.3d 337, 344-46
(6^th^ Cir. 1994) (defendants, who funded alternate purchaser for house
in "normal economic competition" and did not impede any actual
transaction by group home provider, did not "make housing unavailable"),
to support their argument for a narrow reading of Section 3604(f)(1).
But insurance coverage may be readily distinguished from the situations
cited by Defendants. Unlike the denials of insurance at issue in the
present case, neither [Southend Neighborhood]{.underline} nor [Growth
Horizons]{.underline} nor [Babin]{.underline} involved conduct which
directly affected the Plaintiff's ability to obtain or retain a home.
Indeed, the Sixth Circuit has distinguished its own decision in
[Babin]{.underline} from insurance coverage, noting that:

However, in [Babin]{.underline}, we also acknowledged that the phrase
"otherwise make unavailable" might extend to "other actors who, though
not owners or agents, are in a position directly to deny a member of a
protected group housing rights." \[18 F.3d\] at 344. [Babin]{.underline}
is distinguishable from the present case \[involving insurance\]. Unlike
[Babin]{.underline}, the availability of property insurance has a direct
and immediate affect on a person's ability to obtain housing.

[Nationwide]{.underline}, 52 F.3d at 1360. Further, courts have
interpreted the term \"otherwise make unavailable or deny\" to cover a
variety of discriminatory practices with far more indirect effects on
the availability of housing than the denial of home insurance.
[See]{.underline}, [e.g.]{.underline}, [Heights Community
Congress]{.underline} v. [Hilltop Realty, Inc.]{.underline}, 774 F.2d
135, 140 (6th Cir. 1985) (real estate steering), [cert. ]{.underline}

[denied]{.underline}, 475 U.S. 1019 (1986); [Kennedy Park Homes Ass\'n,
Inc.]{.underline} v. [City of Lackawanna, N.Y.]{.underline}, 436 F.2d
108 (2d Cir. 1970) (refusal to permit sewer hookup), [cert]{.underline}.
[denied]{.underline}, 401 U.S. 1010 (1971).

Nor does it matter that Ms. Wai had already purchased her house and was
attempting to obtain a new landlord policy to replace her standard
homeowners policy. Defendants rely on the language in [Southend
Neighborhood]{.underline} noting that the plaintiffs already owned the
property which was allegedly damaged by defendants' actions. 743 F.2d at
1210. But that case did not involve any allegation that defendants'
actions could cause the plaintiffs to lose their property. By contrast,
Ms. Wai has alleged that the terms of her mortgage required her to
maintain insurance, and without the insurance she could lose the home.
Complaint ¶ 2. Moreover, in [United Farm Bureau]{.underline}, the
Seventh Circuit held that a refusal to renew an insurance policy on an
already owned house can make housing unavailable within the meaning of
the Fair Housing Act. 24 F.3d at 1015.

Defendants also attempt to hide behind the fact that Ms. Wai was able to
obtain a less desirable and more expensive commercial insurance policy
from another carrier, and consequently did not lose her house. But Ms.
Wai's successful efforts to mitigate her damages do not protect
Defendants from liability. Plaintiffs allege that at the time Defendants
acted, they refused to provide any insurance coverage to Ms. Wai after
learning who resided in her home. Thus, Defendants acted to make housing
unavailable. The fact that another carrier subsequently provided less
desirable coverage is irrelevant. Defendants' argument is equivalent to
asserting that a landlord did not discriminate in denying an apartment
on the basis of race because the apartment seeker was able to find
another apartment. This is wholly untenable. [See]{.underline}
[McDonald]{.underline} v. [Verble]{.underline}, 622 F.2d 1227, 1233
(6^th^ Cir. 1980) ("The fact that subsequent to the filing of a lawsuit,
the sale of the property was consummated with the \[plaintiffs\], does
not alter the prior discriminatory conduct \[of refusing to sell the
house on the basis of race\].")^9^[^9]

Nor can Defendants escape liability based upon the fact that Ms. Wai's
disabled tenants did not suffer any injury as a result of Defendants'
conduct. To state a claim under the Fair Housing Act, a landlord who has
chosen to protect the rights of members of protected classes need not
"capitulate" to acts of discrimination and pass on the injury to his or
her tenants. [See]{.underline} [United States]{.underline} v. [City of
Hayward]{.underline}, 36 F.3d 832, 836 (9^th^ Cir. 1994) (landlord who
was penalized by City after admitting families with children to mobile
home park stated claim even though no families with children were ever
denied housing), [cert.]{.underline} [denied]{.underline}, 116 S. Ct. 65
(1995). As explained in Section A above, because Ms. Wai is herself an
"aggrieved person," she may bring a Fair Housing Act claim on her own
behalf.

In sum, Plaintiffs have stated a claim under Section 3604(f)(1), namely
that by refusing to provide insurance coverage for Ms. Wai's home,
Defendants made housing unavailable on the basis of the handicaps of the
residents of that home, who are associated with Ms. Wai.

2.  Plaintiffs Have Stated a Claim that Defendants Have Discriminated in
    the [Provision of Services in Violation of 42 U.S.C. § 3604(f)(2)
    ]{.underline}

Defendants also assert that Plaintiffs fail to state a claim under
Section 3604(f)(2) of the Fair Housing Act because the prohibitions of
this Section apply only to landlords who discriminate in the provision
of services, and not to third parties. However, Defendants have
misinterpreted this Section of the Act.

First, both the Sixth and Seventh Circuits have held that the
prohibition against discrimination in housing services applies to
insurance companies. [Nationwide]{.underline}, 52 F.3d at 1356-60;
[American Family]{.underline}, 978 F.2d at 297-301.^10^[^10] Contrary to
Defendants' argument, these cases allow claims of discrimination in
services "against a non-governmental, third party service provider when
the plaintiff is the property owner." [See]{.underline} Allstate Reply
at 15-16. In both [Nationwide]{.underline} and [American
Family]{.underline}, the courts permitted the plaintiffs to assert
claims against insurance companies alleging not only that they had made
housing unavailable, but also that they had discriminated in the
provision of services.

As discussed above regarding the prohibitions on making housing
unavailable, here too the courts have relied on HUD's interpretation of
the Fair Housing Act as set forth in its regulation. [See]{.underline}
24 C.F.R. § 100.70(d)(4). In considering the issue, both the Sixth and
Seventh Circuits have conducted an analysis under [Chevron U.S.A.
Inc.]{.underline} v. [Natural Resources Defense Council,
Inc.]{.underline}, 467 U.S. 837 (1984), and concluded that HUD's
interpretation was reasonable. [See]{.underline}
[Nationwide]{.underline}, 52 F.3d at 1359; [American
Family]{.underline}, 978 F.2d at 300.

The full text of the relevant HUD regulation provides as follows:

\(b\) It shall be unlawful, because of race, color, religion, sex,
handicap, familial status, or national origin, to engage in any conduct
[relating to the provision of housing or of services and facilities in
connection therewith]{.underline} that otherwise makes unavailable or
denies dwellings to persons. . .

\(d\) Prohibited activities relating to dwellings [under paragraph
(b)]{.underline} of this section include, but are not limited to: . . .

\(4\) Refusing to provide municipal services or [property or hazard
insurance]{.underline} for dwellings or providing such services or
[insurance]{.underline} differently because of race, color, religion,
sex, handicap, familial status, or national origin.

24 C.F.R. § 100.70 (emphasis added). Thus, discrimination in insurance
is listed as an example both of discrimination "relating to the
provision of housing" and of discrimination relating to the provision
"of services and facilities in connection therewith." This language
clearly demonstrates that HUD has determined that insurance
discrimination may violate both Section 3604(f)(1) and 3604(f)(2).

Moreover, in cases involving group homes for persons with disabilities,
numerous courts have held that Section 3604(f)(2) applies to third
parties, typically municipalities, which have imposed different terms
and conditions on the basis of disability. [See]{.underline},
[e.g.]{.underline}, [Bangerter]{.underline} v. [Orem City
Corp.]{.underline}, 46 F.3d 1491, 1498 (10^th^ Cir. 1995) (permitting
claim against city under Section 3604(f)(2) to challenge restrictions
placed on operation of group home for persons with disabilities);
[Horizon House Dev. Serv., Inc.]{.underline} v. [Township of Upper
Southampton]{.underline}, 804 F. Supp. 683, 693 (E.D. Pa. 1992)
(municipality violated Section 3604(f)(2) by imposing 1,000 foot spacing
requirement for group homes), [aff'd]{.underline} [mem.]{.underline},
995 F.2d 217 (3d Cir. 1993). These cases further demonstrate that the
prohibitions of Section 3604(f)(2) apply to third parties like
Defendants.

Once again, Defendants rely on [Clifton Terrace Assoc.]{.underline} v.
[United Technologies Corp.]{.underline}, 929 F.2d 714 (D.C. Cir. 1991),
to argue that this Court should not follow the weight of authority on
this issue and should find instead that Section 3604(f)(2) does not
apply to insurance companies. Defendants maintain that in the D.C.
Circuit, [Clifton Terrace]{.underline} stands for the proposition that
no third party service provider may be held liable for discrimination in
the provision of housing services. Allstate Br. at 23. But [Clifton
Terrace]{.underline} does not support Defendants' argument.

In [Clifton Terrace]{.underline}, the Court noted that Section
3604(f)(2) applies to "those who otherwise control the provision of
housing services and facilities." 929 F.2d at 720. The Court went on to
note that "the provision of such services [primarily]{.underline} falls
under the control of the provider of housing --- the owner or manager of
the property." [Id]{.underline}. (emphasis added). The Court did not,
however, state that Section 3604(f)(2) applied [only]{.underline} to
landlords. Here, it is Defendants and not landlords who control the
provision of the service of home insurance. Further, in [Clifton
Terrace]{.underline}, the D.C. Circuit stated that it was endeavoring to
conform its interpretation of Section 3604(f)(2) to HUD's regulations.
[See]{.underline} [id]{.underline}. ("We believe this construction is
consistent with HUD's interpretation of 804(b) and (f)(2).") Yet, unlike
the issue of elevator service addressed by the [Clifton
Terrace]{.underline} Court, property insurance is explicitly covered by
HUD's regulations. Accordingly, a holding that discrimination in
property insurance violates Section 3604(f)(2) is fully consistent with
the D.C. Circuit's opinion in [Clifton Terrace]{.underline}.

Finally, Defendants are incorrect in stating that "the facts of this
case are even weaker" than those in [Clifton Terrace]{.underline},
because there the plaintiff alleged that as owner, it had a legal duty
to provide elevator service. [See]{.underline} Allstate Br. at 23. Here,
Plaintiffs have alleged that Ms. Wai is required by the terms of her
mortgage to maintain property insurance. Complaint ¶ 2. Without
insurance, Ms. Wai would lose the house.

Thus, Plaintiffs have properly stated a claim that by refusing to
provide property insurance to Ms. Wai, Defendants have discriminated in
the provision of services in violation of Section 3604(f)(2).

3\. Plaintiffs Have Stated a Claim that Defendants Have Failed to Make a
[Reasonable Accommodation in Violation of 42 U.S.C.
§ 3604(f)(3)(B)]{.underline}

Plaintiffs' final claim under the Fair Housing Act is that Defendants
have failed to make a reasonable accommodation in violation of Section
3604(f)(3)(B) of the Fair Housing Act. Defendants contend that this
section of the Act only applies to claims against landlords, and that it
may not be violated unless disabled persons have actually been denied
housing. These contentions lack merit.

Section 3604(f)(3)(B) requires "reasonable accommodations in rules,
policies, practices, or services, when such accommodations may be
necessary to afford \[a disabled person\] equal opportunity to use and
enjoy a dwelling." 42 U.S.C. § 3604(f)(3)(B). Under this section, the
Fair Housing Act "imposes an affirmative duty to reasonably accommodate
handicapped persons." [City of Edmonds]{.underline} v. [Washington State
Building Code Council]{.underline}, 18 F.3d 802, 806 (9^th^ Cir. 1994),
[aff'd]{.underline}, 115 S. Ct. 1776 (1995). Specifically, the
reasonable accommodation provision requires Defendants to waive or make
changes in otherwise neutral rules to permit people with disabilities to
occupy the housing of their choice. [See]{.underline},
[e.g.]{.underline}, [Hovsons, Inc.]{.underline} v. [Township of
Brick]{.underline}, 89 F.3d 1096, 1104 (3d Cir. 1996).

Contrary to Defendants' argument, the reasonable accommodation provision
does not impose duties only on landlords. Rather, courts have routinely
applied this section of the Act against third parties, typically
municipalities, in cases involving group homes and other residences for
persons with disabilities. [See]{.underline}, [e.g.]{.underline}, [Smith
& Lee Assoc., Inc.]{.underline} v. [City of Taylor]{.underline}, 102
F.3d 781, 795-96 (6^th^ Cir. 1996) (city violated Section 3604(f)(3)(B)
by failing to make reasonable accommodation for group home);
[Hovsons]{.underline} 89 F.3d at 1102-05 (township violated Section
3604(f)(3)(B) by refusing to permit nursing home in residential area);
[City of Edmonds]{.underline}, 18 F.3d at 806 (city required to make
reasonable accommodation).

Moreover, as discussed above regarding Plaintiffs' Section 3604(f)(1)
claim, Defendants cannot escape liability under the reasonable
accommodation provision based on the fact that Ms. Wai was able to
obtain less desirable insurance coverage from a different insurance
company. To prove a violation of the reasonable accommodation provision,
Plaintiffs need not show that

disabled persons were forced out on the street. For example, in [City of
Taylor]{.underline}, the Sixth Circuit found that plaintiffs had proven
a violation of the reasonable accommodation provision even though the
group home continued to operate for over five years without the
requested accommodation, while the case was being litigated. 102 F.3d at
796. In that case, the Court found that the requested accommodation,
permitting the home operators to house additional residents, was
necessary because the group home was not economically viable with only
the six residents permitted by the City. [Id]{.underline}. The group
home had continued to operate at a loss for over five years during the
litigation, "surviving only because \[the home's operators\] have
continued to transfer personal funds into the corporation to keep the
home running" with six residents. [United States]{.underline} v. [City
of Taylor]{.underline}, 872 F. Supp. 423, 439 (E.D. Mich. 1995), [aff'd
in relevant part]{.underline}, 102 F.3d 781 (6^th^ Cir. 1996).
Similarly, in the present case, the fact that Ms. Wai has managed to
retain her home does not defeat a reasonable accommodation claim,
provided that Plaintiffs are ultimately able to show that the requested
accommodation is necessary to afford equal housing opportunity.

Rather, Section 3604(f)(3)(B) requires that accommodations be made when
they may be necessary to provide persons with disabilities an "equal
opportunity to use and enjoy a dwelling." 42 U.S.C. § 3604(f)(3)(b). As
the Sixth Circuit has explained, under the necessity prong of the test,
"\[p\]laintiffs must show that, but for the accommodation, they likely
will be denied an equal opportunity to enjoy the housing of their
choice." [City of Taylor]{.underline}, 102 F.3d at 795. Under this
standard, Plaintiffs have stated a claim that Defendants have failed to
make a reasonable accommodation in violation of 42 U.S.C. §
3604(f)(3)(B).

D. Title III of the ADA Covers the Terms and Conditions\
[of Insurance Policies ]{.underline}

Defendants argue two alternative theories in support of their motions to
dismiss the ADA claims in this action. First, they argue that Title III
of the ADA requires only physical access to physical facilities and thus
does not cover Plaintiffs, whose insurance dealings did not occur in
Defendants' offices, and who are not alleging a lack of physical access.
Defendants argue alternatively that even if Title III's coverage exceeds
mere physical access to physical facilities, Title III does not prohibit
disability-based discrimination in the terms or conditions of insurance
policies. Defendants' theories contravene congressional intent in
enacting Title III, as evidenced by Title III's plain language, its
goals, and the Department of Justice's Title III regulation and
interpretive guidance, which are entitled to deference.

1.  Title III of the ADA Prohibits Disability-Based Discrimination\
    [Beyond the Denial of Physical Access to a Physical Facility
    ]{.underline}

Defendants argue that Title III guarantees only physical accessibility
to a physical facility.^11^[^11] As explained below, this restrictive
reading of Title III is contrary to the statute's plain language and
underlying purposes. In light of the broad statutory language and
Congress's sweeping remedial goals in enacting the ADA, courts have
properly rejected Defendants' argument. [See]{.underline},
[e.g.]{.underline}, [Carparts Dist. Ctr., Inc]{.underline}. v.
[Automotive Wholesaler's Ass'n of New England]{.underline}, 37 F.3d 12,
19-20 (1^st^ Cir. 1994); [Chabner]{.underline} v. [United of Omaha Mut.
Life Ins. Co.]{.underline}, No. C-95-0447-MHP, 1998 WL 37750 at \*4
(N.D. Cal. Jan. 26, 1998); [Lewis]{.underline} v. [Aetna Life Ins.
Co.]{.underline}, 982 F. Supp. 1158, 1165 (E.D. Va. 1997);
[Attar]{.underline} v. [Unum Life Ins. Co.]{.underline}, No. CA
3-96-CV-0367-R, 1997 WL 446439 at \*11-\*12 (N.D. Tx. Jul. 19, 1997);
[Baker]{.underline} v. [Hartford Life Ins. Co.]{.underline}, No. 94 C
4416, 1995 WL 573430 at \*3 (N.D. Ill. Sept. 28, 1995); [World Ins.
Co.]{.underline} v. [Branch]{.underline}, 966 F. Supp. 1203, 1207 (N.D.
Ga. 1997); [Cloutier]{.underline} v. [Prudential Ins. Co. Of
America]{.underline}, 964 F. Supp. 299, 301-03 (N.D. Cal. 1997);
[Doukas]{.underline} v. [Metropolitan Life Ins. Co.]{.underline}, 950 F.
Supp. 422, 425 (D.N.H. 1996); [Kotev]{.underline} v. [First Colony Life
Ins. Co.]{.underline}, 927 F. Supp. 1316, 1321 (C.D. Cal.
1996).^12^[^12]

The broad language of Title III clearly refutes Defendant's contention
that the statute guarantees only physical accessibility to places of
public accommodation. Congress used decidedly broad language to state
both the goals of the ADA and the proscriptions of Title III. Nothing in
the statute, explicit or implicit, would support Defendants' cramped
interpretation of

Title III's comprehensive provisions.

The congressional statement of purpose in the ADA shows that Congress
intended to invoke a fundamental change in the treatment of individuals
with disabilities in all aspects of society. The ADA states that
Congress sought 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).^13^[^13] Congress
cited the historical reasons for such a sweeping change:

discrimination against individuals with disabilities persists in such
critical areas as employment, housing, public accommodations, education,
transportation, communication, recreation, institutionalization, health
services, voting, and access to public services;

. . . .

individuals with disabilities continually encounter various forms of
discrimination, including outright intentional exclusion, the
discriminatory effects of architectural, transportation, and
communication barriers, overprotective rules and policies, failure to
make modifications to existing facilities and practices, exclusionary
qualification standards and criteria, segregation, and relegation to
lesser services, programs, activities, benefits, jobs, or other
opportunities.

[Id.]{.underline} at §§ 12101(a)(3),(5).

Given these broad goals, Congress used broad language in Title III's
general non-discrimination provisions, to cover all aspects of public
accommodations. These provisions state, in relevant part:

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]{.underline} 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) (emphasis added). Thus, despite Defendants'
contention that Title III guarantees only physical access to physical
places, there is simply no statutory language or even an implication in
the Act supporting their theory. [See]{.underline}
[Cloutier]{.underline}, 964 F. Supp. at 302 ("Nothing within the plain
language of the statute lends itself to such a narrow reading.");
[Kotev]{.underline}, 927 F. Supp. at 1321 ("Title III's plain language
does not refer to access to physical structures . . . . Whether viewed
in isolation or in the context of the rest of the ADA, this section does
not bar only discrimination in access to physical structures.").

If Congress were concerned only with physical access, it could have
accomplished its goal by drafting 42 U.S.C. § 12182(a) to guarantee
equal access only to the "facilities" of a public accommodation. But
Congress worded the statute more broadly to guarantee the "full and
equal enjoyment": not only the "facilities," but also the "goods,
services, . . . privileges, advantages, and accommodations" of a place
of public accommodation. 42 U.S.C.

§ 12182(a). Interpreting Title III to guarantee only physical
accessibility would render most of this principal Title III provision
superfluous, thus violating a fundamental canon of statutory
construction. [See]{.underline} [United States v. Alaska]{.underline},
117 S. Ct. 1888, 1918 (1997) (courts must avoid interpretation that
renders words redundant or superfluous). Such an interpretation would
also run counter to the broad tenor of the provision as a whole.

The relevant definition of "public accommodation" in Title III also
evidences that Congress sought to guarantee more than just getting
people in the door. A "public accommodation" is defined as a private
entity, the operations of which affect commerce, and which owns,
operates, or leases a "place of public accommodation." 42 U.S.C. §
12181(7); 28 C.F.R. § 36.104. Title III lists twelve types of businesses
as illustrative examples of covered "places of public accommodation."
One of the categories, "service establishments," specifically includes
the examples of an insurance office and a "travel service." 42 U.S.C. §
12181(7)(F). As the First Circuit explained in [Carparts Distribution
Center]{.underline} v. [Wholesaler's Ass'n of New England]{.underline},
the inclusion of a "travel service," which is a business that typically
transacts most of its operations outside the walls of its office, shows
that Congress contemplated that "service establishments" would "include
providers of services which do not require a person to physically enter
an actual physical structure." 37 F.3d at 19.

Moreover, adopting Defendants' interpretation of Title III would render
sizeable parts of the statute surplusage, contrary to canons of
statutory construction and judicial rules. For example, several of Title
III's specific proscriptions would be meaningless under Defendants'
theories. Congress amplified the Title III general non-discrimination
provision, discussed above, by listing several specific actions or
failures to act that would constitute discrimination. 42 U.S.C. § 12182.
Several specific obligations would have no meaning if Title III were
only intended to cover physical access, for example: (a) the obligation
to eliminate unnecessary eligibility requirements that tend to screen
out individuals with disabilities; (b) the obligation to make reasonable
modifications to policies, practices, and procedures, where necessary to
afford services to individuals with disabilities; (c) the obligation to
furnish auxiliary aids and services \-- such as sign language
interpreters or Brailled documents \-- where necessary for communication
with individuals with disabilities. [Id.]{.underline} at §§
12182(b)(2)(A)(i)-(iii). Congress could not have intended to limit Title
III to mere physical access and include all of these provisions that are
unrelated to this type of access. The illogic of such an interpretation
has been recognized and the misinterpretation of the ADA was rejected by
many courts. [See]{.underline}, [e.g.]{.underline}, [Kotev]{.underline},
927 F. Supp. at 1322; [Cloutier]{.underline}, 964 F. Supp. at 302;
[Doukas]{.underline}, 950 F. Supp. at 426.

In addition, Defendants' flawed interpretation would effectively
eliminate coverage for several of the categories of protected persons
with disabilities described in the statute. The ADA defines protected
individuals with disabilities as persons who: (a) have a physical or
mental impairment that substantially limits one or more major life
activities; (b) who have a record of such an impairment; or (c) who have
been regarded as having a such an impairment. 42 U.S.C. §§ 12102(2).
Persons in the latter two categories would have no ADA redress under
Defendants' theories, because they generally would not be hampered by a
lack of physical access to a facility. [See]{.underline}
[Kotev]{.underline}, 927 F. Supp. at 1321-22. The same is also true for
another category of protected individuals, persons like the Plaintiffs,
who have been discriminated against because of their known association
with individuals with disabilities. 42 U.S.C. 12182(b)(1)(E). Finally,
another significant group of persons specifically protected by the ADA,
persons with mental disabilities, would gain little benefit from being
granted only physical access. There is no question that Congress
intended the ADA to protect this group of individuals.^14^[^14] Under
Defendants' interpretation, persons with mental disabilities would only
be protected to the extent that they also have physical disabilities. If
this were so, Congress's specific statutory language and legislative
discussions of mental disabilities would be meaningless.

Most relevant to the instant case is a provision in Title V of the ADA
which would be superfluous under Defendants interpretation.
[See]{.underline} 42 U.S.C. § 12201 [et]{.underline} [seq]{.underline}.
Title V contains many miscellaneous provisions related to the other
titles, among which is Section 501(c), which delineates certain
insurances practices that will be deemed not to violate the ADA.
[Id.]{.underline} at

§ 12201(c).^15^[^15] If Congress had intended only to cover the physical
aspects of insurance offices, Section 501(c) would not have been
necessary, or, at the very least, would have been much simpler.
[See]{.underline} [Kotev]{.underline}, 927 F. Supp. 1316, 1322 (C.D.
Cal. 1996) ("\[Defendant Insurance Company\] has not explained why
insurers would need this 'safe harbor' provision under Title III if
insurers could never be liable under Title III for conduct such as the
discriminatory denial of insurance coverage."); [Chabner]{.underline},
1998 WL 37750 at \*5.

Courts have recognized that the narrow reading of Title III urged by
Defendants would thwart Congress's broad goals and policies behind the
ADA. The First Circuit stated that interpreting Title III to cover only
access to a place of public accommodation "would run afoul of the
purposes of the ADA and would severely frustrate Congress's intent that
individuals with disabilities fully enjoy the goods, services,
privileges, and advantages, available indiscriminately to other members
of the general public." [Carparts]{.underline}, 37 F.3d at 20. The First
Circuit also noted that \"\[i\]t would be irrational 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. Congress could not have intended such an absurd result.\"
[Id.]{.underline} at 19; [accord]{.underline} [Lewis]{.underline} v.
[Aetna Life Insurance Co]{.underline}, 982 F. Supp. 1158, 165 (E.D. Va.
1997) ("It is even more difficult to believe that Congress intended this
result to apply to the insurance industry, whose goods and services
(insurance policies) are routinely purchased by customers who never set
foot in an insurance office . . . .").

2\. The ADA Prohibits Discrimination in the Terms and\
[Conditions of Insurance Contracts ]{.underline}

Defendants' alternative argument, that, even assuming that aspects
beyond the physical access of insurance offices are covered, Title III
does not cover the content of insurance policies, is similarly
contradictory to the plain language and spirit of the ADA. The
Department of Justice, the enforcing agency for Title III, recognized
that the ADA's language and its legislative history clearly demonstrate
congressional intent to prohibit unfounded disability-based
discrimination in the terms and conditions of insurance policies.
Congressional intent guided the Department in promulgating its Title III
regulation and preamble, and Technical Assistance Manual, and each is
entitled to deference. Most courts \-- in fact, to our knowledge, all
courts that have addressed the issue directly except for the two relied
upon by Defendants \-- have upheld ADA coverage of insurance policies.
[See]{.underline}, [e.g.]{.underline}, [Branch.]{.underline}, 966 F.
Supp. at 1208; [Cloutier]{.underline}, 964 F. Supp. at 301-03;
[Doukas]{.underline}, 950 F. Supp. at 425-26; [Kotev]{.underline}, 927
F. Supp. at 1321-23; [Attar]{.underline}, 1997 WL 446439 at \*10-\*12;
[Baker]{.underline} v. [Hartford Life Ins. Co.]{.underline}, 1995 WL
573430 at \*4.

a.  Coverage of the Terms And Conditions Of Insurance Policies Is
    [Evident From The ADA's Plain Language ]{.underline}

It is well settled that remedial statutes, such as the ADA, 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 Congress's sweeping goals behind the
ADA. [See]{.underline} [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 its 'broad and
inclusive' goals). [See]{.underline} [also]{.underline}
[Arnold]{.underline} v. [United Parcel Service, Inc.]{.underline}, 1998
WL 63505 (1^st^ Cir., Feb. 20, 1998) (interpreting the ADA in light of
Congress's broad remedial purposes).^16^[^16]

As discussed above, the expansive language of Title III's general
non-discrimination provision prohibits disability-based discrimination
in all aspects \-- "the full and equal enjoyment of the goods, services,
facilities, privileges, advantages, and accommodations" \-- of covered
entities. 42 U.S.C. § 12182(a). Covered entities under Title III include
the owner, operator, lessor, or lessee of an insurance office.
[Id]{.underline}. at § 12181(7)(F). Insurance policies are the principal
"goods, services, . . . privileges, \[or\] advantages" offered by
insurance offices. Disability-based discrimination in the terms or
conditions of insurance policies surely constitutes an infringement of
the "full and equal enjoyment" of an insurance company's "goods,
services, . . . privileges, \[or\] advantages," within the plain meaning
of Title III. Outright rejection of a person based on their own
disability or, as in Plaintiffs' case, their association with persons
with disabilities, plainly constitutes a denial of the "full and equal"
enjoyment of the insurance office's goods and services.
[See]{.underline} [Doukas]{.underline}, 950 F. Supp. at 427 ("The
language . . . logically extends not only to access to the good, but to
the nature of the good itself."). Likewise, an insurance company that
has a policy of excluding persons with particular disabilities from
coverage, as Defendants appear to have, would be using "eligibility
criteria that screen out" individuals with disabilities from "fully and
equally enjoying" the goods and services offered by insurers, in
violation of the clear language of the ADA. 42 U.S.C. §
12182(b)(2)(A)(i). [See]{.underline} [Cloutier]{.underline}, 964 F.
Supp. at 302-03.

The [Doukas]{.underline} Court recognized the importance of insurance to
individuals with disabilities and why Congress would include the terms
and conditions of insurance policies within the coverage of the ADA:

There can hardly be a'good' or 'service' more central to the day-to-day
life of a seriously disabled person than insurance \-- for it is often
insurance coverage that will determine a disabled person's ability to
prevent the disability from limiting his or her participation in
society.

[Doukas]{.underline}, 950 F. Supp. at 427.

Defendants rely principally on dictum in [Parker v. Metropolitan Life
Ins. Co.]{.underline}, to claim that the contents of insurance policies
should not be covered by Title III. 121 F.3d 1006 (6^th^ Cir. 1997).
However, [Parker]{.underline}, which concerned a long-term disability
benefit plan issued through an employer, is inapposite here, where
Plaintiffs sought property insurance directly from the insurer,
completely unrelated to the employment context.^17^[^17] That
distinction is potentially important, because Title I of the ADA covers
employment, and the interplay of the different titles was partly
determinative in the outcome of [Parker]{.underline}, while there is no
similar Title I issue in this case. The [Parker]{.underline} court
explicitly limited its holding: "We have . . . held only that a
long-term disability plan obtained through an employer is not a public
accommodation under Title III of the ADA." [Id.]{.underline} at 1014;
[see]{.underline} [Chabner]{.underline}, 1997 WL 37750 at \*6
(distinguishing itself from [Parker]{.underline}, because Chabner
purchased insurance directly, instead of through an employer).^18^[^18]
Even the [Parker]{.underline} Court acknowledged that "Title IV \[sic\]
of the ADA may address the contents of insurance policies provided by a
public accommodation." 121 F.3d at 1012. Indeed, no courts have adopted
Defendants' ADA interpretation outside of the employment setting. The
cases involving privately purchased insurance have universally held that
Title III does cover the terms and conditions of those insurance
policies.^19^[^19]

As discussed earlier, the very existence of Section 501(c), and the
language it uses confirm that Title III was meant to prohibit
unjustified differential treatment for people with disabilities in the
terms and conditions of insurance policies. It states:

\(c\) [Insurance ]{.smallcaps}[---]{.smallcaps} Titles I through 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 Act 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 Act 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 title I and III.

42 U.S.C. § 12201(c). The section creates a limited exemption for
certain insurance practices that would otherwise violate Titles I, II,
and III of the ADA. If the broad language of Title III did not otherwise
cover insurance polices, there would have been no need for Congress to
emphasize in Section 501(c) that certain insurance practices were
exempted from Title III's scope. [Kotev]{.underline}, 927 F. Supp. at
1322; [Chabner]{.underline}, 1998 WL 37750 at \*5.

Although Section 501(c) creates a limited exemption for certain
actuarial based practices, it does not nullify Title III's prohibitions
against discrimination in the terms and conditions of insurance
policies. Section 501(c) does not insulate policies where they are
inconsistent with state law or where they are used as a subterfuge to
evade the purposes of the ADA; it ensures the full and equal enjoyment
of the goods and services of an insurance provider to persons with
disabilities. As explained 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 treating
people differently on the basis of disability, unless such differential
treatment is justified.^20^[^20]

a.  The Department of Justice's Title III Regulation and Technical
    Assistance Manual Interpret Title III to Cover 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."
28 C.F.R. pt. 36, App. B at 619. The Department's guidance further
emphasized that Title III covers "unjustified discrimination in all
types of insurance provided by public accommodations." [Id]{.underline}.
at 620. The Department adopted the same interpretation of the statute in
its Technical Assistance Manual, stating that "\[i\]nsurance 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) (attached hereto
as Exhibit B).

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 Department of Justice is the only federal office 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'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]{.underline} [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]{.underline} [also]{.underline} [Thomas Jefferson
Univ.]{.underline} v. [Shalala]{.underline}, 512 U.S. 504, 512 (1994).
As further interpretation by an enforcement agency, the Department's
Technical Assistance Manual is also entitled to substantial deference.
[See]{.underline} [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, 694-96 (D. Ariz. 1996); [Fiedler]{.underline} v. [American
Multi-Cinema, Inc]{.underline}., 871 F. Supp. 35, 36-37 n.4 (D. D.C.
1994). [Cf.]{.underline} [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"), [cert]{.underline}. [denied]{.underline},
[Pollin]{.underline} v. [Paralyzed Veterans of America]{.underline}, 118
S. Ct. 1184 (1998).

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, both the House and Senate reports 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, 101^st^ Cong. 2d Sess., at 84. Similarly, the committee reports
explain that a public accommodation may "not refuse to insure, . . . or
limit the amount, extent, or kind of coverage available to an
individual, or charge a different rate for the same coverage 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 reasonably anticipated experience." H.R. Rep.
No. 485, [supra]{.underline}, at 71 (1990); S. Rep. No. 116,
[supra]{.underline}, at 85. [See]{.underline} [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); [Cloutier]{.underline}, 964 F. supp. at 303. ("The
legislative history supports this narrow reading of the § 501(c)
exemption."); [Kotev]{.underline}, 927 F. Supp. at 1322-23("Language in
the committee reports indicates that Congress intended to reach
insurance practices by prohibiting differential treatment of individuals
with disabilities in insurance offered by public accommodations unless
the differences were justified.").

a.  [Defendants' Misconstrue the Title III Regulation]{.underline}

Defendants, too, attempt to use the Department's regulation to support
their theory. Defendants cite an inapposite regulatory provision, while
ignoring the regulatory provisions discussed above, which directly
affirm coverage of the terms and conditions of insurance. Defendants
claim that a regulatory provision exempting public accommodations from
having to alter inventory or purchase special inventory for individuals
with disabilities also protects insurers who discriminate on the basis
of disability in their policies. The relevant portions of that provision
state:

**§ 36.307 Accessible or special goods**

\(a\) This part does not require a public accommodation to alter its
inventory to include accessible or special goods that are designed for,
or facilitate use by, individuals with disabilities.

. . . .

\(c\) Examples of accessible or special goods include items such as
Brailled versions of books, books on audio cassettes, closed-captioned
video tapes, special sizes or lines or clothing, and special foods to
meet particular dietary needs.

28 C.F.R. § 36.307.

It is obvious from a reading of these two provisions and the preamble
discussion of those provisions that they do not apply to Defendants'
argument. [Id]{.underline}.; 28 C.F.R. pt. 36, App. B at 630-31. This
provision only prevents an insurance company from having to change the
scope of the type of product it sells. 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 person with disabilities may have a great need for such
coverage. This provision does not insulate an insurance company from
offering its services on a nondiscriminatory basis.^21^[^21]

Thus, it is clear from the ADA's broad language and goals, the
Department of Justice's regulation and interpretation of the ADA, and
the weight of judicial authority, that the ADA prohibits discrimination
in the terms and conditions of insurance policies, as well as access to
insurance offices. To carve out a gaping exception to the ADA's
protection of individuals with disabilities, as Defendants urge, would
undermine Congress's intent and would render individuals with
disabilities without protection and redress in a critical area of their
lives.

IV\. [CONCLUSION]{.underline}

For the foregoing reasons, the United States, as [amicus]{.underline}
[curiae]{.underline}, urges this court to deny Defendants' motion to
dismiss and to find that the Plaintiffs' complaint has stated a cause of
action under the Fair Housing Act, and to find that Title III of the ADA
covers the terms and conditions of insurance policies.

Respectfully submitted,

Bill Lann Lee

Acting Assistant Attorney General

Civil Rights Division

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

John L. Wodatch, Chief

Renee Wohlenhaus, Acting Deputy Chief

Bebe Novich, Trial Attorney

D.C. Bar No. 431203

Disability Rights Section

Civil Rights Division

U.S. Department of Justice

P.O. Box 66738

Washington, D.C. 20035-6738

\(202\) 616-2313

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

Brian F. Heffernan, Deputy Chief

Sharon Bradford Franklin, Trial Attorney

D.C. Bar No. 431023

Housing and Civil Enforcement Section

Civil Rights Division

U.S. Department of Justice

P.O. Box 65998

Washington, D.C. 20035-5998

\(202\) 514-4736

[^1]: ^1^ The United States does not express any view on Defendants'
    arguments regarding standing.

[^2]: ^2^ Only Defendants Allstate and State Farm have filed motions to
    dismiss, and as stated in Plaintiffs' Brief, Plaintiffs Arthur
    Verbit and Oxford House, Inc. do not assert claims against these
    Defendants. Accordingly, this amicus brief will only address the
    facts and claims regarding Defendants Allstate and State Farm and
    Plaintiffs Wai and the Fair Housing Council of Greater Washington,
    Inc.

[^3]: ^3^ In Section C below, this Brief addresses the differences among
    these Fair Housing Act claims and the reasons why each states a
    claim under the Act. In Section D below, this Brief discusses ADA
    coverage.

[^4]: ^4^ Contrary to the suggestion by Defendant State Farm,
    [see]{.underline} Reply Brief at 9, the Court in [Clifton Terrace
    Assoc.]{.underline} v. [United Technologies Corp.]{.underline}, 929
    F.2d 714, 720-21 (D.C. Cir. 1991), only held that a landlord could
    not assert claims under 42 U.S.C. §§ 1981 and 1982 on behalf of its
    tenants. There was no similar finding under the Fair Housing Act,
    under which "aggrieved person" is defined very broadly.

[^5]: ^5^ Defendants do not assert that Maryland's scheme is unique in
    this regard among the state insurance codes considered in the
    above-cited cases. Rather, they argue that none of the defendants in
    the other cases made this argument. [See]{.underline} Allstate Reply
    Br. at 9.

[^6]: ^6^ Maryland recodified its Insurance Code in late 1997,
    subsequent to the filing of Allstate's Brief. The version quoted by
    Allstate was not substantively different, and was codified at Md.
    Code Ann. Art. 48A, § 25(4)(a).

[^7]: ^7^ Moreover, as explained in Plaintiff's Brief at 20, Defendants'
    reliance on [Magan]{.underline} v. [Medical Mutual Liability
    Insurance Society]{.underline}, 81 Md. App. 301, 567 A.2d 503 (1989)
    is misplaced.

[^8]: ^8^ Defendant State Farm contends that this Court should not rely
    on HUD's regulations because several Congressional Reports on HUD's
    appropriations legislation have included language expressing
    "concern" by some Members of Congress regarding HUD's interpretation
    of the Fair Housing Act. State Farm Reply Br. at 10 n.3. However,
    these Members of Congress have not been successful in enacting
    legislation to overrule HUD's interpretation. For example, in 1995,
    Congress voted to delete the proposed section of HUD's
    appropriations bill which, as described in the 1995 Reports cited by
    State Farm, [would have]{.underline} prohibited HUD from spending
    any money to enforce the Fair Housing Act against property insurers.
    [See]{.underline} 141 Cong. Rec. S14363 (Sept. 27, 1995) (agreeing
    to amendment deleting prohibition, as set forth at 141 Cong. Rec.
    S14355).

    Thus, if anything, these unsuccessful legislative efforts indicate
    that Congress has acquiesced in and ratified HUD's interpretation.
    [See]{.underline} [Patterson]{.underline} v. [McClean Credit
    Union]{.underline}, 491 U.S. 164, 201 (1989) (When "Congress has
    considered and rejected an amendment" changing an interpretation of
    a statute, this is "evidence of congressional acquiescence that is
    'something other than mere congressional silence and passivity.'"
    (citation omitted)). Moreover, even if language in Congressional
    Reports divorced from accompanying legislation had any significance,
    the passages cited by State Farm have not been fully accepted by
    Congress. [See]{.underline}, [e.g.]{.underline}, 143 Cong. Rec.
    S10741-42 (Oct. 9, 1997) (statement of Sen. Moseley-Braun) (taking
    "exception" to language "regarding the Fair Housing Act and property
    insurance.")

[^9]: ^9^ In fact, even had Defendants themselves offered the more
    expensive, less desirable commercial insurance policy, Plaintiffs
    would still have stated a claim that Defendants made housing
    unavailable. As the Seventh Circuit has found, by providing only
    hazard insurance rather than a complete homeowners policy, "the cost
    of owning a home or real property is increased, perhaps
    prohibitively. . . This undoubtedly could make owning and retaining
    real property unavailable; simply preventing foreclosure is not
    sufficient to make housing 'available.'" [United Farm Bureau Mut.
    Ins. Co., Inc.]{.underline} v. [Metropolitan Human Relations
    Comm'n]{.underline}, 24 F.3d 1008, 1014 n.8 (7^th^ Cir. 1994).

[^10]: ^10^ Both cases considered Section 3604(b), the parallel
    provision applying to race discrimination, rather than to Section
    3604(f)(2) itself. However, as all parties to this case have
    acknowledged, there are no substantive differences in these
    provisions.

[^11]: ^11^ The ADA is divided into five titles covering
    disability-based discrimination: Title I prohibits discrimination in
    employment; Title II prohibits discrimination in State and local
    government programs, services, and activities; Title III prohibits
    discrimination in public accommodations and commercial facilities;
    Title IV establishes accessible telecommunications systems; and
    Title V contains miscellaneous provisions applicable to the four
    other titles. [See]{.underline} [generally]{.underline} 42 U.S.C. §§
    12101 [et]{.underline} [seq]{.underline}.

[^12]: ^12^ [But]{.underline} [see]{.underline} [Parker]{.underline} v.
    [Metropolitan Life Ins. Co.]{.underline},121 F.3d 1006, 1010-11
    (6^th^ Cir. 1997), [cert]{.underline}. [denied]{.underline}, 118 S.
    Ct. 871 (1998); [Pappas]{.underline} v.[ Bethesda Hosp.
    Ass'n]{.underline}, 861 F. Supp. 616, 620 (S.D. Ohio 1994).

[^13]: ^13^ A copy of Congress's statement of findings and purposes
    behind the ADA, 42 U.S.C. § 12101, is attached hereto as Exhibit A.

[^14]: ^14^ [Id]{.underline}.; H.R. Rep. No. 485 (II) at 27, 45; S. Rep.
    at 22-23.

[^15]: ^15^ Section 501(c) is quoted in its entirety in Section 2.a,
    [infra]{.underline}.

[^16]: ^16^ See discussion in Section D.1, [supra]{.underline}, of
    Congress's goals behind of the ADA.

[^17]: ^17^ In addition to [Parker]{.underline}, Defendants rely on
    [Leonard F.]{.underline} v. [Israel Discount Bank of New
    York]{.underline}, 967 F. Supp. 802 (S.D.N.Y. 1997), which also
    involved an insurance plan incident to employment.

[^18]: ^18^To the extent that the [Parker]{.underline} court issued
    dictum implying that Title III does not cover the terms and
    conditions of any insurance policy, the United States respectfully
    disagrees with such interpretation and urges this Court to decline
    to adopt its reasoning.

[^19]: ^19^ Even some cases involving employment-based insurance have
    refused to adopt Defendants' interpretation. [See]{.underline},
    [e.g.]{.underline}, [Lewis]{.underline}, 982 F. Supp. 1158; [Attar
    v. Unum Life Ins. Co.]{.underline}, 1997 WL 446439 (N.D. Tx. 1997).

[^20]: ^20^ Defendant Allstate, in its reply brief, proposes an
    additional and unique argument, that the ADA does not cover property
    insurance, because Section 501(c) covers only health benefit plans.
    Defendant appears to be arguing that the phrase "that administers
    benefit plans" modifies all of the entities preceding it. The
    guidance to the Department of Justice's regulation specifically
    rejects such a reading. 28 C.F.R. pt. 36, App. B at 620. Further, if
    one were to accept Allstate's argument, it would follow that the
    terms and conditions of property insurance policies are generally
    covered, [without]{.underline}* *the benefit of the 501(c) exemption
    for policies not inconsistent with state law.

[^21]: ^21\ ^ The words and context of this provision also show that it
    was intended primarily to protect providers of consumer goods.
    Sellers of consumer goods often have no control over the
    availability, design, or production of accessible consumer goods.
    Insurance companies, in contrast, control the terms and conditions
    of their policies and can ensure that policies do not discriminate.