REVISED MARCH 1, 2000

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 98-10585

_____________________

MICHAEL JAY McNEIL, ET AL.,

Plaintiffs,

JIMMY WALLACE McNEIL, as

Independent Executor and

Representative of the

Estate of Michael Jay McNeil,

Plaintiff-Appellant,

versus

TIME INSURANCE COMPANY,

Defendant-Appellee.

_________________________________________________________________

Appeal from the United States District Court for the

Northern District of Texas

_________________________________________________________________

February 24,2000

Before REYNALDO G. GARZA, JOLLY, and DeMOSS, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

In this case, we are presented difficult questions of

statutory interpretation that determine whether the defendant

insurance company is liable for more than $400,000 in hospital

bills, which the insured, now deceased, incurred as a result of his

losing battle with AIDS. In addition to state statutory questions,

we must decide whether the Americans with Disabilities Act’s
2

(“ADA”) anti-discrimination provisions regulate the terms and

content of an insurance policy. We ultimately decide that the ADA

does not regulate the terms or content of goods and services, of

which this insurance policy is one. We therefore affirm the

district court’s grant of summary judgment dismissing the

complaint. 

I 

In the spring of 1994, Dr. Michael McNeil, a Texas

optometrist, did not know that he would be dead within the year

because of AIDS. He thus routinely sought to cover himself and his

employee in his optometry practice under a general health insurance

plan.

Dr. McNeil’s optometry practice was a two-person partnership

with Dr. Roy F. Dickey. The partnership had one employee, its

secretary, Jana Jay. The partnership was a member of the Texas

Optometric Association, which operated as a trust, allowing its

members to purchase group insurance. In April, Dr. McNeil received

information about a new life and health insurance policy offered by

Time Insurance Company through the association. The brochure

described the policy’s benefits and costs. The policy contained no

limitation on pre-existing conditions and provided lifetime maximum

benefits of $2 million. There were limitations on coverage for

several specific health problems. One of these was for Acquired
3

Immune Deficiency Syndrome (“AIDS”). The policy limited coverage

for AIDS and AIDS Related Complex (“ARC”) to $10,000 during the

first two years of the policy but provided maximum benefits after

that.

Dr. McNeil decided that the partnership should purchase this

plan. He filled out the employer application, signing a document

indicating that he had “authority to bind the employer,” and then

he and Ms. Jay mailed employee enrollment forms to Time. His form

listed him as an “employee.” Dr. Dickey was covered by Medicare

and did not enroll. The partnership paid the first premium to Time

for Dr. McNeil and Ms. Jay from its operating account, though Dr.

McNeil later reimbursed the partnership for his portion. The plan

became effective on May 1, 1994.

After the plan became effective, Dr. McNeil paid his own

premiums, while the partnership paid for Ms. Jay’s. During the

plan’s operation, the partnership’s administrative duties consisted

of receiving premium notices and paying Ms. Jay’s premiums.

In September 1994, Dr. McNeil was diagnosed with AIDS. He was

admitted to the hospital and treated for pneumonia. Time paid the

first $10,000 of his costs but nothing more. Dr. McNeil

subsequently incurred over $400,000 in medical expenses. He died

on March 1, 1995.
4

Before his death, Dr. McNeil brought suit in Texas state

court. After Dr. McNeil’s death, his father and the executor of

his estate took over the suit. Time later removed the case to

federal court based on ERISA preemption and diversity. Mr. McNeil

then amended the complaint several times. The last version, the

Third Amended Complaint, asserted several common law causes of

action: breach of contract, breach of the duty of good faith and

fair dealing, negligent misrepresentation, common law

discrimination, waiver, estoppel, and ratification. This amended

complaint also charged that Time had violated a host of state and

federal statutes, including the Texas Deceptive Trade Practices Act

(“DTPA”), the Texas Insurance Code, the Texas Commission on Human

Rights Act (“TCHRA”), the Americans with Disabilities Act (“ADA”),

and ERISA.

Mr. McNeil did not have much success in federal district

court. First, the court dismissed the claims that were based on

alleged violation of Texas insurance law. Second, the court held

that Time’s provision of insurance did not constitute a “public

accommodation” under the ADA, and that Title III of that Act only

applied to physical use of the services of a place of public

accommodation. Since Mr. McNeil could point to nothing that

prevented his son from making physical use of Time’s services, the

court dismissed the ADA claim. Third, the court held that ERISA
 

1This provision was repealed in 1993 and was replaced by Tex.

Ins. Code Ann. art. 21.21-6 (Vernon Supp. 1977). When enacting

Article 21.21-6, the Texas legislature provided that “[t]his Act

takes effect September 1, 1995, and applies only to an insurance

policy or an evidence of coverage that is delivered, issued for

delivery, or renewed on or after January 1, 1996. A policy or

evidence of coverage that is delivered, issued for delivery, or

renewed before January 1, 1996 is governed by the law as it existed

immediately before the effective date of this Act, and that law is

continued in effect for that purpose.” Id. (Historical and

Statutory Notes). Because Dr. McNeil obtained his coverage before

January 1, 1996, Article 21.21-3 provides the basis for his claim.

We also note that because the district court dismissed this

particular cause of action, it did not rule on whether ERISA

preempted this claim. Our subsequent discussion of ERISA

preemption, therefore, does not involve Article 21.21-3.

5

preempted the remaining state law claims. Mr. McNeil now appeals

each of these three determinations.

II

A

We first address the district court’s dismissal of Mr.

McNeil’s claim under Article 21.21-3 of the Texas Insurance Code:1

Art. 21.21-3. Discrimination Against Handicapped

Prohibited

An insurer who delivers or issues for delivery or renews

any insurance in this state may not refuse to insure,

refuse to continue to insure, limit the amount, extent,

or kind of coverage available to an individual, or charge

an individual a different rate for the same coverage

solely because of handicap or partial handicap, except

where the refusal, limitation, or rate differential is

based on sound actuarial principles or is related to

actual or reasonably anticipated experience.

(Emphasis added). The district court first concluded that AIDS was

not a “handicap” for purposes of this statute. The court
 

2See Tex.Rev.Civ.Stat.Ann. art. 5221k § 2.01(7)(B) (Vernon

1987)(repealed 1993)(defining “handicap” as “a condition either

mental or physical that includes mental retardation, hardness of

hearing, deafness, speech impairment, visual handicap, being

crippled, or any other health impairment that requires special

ambulatory devices or services.”).

6

acknowledged that although the statute did not define “handicap,”

the Texas Commission on Human Rights Act (“TCHRA”) did,2 and the

two statutes were similar enough to warrant reliance on the TCHRA’s

definition. The district court then cited our holding in Hilton v.

Southwestern Bell Telephone Co., 936 F.2d 823, 828 (5th Cir. 1991),

for the proposition that AIDS was not a handicap under the TCHRA

and thus not a handicap under Article 21.21-3. The court went on

to explain that Time’s actions did not constitute “discrimination”

under Article 21.21-3 because Time inserted the AIDS limitation in

all its policies regardless of whether the insured had AIDS. For

these reasons, the district court dismissed this portion of Mr.

McNeil’s complaint for failure to state a claim. 

Our analysis of this Texas law begins with statutory

construction, a process we approach as a Texas court would.

General Electric Capital Corp. v. Southeastern Health Care, Inc.,

950 F.2d 944, 950 (5th Cir. 1991). In Texas, the cardinal rule of

statutory construction is to ascertain the “legislature’s intent,”

and to give effect to that intent. Union Bankers Ins. Co. v.

Shelton, 889 S.W.2d 278, 280 (Tex. 1994). The duty of the court is
 

3We have omitted the possible defense, an actuarial basis or

past experience, from this reformulation of the provision because

Time has apparently conceded that it has no such defense in this

case.

7

to construe a statute as written and ascertain the legislature’s

intent from the language of the act. Morrison v. Chan, 699 S.W.2d

205, 208 (Tex. 1985).

In condensed form and for purposes of the case before us, we

read this statute as follows: An insurer who issues a policy may

not limit the amount or extent of coverage to an individual solely

because of handicap.3 This reading leaves us with these questions.

First, is AIDS a handicap for purposes of this statute, and,

second, if AIDS is a handicap, did Time, the insurer, limit the

amount or extent of the policy’s coverage to the individual, Dr.

McNeil, because of handicap?

We touch on the first question only briefly because the lack

of clarity in Texas law makes us reluctant to say whether AIDS

constitutes a handicap under the law of that state. The statute

itself does not define the term “handicap,” and there are no Texas

administrative regulations we comfortably can rely on. We do note

that the district court’s analysis is not irrefutable. If we are

to read and consider various statutes of a common purpose together,

Calvert v. Fort Worth National Bank, 356 S.W.2d 918, 921 (Tex.

1962); Cadle Co. v. Butler, 951 S.W.2d 901, 907 (Tex. App. 1997),
 

4The Texas Board of Insurance promulgated these regulations

pursuant to Article 21.21 § 13(a). But the applicability of the

Board’s regulations was statutorily limited to interpretations of

Articles 21.20 and 21.21, which are different articles than Article

21.21-3. See Tex.Rev.Civ.Stat.Ann. art. 2226 (treating 21.21 and

21.21-2 as separate articles); Vail v. Texas Farm Bureau Mutual

Ins. Co., 754 S.W.2d 129, 134 (Tex. 1988)(same). 

 

5We cannot read “limit the amount or extent of coverage

because of handicap” as “limit the amount or extent of coverage for

handicap.” First, “because of” and “for” clearly have different

meanings. Second, that interpretation would raise vexatious

questions for courts whenever they faced any limitation in a

policy. Such a construction would require insurers to have an

actuarial basis or past experience in support of every limitation

8

we cannot stop, as the district court did, with the TCHRA.

Administrative regulations interpreting Articles 21.20 and 21.21 do

suggest that AIDS is a handicap and must also be considered.4 For

the sake of this appeal only, however, we will assume that AIDS is

a handicap for purposes of Article 21.21-3. 

Even so, Time did not violate Article 21.21-3, either at the

time that it issued the policy or when it refused to pay more than

$10,000 in health care costs. 

We begin with the issuance of the policy to Dr. McNeil. It is

true that the policy limited its coverage for AIDS to $10,000

during the first two years of the policy. The statute, however,

focuses on the conduct of the insurer. The phrase “because of

handicap” indicates that the insurer must know that the applicant

is handicapped and that the insurer limits coverage to that

individual for that reason.5 Dr. McNeil was not handicapped when
on coverage for anything that could be construed as a handicap.

Had the legislature intended such a drastic change in the legal

requirements on the way insurers do business, we assume that it

would have made that intent clearer.

9

Time issued this policy to him, or, at the least, Time did not know

that he was. Thus, the limitation by the insurer could not have

been “because of handicap.”

But even if Time had known this when it sold Dr. McNeil the

policy, we do not believe it would change our result. The statute

specifies that the insurer may not limit the amount or extent of

coverage available “to an individual.” In short, the statute

prevents an insurer from discriminating against an individual

applicant because of handicap. Time offered this general policy

without distinguishing between individual applicants based on

whether they had AIDS. As long as Time offered Dr. McNeil the same

policy it offered everyone else, Time has not violated Article

21.21-3, even assuming it knew that he had AIDS.

After Dr. McNeil was diagnosed with AIDS, Time refused to pay

for anything above the $10,000 limit. But this refusal does not

mean that the insurer limited the amount of coverage available

solely because of handicap. Under the policy, $10,000 was all that

was available for AIDS; the insurer simply applied the terms of the

policy. The insurance policy itself controlled and determined the
 

6This policy specified:

Covered Charges Incurred for treatment of AIDS, AIDS

Related Complex (ARC), Human Immunodeficiency Virus (HIV)

associated diseases and related immunodeficiency

disorders as follows:

a. Benefits will not be paid for Covered Charges

Incurred during the first 12-month period after the

Covered Person’s Effective Date;

b. The maximum amount We will pay for Covered Charges

Incurred during the second 12-month period after

the Covered Person’s Effective Date is limited to

$10,000; and

c. Thereafter, benefits will be paid on the same basis

as any other illness.

10

benefits.6 But under the plain language of the statute, the

violation must be committed by the insurer, not by a term of the

policy. We thus conclude that Time did not violate Article

21.21-3, that is, limit the amount of coverage solely because of

handicap, because it was merely applying a term of the policy.

We think this result, closely tied as it is to the actual

words in Article 21.21-3, best accords with the legislature’s

intent. The title of Article 21.21-3 refers to “discrimination.”

But there was no discrimination here. Time offered Dr. McNeil the

same policy on the same terms that it offered everyone else. It

did not treat him differently because he was handicapped, which is

what we understand “discrimination” to mean. We conclude,

therefore, that Time’s policy did not violate Article 21.21-3.
 

7This provision was repealed in 1995. See Acts 1995, 74th

Leg., ch. 414 § 11, eff. Sept. 1, 1995.

11

B

Mr. McNeil also charged Time with violation of Article 21.21,

specifically, § 4(7)(b), in his summary judgment motion. Although

the district court failed to address this claim, we will resolve it

on appeal for the sake of efficiency, rather than remanding. See

NL Industries, Inc. v. GHR Energy Corp., 940 F.2d 957, 967 (5th

Cir. 1991)(reviewing claim not addressed in district court because

it would “undoubtedly reappear following remand”).

It is quickly apparent that Mr. McNeil does not have a claim

under this provision either. Article 21.21 § 1(a) prohibits all

unfair and deceptive practices and acts by insurers. Subsequent

sections of that article then define what constitutes such an act

or practice. In 1994, Article 21.21 § 4(7)(b)7 defined “unfair

discrimination” as:

Making or permitting any unfair discrimination between

individuals of the same class and of essentially the same

hazard in the amount of premium, policy fees, or rates

charged for any policy or contract of accident or health

insurance or in the benefits payable thereunder, or in

any of the terms or conditions of such contract, or in

any other manner whatever. 

(Emphasis added). Mr. McNeil does not attempt to define the class

to which his son belonged at the time the insurer issued the

policy. He has not alleged that other individuals of any defined
12

class were charged rates or provided benefits different from those

charged and provided to Dr. McNeil. Indeed, he does not even

mention other insureds or potential insureds. Thus, Mr. McNeil has

failed to state a claim under this section of Article 21.21.

III

A

We next turn to Mr. McNeil’s claim that Time’s policy violated

Title III of the ADA. The relevant portion of Title III reads: 

No individual shall be discriminated against on the basis

of disability in the full and equal enjoyment of the

goods, services, facilities, privileges, advantages, or

accommodations of any place of public accommodation by

any person who owns, leases (or leases to), or operates

a place of public accommodation.

42 U.S.C. § 12182. The district court construed this statute to

prohibit limitations on physical access to places of public

accommodation, and dismissed the claim on summary judgment because

Mr. McNeil had not been denied physical access to such a place.

On appeal, Mr. McNeil argues that any limitation on enjoyment

of the goods and services of a place of public accommodation

violates the statute. He urges us to read the statute expansively

in the light of the purpose of the statute and administrative

regulations interpreting it. Time, on the other hand, pushes for

a narrower reading based on Congress’ deference to state insurance

law and on the impact of a broad reading on the insurance industry.

Specifically, Time proposes that the statute merely regulates
 

8Because we reach our conclusion based on the plain language

of the statute, we need not consider the administrative regulations

interpreting the ADA. Any attempt to rely on those regulations,

13

access to--not the content of--goods and services. Time also

argues that its policy is not discriminatory under the statute.

Both parties acknowledge, as they must, that AIDS is a “handicap”

for Title III purposes. See Bragdon v. Abbott, 524 U.S. 624, 188

S.Ct. 2196, 2204, 1141 L.Ed.2d 540 (1998).

B

We read the statute to say: No owner, operator, lessee, or

lessor of a place of public accommodation shall discriminate

against an individual by denying him or her, because of handicap,

the full and equal enjoyment of the goods and services that the

place of public accommodation offers. We think, therefore, that

the question to answer in determining the scope of Title III in

this case is concise: What does it mean to be discriminated against

in the full and equal enjoyment of the goods and services of a

place of public accommodation? We believe that Title III prohibits

the owner, operator, lessee, or lessor from denying the disabled

access to, or interfering with their enjoyment of, the goods and

services of a place of public accommodation. Title III does not,

however, regulate the content of goods and services that are

offered. We reach this conclusion based on the language in the

statute and on a practical application of that language.8
moreover, would be fruitless because they are internally

contradictory on this specific issue. Compare DOJ Technical

Assistance Manual, § III-3.11000, reprinted in Americans with

Disabilities Act Manual (BNA) at 90:0917 (interpreting Title III to

regulate the content of insurance policies); with 28 C.F.R. pt. 36,

app. B, at 640 (1997)(limiting Title III to access, not the makeup

of goods and services offered).

 

9Mr. McNeil contends that our reading renders other portions

of Title III superfluous, including §§ 12182(b)(1)(A)(i)-(iii),

12182(b)(2)(A)(ii), and 12188(a)(2). We disagree. The provisions

in §§ 12182(b)(1)(A)(i)-(iii) concerning the opportunity to benefit

from or to participate in a good or service do not imply that the

goods or services must be modified to ensure that opportunity or

benefit. Rather, this section only refers to impediments that

stand in the way of a person’s ability to enjoy that good or

service in the form that the establishment normally provides it.

Similarly, in § 12182(b)(2)(A)(ii), eligibility criteria have

nothing to do with the content of a good or service, only to nonphysical access to those goods and services. Finally,

§ 12188(a)(2) concerns modification of policies by a place of

public accommodation, not the modification of insurance policies.

14

To be sure, we think that the plain language of the statute

demonstrates that a business is not required to alter or modify the

goods or services it offers to satisfy Title III.9 The prohibition

of the statute is directed against owners, etc., of places of

public accommodation. It prohibits them from discriminating

against the disabled. The discrimination prohibited is that the

owner, etc., may not deny the disabled the full and equal enjoyment

of the business’s goods and services. Practically speaking, how

can an owner, etc., deny the full and equal enjoyment of the goods

or services that he offers? By denying access to, or otherwise

interfering with, the use of the goods or services that the
 

10Mr. McNeil has argued that Title III regulates the content

of goods and services based on the safe harbor provision for the

insurance industry. See 42 U.S.C. § 12201(c). That provision

prohibits us from construing Title III to regulate the way

insurance companies underwrite, classify, or administer risks when

the companies do so consistently with state law. According to Mr.

McNeil, this provision that excludes regulation of the content of

such policies demonstrates that Title III otherwise applies to the

content of insurance policies. We cannot agree, however, that the

existence of the “safe harbor” counsels a construction different

from the one we reach. We would then have to read Title III as

regulating the content of all goods and services, which would lead

to the absurd results that we discuss in the main body of our

decision. The presence of this provision merely suggests that

insurers saw the potential for the construction that Mr. McNeil

proposes and obtained special wording from Congress that partially

exempted them. Moreover, it would be oxymoronic to interpret the

“safe harbor” for the insurance industry as ensuring more

regulation of that same industry.

15

business offers. The goods and services that the business offers

exist a priori and independently from any discrimination. Stated

differently, the goods and services referred to in the statute are

simply those that the business normally offers.10

We acknowledge that it is literally possible, though strained,

to construe “full and equal enjoyment” to suggest that the disabled

must be able to enjoy every good and service offered to the same

and identical extent as those who are not disabled. Construed in

this manner, the statute would regulate the content and type of

goods and services. That would be necessary to ensure that the

disabled’s enjoyment of goods and services offered by the place of

public accommodation would be no less than, or different from, that
16

of the non-disabled. But such a reading is plainly unrealistic,

and surely unintended, because it makes an unattainable demand.

The unvarnished and sober truth is that in many, if not most,

cases, the disabled simply will not have the capacity or ability to

enjoy the goods and services of an establishment “fully” and

“equally” compared to the non-disabled. The blind may surely enjoy

attending a movie or even a tennis match. But it seems

indisputable that the blind will not fully and equally enjoy the

“good” or “service” of those places of public accommodation when

visual elements of that experience are, by circumstance, denied

them. Similarly, the deaf sometimes enjoy symphonies because they

can sense the vibrations of the music. But their enjoyment cannot

be full or equal compared to one with hearing, because they are not

privy to the full range of sounds that one with hearing is. It is

a flawed and unreasonable construction of any statute to read it in

a manner that demands the impossible. 

Furthermore, were we to try to construe the statute in this

manner, its application would force impracticable results. If the

blind must be able to enjoy all goods and services to the same

extent as the sighted, bookstores would be forced to limit the

selection of books they carried because they would need to stock

braille versions of every book. Shoe stores would reduce the

styles available to their general customers, because they would
17

need to offer special shoes for people with disabling foot

deformities in every style sold to the non-disabled. Sporting

goods stores might have to close altogether. Restaurants would

have to limit their menus to avoid discriminating against

diabetics. After all, to offer food to the public that a diabetic

could not eat would, in the literal words of the statute, deny the

diabetic the full and equal enjoyment of the goods of the

restaurant compared to those with no limitation on their diets.

By citing such examples, we do not mean to make the statute

sound ridiculous. We do this to illustrate that the language of

the statute can only reasonably be interpreted to have some

practical, common sense boundaries. And if we construe Title III

to regulate the content of goods and services, there seem to be no

statutory boundaries. Based on the language of the statute, we

simply see no non-arbitrary way to distinguish regulating the

content of some goods from regulating the content of all goods.

In sum, we read Title III to prohibit an owner, etc., of a

place of public accommodation from denying the disabled access to

the good or service and from interfering with the disableds’ full

and equal enjoyment of the goods and services offered. But the

owner, etc., need not modify or alter the goods and services that

it offers in order to avoid violating Title III.
 

1142 U.S.C. § 12101(b), from Title III, reads: “It is the

purpose of this chapter . . . to invoke the sweep of congressional

authority . . . in order to address the major areas of

discrimination faced day-to-day by people with disabilities.”

 

12See Ford v. Schering-Plough Corp., 145 F.3d 601, 613 (3d Cir.

1998)(insurance policy limiting coverage for mental disabilities

did not violate Title III); Parker v. Metropolitan Life Ins. Co.,

121 F.3d 1006, 1012 (6th Cir. 1997)(concluding that Title III does

not regulate the content of goods and services).

 

13See Doe v. Mutual of Omaha Ins. Co., 179 F.3d 557, 559-63

(7th Cir. 1999), cert. denied, 120 S.Ct. 845 (2000)(insurance

policy with cap on AIDS coverage did not violate Title III).

18

We believe our construction gives Title III a broad sweep

without overreaching congressional intent and with due regard to

the practicalities of applying this mutable statute.11 This

construction assures that the disabled have access to all goods and

services offered by the business and the opportunity to use and

enjoy that good or service without interference by the owner, etc.

Our opinion merely declines to dictate to every business in the

country what types of goods and services must be offered.

We note that our construction accords with those given the

statute by most of our sister circuits that have considered the

question. The Third and Sixth Circuits thought that limiting Title

III to access as opposed to content was too obvious to warrant

additional analysis.12 The Seventh Circuit also reached the same

conclusion, albeit after a more detailed explanation of the

practical difficulties of implementing a contrary reading.13 On the
 

14See Pallozzi v. Allstate Life Ins. Co., 1999 WL 1079973 at

*3-6 (2d Cir. 1999)(refusal to sell life insurance to one with a

mental disorder violated Title III).

 

15The Second Circuit reasoned that the content of goods and

services would need to be altered to allow the disabled the

opportunity to fully and equally enjoy those goods and services

along with the non-disabled. As already noted, we think such full

and equal enjoyment is neither possible nor practicable. In

addition, the court relied on the presence of the “safe harbor”

provision in Title III for insurers. We address this argument in

footnote 11, supra.

19

other hand, the Second Circuit read Title III to regulate content

as well as access,14 a reading that we ultimately find unpersuasive

for the reasons noted above.15

C

It follows from our construction of the statute that Time has

not violated Title III by offering a policy that limits the amount

of coverage for AIDS to $10,000 over the first two years of the

policy. The “good” in this case is the insurance policy that Time

offered to the members of the Texas Optometric Association. To

establish a Title III violation, Mr. McNeil is required to

demonstrate that Time denied his son access to that good or

interfered with his son’s enjoyment of it. Mr. McNeil concedes

that Time offered the policy to his son on the same terms as it

offered the policy to other members of the association; that is,

his son had non-discriminatory access to the good. Mr. McNeil has

not alleged that Time interfered with his son’s ability to enjoy
 

16Although Mr. McNeil may argue that his son was denied access

to a service when Time failed to pay the claims beyond $10,000,

this is still an attack on the content of the good. The policy did

not provide for payment of claims beyond $10,000, so their payment

was not a service that Dr. McNeil was entitled to. 

20

that policy as it was written and offered to the non-disabled

public.16 Instead, Mr. McNeil’s Title III challenge is to a

particular provision of the policy--the AIDS limitation. He is, in

effect, challenging the content of the good that Time offered.

Because Title III does not reach so far as to regulate the content

of goods and services, and because it is undisputed this limitation

for AIDS is part of the content of the good that Time offered, Mr.

McNeil’s Title III claim must fail.

We therefore affirm the district court’s dismissal of Mr.

McNeil’s Title III claim. 

IV

The district court held that ERISA preempted Mr. McNeil’s

remaining state law claims and dismissed them. In doing so, the

court first determined that Time’s policy constituted an ERISA

plan, and that the state law claims did not fall within ERISA’s

safe harbor for the operation of laws regulating insurance. Mr.

McNeil takes issue with each of these determinations on appeal.

It is well established that state law claims are preempted if

they “relate to” an ERISA plan. ERISA’s preemption clause states

that ERISA “shall supersede any and all State laws insofar as they
21

may now or hereafter relate to any employer benefit plan.” 29

U.S.C. § 1144(a) (expressly excepting two situations not applicable

here). 

In reviewing the district court’s decision, we must make two

separate determinations. First, we need to establish that Time’s

insurance policy constituted an ERISA plan. This is an issue of

fact that we review for clear error. Zavora v. Paul Revere Life

Ins. Co., 145 F.3d 1118, 1120 (9th Cir. 1998); Belanger v. WymanGordon Co., 71 F.3d 451, 454 (1st Cir. 1995). Second, if there is

such a plan, we must establish that ERISA does preempt Mr. McNeil’s

state law claims. This is an issue of law that we review de novo.

Robin v. Metropolitan Life Insurance Co., 147 F.3d 440, 444 (5th

Cir. 1998).

A

Under ERISA, an “employee welfare benefit plan” is defined, in

part, as “any plan, fund, or program . . . established or

maintained by an employer . . . for the purpose of providing for

its participants or their beneficiaries, through the purchase of

insurance or otherwise, (A) medical, surgical, or hospital care or

benefits.” 29 U.S.C. § 1002(1). To determine whether a particular

plan qualifies as an ERISA plan, we ask whether the plan (1)

exists; (2) falls within the safe harbor exclusion established by

the Department of Labor; and (3) meets the ERISA requirement of
22

establishment or maintenance by an employer for the purpose of

benefitting the plan participants. Meredith v. Time Ins. Co., 980

F.2d 352, 355 (5th Cir. 1993).

(1)

We agree with the district court that a plan existed. The

district court held that a reasonable person could ascertain the

intended benefits, beneficiaries, source of financing, and

procedures for receiving benefits. See id. (setting out the rule

for determining the existence of a plan). This information was

clearly available in the brochures Dr. McNeil received. 

The plan that existed, moreover, was a single plan covering

both Ms. Jay and Dr. McNeil. Before either obtained coverage, Dr.

McNeil filled out an employer application. Then, both he and Ms.

Jay sent in their individual employee enrollment forms. The

partnership then paid the first premium for both of them. After

that, premium bills were sent to the partnership and referred to

both Ms. Jay and Dr. McNeil. All these factors indicate that the

plan, at least as established, included Dr. McNeil. Any concerns

we have about the fact that Dr. McNeil usually paid his own premium

are not enough to overcome the deference due the district court

concerning an issue of fact such as this one. The court held that
 

17It is true that a plan in which the only participants are the

owners or partners does not constitute an ERISA benefit plan.

Meredith v. Time Ins. Co., 980 F.2d 352, 357-58 (5th Cir. 1993).

But that is not the case here, because the plan covered both Dr.

McNeil and Ms. Jay. See Vega v. Nat. Life Ins. Services, Inc., 188

F.3d 287, 291 (5th Cir. 1999)(en banc)(plan covering owners and

employees constituted ERISA plan); Peterson v. American Life &

Health Ins. Co., 48 F.3d 404, 408 (9th Cir. 1995)(the involvement

of at least one employee is sufficient to establish the existence

of an ERISA plan).

 

1829 U.S.C. § 1135 reads:

Subject to subchapter II of this chapter and section 1029

of this title, the Secretary may prescribe such

regulations as he finds necessary or appropriate to carry

out the provisions of this subchapter. Among other

things, such regulations may define accounting, technical

and trade terms used in such provisions; may prescribe

forms; and may provide for the keeping of books and

records, and for the inspection of such books and records

(subject to section 1134(a) and (b) of this title).

 

1929 C.F.R. § 2510.3-1(j) reads:

23

there was a single plan that included both Ms. Jay and Dr. McNeil,

and we cannot say that determination was clear error.17

(2)

To qualify as an ERISA plan, the plan cannot fall within the

Department of Labor’s “safe harbor” exclusion. ERISA’s § 505

granted the Secretary of Labor the authority to promulgate

regulations for implementation of ERISA, 29 U.S.C. § 1135,18 and the

Secretary has created an exemption for certain group or group-type

insurance programs from the scope of ERISA. 29 C.F.R.

§ 2510.3-1(j)(1999).19 We have adopted this “safe harbor” for
(j) Certain group or group-type insurance programs. For

purposes of Title I of the Act and this chapter, the

terms "employee welfare benefit plan" and "welfare plan"

shall not include a group or group-type insurance program

offered by an insurer to employees or members of an

employee organization, under which

(1) No contributions are made by an employer

or employee organization;

(2) Participation in the program is completely

voluntary for employees or members;

(3) The sole functions of the employer or

employee organization with respect to the

program are, without endorsing the program, to

permit the insurer to publicize the program to

employees or members, to collect premiums

through payroll deductions or dues checkoffs

and to remit them to the insurer; and

(4) The employer or employee organization

receives no consideration in the form of cash

or otherwise in connection with the program,

other than reasonable compensation, excluding

any profit, for administrative services

actually rendered in connection with payroll

deductions or dues checkoffs. 

24

certain types of claims, and have held that an insurance policy is

not governed by ERISA if (1) the employer does not contribute to

the plan; (2) participation is voluntary; (3) the employer’s role

is limited to collecting premiums and remitting them to the

insurer; and (4) the employer received no profit from the plan.

Meredith, 980 F.2d at 355. The plan must meet all four criteria to

be exempt. Id.

Time’s plan does not fall within the ERISA safe harbor. As

the district court noted, the evidence clearly establishes that the

partnership contributed to the plan. Though the partnership’s
25

contributions were for Ms. Jay, not Dr. McNeil, all the documents

filed with Time indicated that the two were members of the same

plan.

(3)

Finally, the plan met the requirements of 29 U.S.C. § 1002(1).

First, the single plan was established by the partnership. Dr.

McNeil filed an employer application for the partnership and signed

a document purporting to bind the partnership. In addition, the

partnership paid the initial premium establishing the policy. The

bills that Time sent to the partnership, as opposed to each

individual, support this conclusion that the partnership

established a single plan. The partnership also maintained that

plan by paying Ms. Jay’s premiums throughout the life of the

partnership. Second, the purpose of the plan was to provide the

participants, Ms. Jay and Dr. McNeil, with medical care.

Mr. McNeil raises one other argument for the proposition that

this plan did not constitute an ERISA plan. He contends that the

partnership’s involvement in interstate commerce was not sufficient

to implicate ERISA under 29 U.S.C. § 1003(a)(1). We cannot agree.

Mr. McNeil concedes that the partnership purchased glasses from

other states that were then shipped to the office in Texas.

Moreover, because Time was not in Texas, even setting up the

insurance policy constituted interstate commerce. There is no
 

20We disagree with Mr. McNeil’s argument that our inquiry on

this issue has been fundamentally altered by the Supreme Court’s

decision in New York State Conference of Blue Cross & Blue Shield

Plans v. Travelers Insurance Co., 514 U.S. 645, 115 S.Ct. 1671, 131

L.Ed.2d 695 (1995). The method of analysis we use today was well

established before that decision, and it continues to be used

today. Compare Weaver v. Employers Underwriters, Inc., 13 F.3d

172, 176 (5th Cir. 1994)(before Travelers); Memorial Hosp. System

v. Northbrook Life Ins. Co., 904 F.2d 236, 245 (5th Cir.

1990)(same); with Cypress Fairbanks Medical Center Inc. v. PanAmerican Life Ins. Co., 110 F.3d 280, 283 (5th Cir. 1997)(postTravelers); Smith v. Texas Children’s Hospital, 84 F.3d 152, 155

(5th Cir. 1996)(same).

26

doubt, therefore, that the partnership was involved in interstate

commerce, and the extent of that involvement, at least for ERISA

purposes, is not a matter of degree.

B

ERISA’s preemption of state law claims is extensive. We have

held that § 1144(a) preempts a state law claim if that claim

addresses an area of exclusive federal concern, such as the right

to receive benefits under the terms of an ERISA plan, and if that

claim directly affects the relationship between traditional ERISA

entities. Dial v. NFL Player Supplemental Disability Plan, 174

F.3d 606, 611 (5th Cir. 1999).20 

Mr. McNeil makes the following state common law claims that

have not been addressed on the merits: breach of contract, breach

of the duty of good faith and fair dealing, negligent

misrepresentation, common law discrimination, waiver, estoppel and

ratification. He also argues that various provisions of the Texas
 

21Mr. McNeil also cites to 26 T.A.C. § 26.20(e), 26 T.A.C. §

26.27, and 28 T.A.C. § 21.702, but these are agency regulations and

do not provide the foundation for a claim.

 

22Because we have federal diversity and federal question

jurisdiction, we do not consider the question of complete

preemption. See McClelland v. Gronwaldt, 155 F.3d 507 (5th Cir.

1998).

 

23Mr. McNeil’s contentions concerning the incorporation of

Texas insurance law’s requirement of sound actuarial principles are

inherently part of these state law claims. While that requirement

might affect resolution of those claims because of incorporation,

that does not alter the nature of those claims, and therefore our

determination concerning preemption.

27

Insurance Code requiring sound actuarial principles have been

incorporated into state contract law and tort law (under the duty

of good faith and fair dealing) when insurance is involved.21

We hold that all of these claims are preempted by ERISA.22

Each claim addresses Mr. McNeil’s right to receive benefits under

the terms of an ERISA plan. Moreover, these claims directly affect

the relationship between Dr. McNeil’s estate and Time. A finding

for either party will affect the obligations owed to the other

under the provisions of the plan. For these reasons, we hold that

the district court’s determination of ERISA preemption over the

state claims was correct.23

There is one exception to ERISA preemption, but it does not

apply in this case. Mr. McNeil argues that the laws on which he

bases his claims fall within ERISA’s “savings clause,” 29 U.S.C.

§ 1144(b)(2)(A). That provision states: “Except as provided in
28

subparagraph (B), nothing in this subchapter shall be construed to

exempt or relieve any person from any law of any State which

regulates insurance, banking, or securities.” Id. A law regulates

insurance when: (1) it is specifically directed at the insurance

industry; (2) it transfers or spreads policyholder risk; and (3) it

affects an integral part of the policy relationship between insurer

and insured. Gahn v. Allstate Life Ins., 926 F.2d 1449, 1453 (5th

Cir. 1991). Unfortunately for Mr. McNeil, none of the remaining

state law claims satisfies these requirements. Thus, these state

laws do not fall within the savings clause.

V

For the reasons stated herein, the district court’s decision

is, in all respects, 

A F F I R M E D.