IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant,

Transcription

1 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. THE CHASE MANHATTAN BANK, Defendant-Appellee, and UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant On Appeal from the United States District Court for the Southern District of New York BRIEF AMICI CURIAE OF THE EQUAL EMPLOYMENT ADVISORY COUNCIL AND THE CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA IN SUPPORT OF DEFENDANT-APPELLEE AND IN SUPPORT OF AFFIRMANCE Stephen A. Bokat Ann Elizabeth Reesman* Robin S. Conrad Corrie L. Fischel Sussan Mahallati Kysela McGUINESS & WILLIAMS NATIONAL CHAMBER LITIGATION 1015 Fifteenth Street, N.W. CENTER, INC. Suite H Street, N.W Washington, DC Washington, DC (202) (202) Attorneys for Amici Curiae Attorneys for Amici Curiae EQUAL EMPLOYMENT ADVISORY The Chamber of Commerce of COUNCIL the United States of America May 27, 1999 *Counsel of Record

2 CORPORATE DISCLOSURE STATEMENT Pursuant to Fed. R. App. P and 29(c), Amici Curiae Equal Employment Advisory Council discloses the following: 1) The Equal Employment Advisory Council and The Chamber of Commerce of the United States have no parent corporations. 2) No publicly held company owns 10% or more stock in the Equal Employment Advisory Council or The Chamber of Commerce of the United States. Ann Elizabeth Reesman McGUINESS & WILLIAMS 1015 Fifteenth Street, N.W. Washington, DC (202) Attorney for Amici Curiae EQUAL EMPLOYMENT ADVISORY COUNCIL

3 TABLE OF CONTENTS TABLE OF AUTHORITIES... iii STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION... 1 INTEREST OF THE AMICI CURIAE... 1 STATEMENT OF THE CASE... 4 SUMMARY OF ARGUMENT... 5 ARGUMENT... 7 I. A DISPARITY IN BENEFITS PROVIDED FOR PHYSICAL AND MENTAL DISORDERS DOES NOT VIOLATE THE ADA, SINCE THE ADA COVERS ONLY ACCESS TO BENEFITS, AND NOT THE CONTENT... 7 A. This Court and Others Already Have Ruled That Coverage Limitations Do Not Violate The ADA... 7 B. The Supreme Court and This Court Also Have Rejected an Equal Results Requirement Under the Rehabilitation Act C. Subsequent Congressional Activity Confirms That the ADA Does Not Prohibit Differing Benefit Levels for Mental and Physical Conditions in Long-Term Disability Benefits II. A RULING THAT DISPARITIES IN BENEFITS FOR MENTAL AND PHYSICAL DISORDERS VIOLATE THE ADA COULD CAUSE EMPLOYERS TO REDUCE OR ELIMINATE DISABILITY BENEFITS ENTIRELY CONCLUSION ii

4 TABLE OF AUTHORITIES CASES Alexander v. Choate, 469 U.S. 287 (1985)... 6, 14 Bowen v. Georgetown University Hosp., 488 U.S. 204 (1988) Bragdon v. Abbott, 524 U.S. 624 (1998)... 9 Castellano v. City of New York, 142 F.3d 58 (2d Cir. 1998), cert. denied, 67 U.S.L.W (U.S. May 24, 1999) (No )... 6, 8 Doe v. Colautti, 592 F.2d 704 (3d Cir. 1979) EEOC v. CNA Ins. Cos., 96 F.3d 1039 (7th Cir. 1996)... 3, 6, 8, 16, 18 EEOC v. The Chase Manhattan Bank and Unum Life Insurance Company of America, No. 97 CIV 6620 (WK) (December 8, 1998)... 4, 5 Flight v. Gloeckler, 68 F.3d 61 (2d Cir. 1995) Ford v. Schering-Plough, 143 F.3d 601 (3d Cir. 1998), cert. denied, 119 S. Ct. 850 (1999)... passim Krauel v. Iowa Methodist Med. Ctr., 95 F.3d 674 (8th Cir. 1996)... 3, 8, 9 Modderno v. King, 82 F.3d 1059 (D.C. Cir. 1996), cert. denied, 117 S. Ct. 772 (1997)... 4, 15 P.C. v. McLaughlin, 913 F.2d 1033 (2d Cir. 1990)... 14, 15 Parker v. Metropolitan Life Insurance Co., 121 F.3d 1006 (6th Cir. 1997),cert. denied, 118 S. Ct. 871 (1998)... passim iii

5 Parker v. Metropolitan Life Insurance Co., 99 F.3d 181 (6th Cir. 1996), vacated, rehg en banc granted, 107 F.3d (6th Cir. 1997), affd, 121 F.3d 1006 (6th Cir. 1997), cert. denied, 118 S. Ct. 871 (1998)... 4 Public Employees Retirement System of Ohio v. Betts, 492 U.S. 158 (1989) Rogers v. Department of Health and Environmental Control, 1999 U.S. App. LEXIS 6327 (4th Cir. April 8, 1999)... 3, 6, 7, 16 Traynor v. Turnage, 485 U.S. 535 (1988)... 6, 14 STATUTES Americans with Disabilities Act, 42 U.S.C et seq.... 1, 5, 7 42 U.S.C (c)... 10, U.S.C (c)(3)... 10, 11 Mental Health Parity Act of 1996, 29 U.S.C. 1185a U.S.C. 1185a(c)(2) Rehabilitation Act of 1973, 29 U.S.C. 701 et seq... 4, 6, U.S.C UNENACTED BILLS Mental Health Equitable Treatment Act of 1999, S Mental Health and Substance Abuse Parity Amendments of 1999,H.R Substance Abuse Treatment Parity Act of 1997, S and H.R. 2409, 105th Cong. (1997) REGULATIONS 56 Fed. Reg (Feb. 28, 1991)... 4 iv

6 LEGISLATIVE HISTORY 145 Cong. Rec (April 14, 1999) H.R. Rep. No , pt.2, at 137, reprinted in 1990 U.S.C.C.A.N S. Rep. No , at , 12, 20 MISCELLANEOUS EEOC Interim Enforcement Guidance on Application of ADA to Health Ins., (June 8, 1993), reprinted in EEOC Compliance Manual (BNA) N: , 13 Social Security Administration Correspondence & Analysis Response Group (1996) U. S. Dept. of Labor, Bureau of Labor Statistics, Employee Benefits Survey (1997)... 21, 22 U. S. Dept. of Labor, Bureau of Labor Statistics, Employer Costs For Employee Compensation (March 1998) Warren, Gorham & Lamont, HR Series-Policies and Practices. 161:5302 (1998) v

7 The Equal Employment Advisory Council and The Chamber of Commerce of the United States of America respectfully submit this brief amici curiae with the consent of both parties. The brief urges the Court to affirm the decision below, and thus supports the position of Defendant-Appellee The Chase Manhattan Bank. Appellee. STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION Amici defer to the jurisdictional statements of the INTEREST OF THE AMICI CURIAE The Equal Employment Advisory Council ("EEAC" or the "Council") is a nationwide association of employers organized in 1976 to promote sound approaches to the elimination of employment discrimination. Its membership includes over 300 major U.S. corporations. EEAC's directors and officers include many of industry's leading experts in the field of equal employment opportunity. Their combined experience gives the Council a unique depth of understanding of the practical, as well as legal, considerations relevant to the proper interpretation and application of equal employment policies and requirements. EEAC's members are firmly committed to the

8 principles of nondiscrimination and equal employment opportunity. The Chamber of Commerce of the United States of America ("the Chamber") is the largest federation of business companies and associations in the world. The Chamber represents an underlying membership of more than three million businesses and organizations of every size, in every sector and region. An important function of the Chamber is to represent the interests of its members in court on employment law issues of national concern to the business community. All of EEAC's members, and many of the Chamber s members, are employers subject to Title I of the Americans with Disabilities Act of 1990, 42 U.S.C et seq. ("ADA"), as well as other equal employment statutes and regulations. In addition, many are federal contractors subject to 503 of the Rehabilitation Act of 1973, 29 U.S.C Therefore, as employers, and as potential respondents to ADA charges, EEAC's and the Chamber s members are concerned about the central issue presented in this case. The district court below correctly concluded that long-term disability benefit plans that distinguish between mental and physical disorders do not violate the ADA. Many of EEAC s and the Chamber s members offer long-term disability benefits to their employees and follow the common practice of providing 2

9 different coverage levels for mental and physical conditions. These members and many other employers also offer other employee benefits as well. Accordingly, EEAC s and the Chamber's members have a substantial interest in the extent to which the actual content of benefit plans not merely access to the plans can be challenged under the ADA. Because of its interest in the application of the nation's civil rights laws, EEAC has filed more than 430 briefs as amicus curiae in cases before the Supreme Court, the United States Circuit Courts of Appeals and various state supreme courts. The Chamber has filed briefs in nearly 500 cases of importance to the business community. Several employers already have defended successfully against ADA lawsuits brought by private plaintiffs as well as the Equal Employment Opportunity Commission challenging benefit plans that cap various levels of coverage. As part of their amicus activity, EEAC and the Chamber have participated in the key appellate cases involving the issues presented in this case under the ADA 1, and its predecessor, the 1 EEAC filed briefs in Rogers v. Dep't of Health and Envtl. Control, 1999 U.S. App. LEXIS 6327 (4th Cir. April 8, 1999) (parity in physical and mental benefits is not required); EEOC v. CNA Ins. Cos., 96 F.3d 1039 (7th Cir. 1996) (same); Ford v. Schering-Plough Corp., 145 F.3d 601 (3d Cir. 1998) (same), cert. denied, 119 S. Ct. 850 (1999); and Krauel v. Iowa Methodist Med. Ctr., 95 F.3d 674 (8th Cir. 1996) (health insurance plan that does not cover treatments for fertility or infertility problems does not violate the ADA or the Pregnancy Discrimination Act). Both EEAC and the Chamber filed briefs in 3

10 Rehabilitation Act of 1973, 29 U.S.C. 701 et seq. 2 EEAC also filed extensive comments in response to the Equal Employment Opportunity Commission s Notice of Proposed Rulemaking on its substantive regulations implementing the employment provisions of the ADA. 56 Fed. Reg (Feb. 28, 1991) (codified at 29 C.F.R. pt. 1630). Thus, EEAC and the Chamber both have an interest in, and familiarity with, the issues and policy concerns presented to the Court in this case. Indeed, because of their significant experience, EEAC and the Chamber are well situated to brief this Court on the importance of the issues beyond the immediate concerns of the parties to the case. STATEMENT OF THE CASE Chemical Bank, the predecessor of The Chase Manhattan Bank ( Chase ), offers all eligible employees the option to participate in a long-term disability plan ( LTD plan) funded completely by employee contributions. EEOC v. The Chase Parker v. Metropolitan Life Ins. Co., 99 F.3d 181 (6th Cir. 1996), vacated, reh g en banc granted, 107 F.3d (6th Cir. 1997), aff d, 121 F.3d 1006 (6th Cir. 1997), cert. denied, 118 S. Ct. 871 (1998) (totally disabled individual is not a qualified individual with a disability; disparity in benefits provided for physical and mental disorders does not violate the ADA). 2 E.g., EEAC filed a brief in Modderno v. King, 82 F.3d 1059 (D.C. Cir. 1996), cert. denied, 117 S. Ct. 772 (1997) (distinction made between coverage for mental and physical benefits is not subterfuge to evade the purposes of the ADA). 4

11 Manhattan Bank and Unum Life Insurance Company of America, No. 97 CIV 6620 (WK) (December 8, 1998), slip op. at 1. Unum Life Insurance Company of America ( Unum ) acted as the plan s administrator. Id. The Plan provides supplemental income payments for eligible employees who are unable to work because of total disability. Id. at 2. All employees, including those with and without disabilities, have access to the plan. Id. It provides benefit payments until age 65 if an eligible individual is unable to work due to a physical condition. Id. It provides benefit payments for a period of eighteen months to an eligible individual who is unable to work due to a mental or nervous disorder. Id. The EEOC sued Chase and Unum, claiming that the LTD plan violated Title I of the ADA. Id. The district court below granted the defendants motion to dismiss. Id. at 4. This appeal followed. SUMMARY OF ARGUMENT The Americans with Disabilities Act, 42 U.S.C et seq. (ADA), does not address differences in the content of employee benefits plans, insurance policies, and the like. Thus, offering different levels of long term disability benefits for mental and physical disorders does not violate the ADA, according to every Circuit that has addressed the issue 5

12 presented in this case. Rogers v. Dep't of Health and Envtl. Control, 1999 U.S. App. LEXIS 6327 (4th Cir. April 8, 1999); Ford v. Schering-Plough Corp., 145 F.3d 601 (3d Cir. 1998), cert. denied, 119 S. Ct. 850 (1999); Parker v. Metropolitan Life Ins. Co., 121 F.3d 1006 (6th Cir. 1997), cert. denied, 118 S. Ct. 871 (1998); EEOC v. CNA Ins. Cos., 96 F.3d 1039 (7th Cir. 1996). Consistent with those Courts, this Circuit also has stated that as long as a plan is available equally to persons with and without disabilities, there is no ADA violation. Castellano v. City of New York, 142 F.3d 58, 70 (2d Cir. 1998), cert. denied, 67 U.S.L.W (U.S. May 24, 1999)(No ). All of these decisions relied on, and follow, the Supreme Court s interpretations of the Rehabilitation Act of 1973, 29 U.S.C. 701 et seq., that benefit plans that are applied uniformly do not discriminate on the basis of disability merely because they do not address the special needs of every individual with a disability. Alexander v. Choate, 469 U.S. 287 (1985); Traynor v. Turnage, 485 U.S. 535 (1988). The legislative history of the ADA, together with guidance issued by the Equal Employment Opportunity Commission ( EEOC ), confirms that differing benefit levels for mental and physical disorders do not violate the nondiscrimination requirements of the ADA. A ruling in favor of the EEOC would constitute unsound 6

13 public policy, as it would likely encourage employers such as Chase to reduce or eliminate LTD benefits. Thus, adopting the EEOC s interpretation of the ADA ultimately would harm, not benefit, those that the Act is intended to protect. ARGUMENT I. A DISPARITY IN BENEFITS PROVIDED FOR PHYSICAL AND MENTAL DISORDERS DOES NOT VIOLATE THE ADA, SINCE THE ADA COVERS ONLY ACCESS TO BENEFITS, AND NOT THE CONTENT A. This Court and Others Already Have Ruled That Coverage Limitations Do Not Violate The ADA The Americans with Disabilities Act, 42 U.S.C et seq. (ADA), addresses only access to and not the content of employee fringe benefits. Accordingly, the courts of appeals that have addressed the issue have ruled unanimously that providing different levels of long term disability benefits for mental and physical conditions does not violate the ADA. The Third, Fourth, Sixth and Seventh Circuits, in cases virtually identical to the one before this Court, all have held that distinctions between mental and physical conditions in long-term disability plans are not unlawful, since they do not prohibit access to the plan s benefits because of disability. Rogers v. Dep't of Health and Envtl. Control, 1999 U.S. App. LEXIS 6327 (4th Cir. April 8, 1999); Ford v. Schering-Plough Corp., 145 F.3d 601 (3d Cir. 1998), cert. denied, 119 S. Ct. 850 (1999); Parker v. Metropolitan Life Ins. Co., 121 F.3d 1006 (6th Cir. 7

14 1997), cert. denied, 118 S. Ct. 871 (1998); EEOC v. CNA Ins. Cos., 96 F.3d 1039 (7th Cir. 1996). This Court has not directly addressed this precise issue, but has reached a consonant result, stating that as long as a plan is available equally to persons with and without disabilities, there is no ADA violation. Castellano v. City of New York, 142 F.3d 58, 70 (2d Cir. 1998), cert. denied, 67 U.S.L.W (U.S. May 24, 1999)(No ). Addressing a challenge to a retirement plan that provided less benefits for individuals retiring based on disability than a plan based on years of service, this Court concluded that the ADA requires only that persons with disabilities have the opportunity to receive the same benefits as non-disabled officers who have given an equivalent amount of service. Id. (emphasis added). Applying similar reasoning, the Eighth Circuit in Krauel v. Iowa Methodist Med. Ctr., 95 F.3d 674 (8th Cir. 1996), found that a benefit plan exclusion for treatment of infertility that was applied equally to all participants did not violate the ADA. The Eighth Circuit specifically analogized the exclusion in question to the type of distinctions at issue in the instant case. In so doing, the Eighth Circuit relied on the EEOC s own guidance, cited infra, to support its decision: Insurance distinctions that apply equally to all insured employees, that is, to individuals with 8

15 disabilities and to those who are not disabled, do not discriminate on the basis of disability. Krauel, 95 F.3d at 678, (quoting EEOC Interim Enforcement Guidance on Application of ADA to Health Ins., (June 8, 1993), reprinted in EEOC Compliance Manual (BNA) N:2301, N:2303). Since the infertility exclusion applies equally to all individuals, in that no one participating in the Plan receives coverage for treatment of infertility problems, the Court concluded that the exclusion was not a disability-based distinction in violation of the ADA. Id. 3 Thus, benefit plans or programs that are available to all employees but, by definition, provide benefits only to those individuals with disabilities so severe that they are unable to work, do not violate the law merely because they do not provide the same level of benefits to every individual. These plans provide no benefits at all to individuals without disabilities and indeed provide no benefits to individuals with disabilities who are able to work. Arguing that each of these circuit courts has misconstrued the ADA, the EEOC contends that its interpretation is the correct view. The EEOC is wrong for several reasons. 3 Contrary to the EEOC s argument, the Supreme Court s decision last year in Bragdon v. Abbott, 524 U.S. 624 (1998), concluding that reproduction is a major life activity for ADA purposes, did not overrule the Eighth Circuit s separate and pertinent 9

16 First, the agency makes much of the fact that discrimination laws protect individuals, missing the point that no individual has been the victim of disability-based discrimination under this plan. In the instant case, as in all others like it, the employer provided each employee with the same package of benefits. No eligible employee was refused coverage on the basis of disability generally, or on the basis of any particular disabling condition. On the contrary, every participating employee obtained precisely the same coverage offered to every other participating employee. Second, the EEOC misconstrues Section 501(c) of the ADA, 42 U.S.C (c), actually a rule of statutory construction that confirms that the ADA was not intended to change the way the insurance industry does business. In particular, Section 501(c)(3) provides that the requirements of the ADA shall not be construed to prohibit or restrict: (3) a person or organization covered by this chapter from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that is not subject to State laws that regulate insurance. 42 U.S.C (c)(3). The rule notes that Paragraphs (1), (2) and (3) shall not be used as a subterfuge to evade the purposes of subchapter [SIC] I and III of this chapter. 42 holding that a benefit plan exclusion that applies equally to all participants does not violate the ADA. 10

17 U.S.C (c) (footnote omitted). In this context, subterfuge has the same meaning given it by the Supreme Court in Public Employees Retirement Sys. of Ohio v. Betts, 492 U.S. 158, 168 (1989) (interpreting virtually identical language then existing in the Age Discrimination in Employment Act of 1967 to mean that a benefit plan cannot be a subterfuge unless it is used to discriminate in some other aspect of the employment relationship). Accordingly, Section 501(c) means that the ADA cannot be construed to dictate the terms of a bona fide benefit plan unless the plaintiff can demonstrate that it is somehow being used as a subterfuge for disability discrimination in some other aspect of the employment relationship. Under Section 501(c), a benefit plan can discriminate on the basis of disability even as to access to the plan itself, or to certain aspects of the plan, to a particular individual if it can show a legitimate reason for doing so. As the Senate Labor Committee stated: the plan may not refuse to insure, or refuse to continue 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. 4 4 Notably, any actuarial justification requirement is inapplicable to a bona fide benefit plan that is not subject to state laws that regulate insurance. 42 U.S.C (c)(3). 11

18 S. Rep. No , at 85 (emphasis added). The EEOC misunderstands this language as prohibiting the type of distinction made in this case. EEOC Br. at The language, however, unquestionably refers to the amount, extent, or kind of coverage available to an individual, which, as noted above, is precisely the same for any participating employee. Third, the EEOC s position simply defies common sense. Indeed, the EEOC itself has stated that providing different benefits for physical and mental conditions does not violate the ADA. In guidance issued for use by its own field investigators, the EEOC explained that "distinctions that are not based on disability, and that are applied equally to all insured employees, do not discriminate on the basis of disability and so do not violate the ADA." EEOC Interim Enforcement Guidance on Application of ADA to Health Ins., (June 8, 1993), reprinted in EEOC Compliance Manual (BNA) N:2301, N:2303. As noted above, the agency actually uses a variance between physical and mental benefits as an example of a nondiscriminatory distinction: [A] feature of some employer provided health insurance plans is a distinction between the benefits provided for the treatment of physical conditions on the one hand, and the benefits provided for the treatment of "mental/nervous" conditions on the other. Typically, a lower level of benefits is provided for the treatment of mental/nervous conditions than is provided for the treatment of physical conditions.... Such broad distinctions, which apply to the treatment of a multitude 12

19 of dissimilar conditions and which constrain individuals both with and without disabilities, are not distinctions based on disability. Consequently, although such distinctions may have a greater impact on certain individuals with disabilities, they do not intentionally discriminate on the basis of disability and do not violate the ADA. Id. (emphasis added). Although the Interim Guidance specifically applies to health insurance, the agency's reasoning is equally applicable here. 5 These types of distinctions are not discriminatory and are therefore not covered by the ADA. The Supreme Court has stated that it ha[s] never applied the principle of [deference] to agency litigating positions that are wholly unsupported by regulations, rulings or administrative practice. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212 (1988). Further, [d]eference to what appears to be nothing more than an agency s convenient litigating position would be entirely inappropriate. Id. at 213. Were the EEOC s position correct, it would ban not only distinctions between benefits payable for mental and physical conditions in LTD plans, but any other benefit distinctions, caps, or limitations as well. As the Third Circuit said in Ford v. Schering-Plough Corp., The ADA does not require equal 5 The agency strains to distinguish this guidance from its contrary position in this case by observing that LTD plans only address disabilities. EEOC Br. at 29 n.8. The EEOC fails to note, however, that LTD benefits are not available to all individuals with disabilities but only those who are unable to work. 13

20 coverage for every type of disability; such a requirement, if it existed, would destabilize the insurance industry in a manner definitely not intended by Congress when passing the ADA. 145 F.3d at 608, cert. denied, 119 S. Ct. 850 (1999). B. The Supreme Court and This Court Also Have Rejected an Equal Results Requirement Under the Rehabilitation Act While the United States Supreme Court has yet to address the issue of parity in benefits under the ADA, it consistently has held when interpreting the Rehabilitation Act of 1973, 29 U.S.C. 701 et seq., that benefit plans that are applied uniformly do not discriminate on the basis of disability even though they do not provide equal results to every individual. Alexander v. Choate, 469 U.S. 287 (1985); and Traynor v. Turnage, 485 U.S. 535 (1988). This Court, applying Alexander and Traynor, arrived at a similar conclusion in P.C. v. McLaughlin, 913 F.2d 1033 (2d Cir. 1990). In P.C., an individual with mental retardation sued employees of the Vermont Department of Mental Health under the Rehabilitation Act, because the Department could not find suitable residential placements and educational opportunities for him. He alleged, in essence, that he was denied meaningful access to the benefits provided to other handicapped individuals because 14

21 the services provided did not adequately meet his needs. Id. at The court observed that the clearly established law under 504 of the Rehabilitation Act is that its central purpose is to assure that handicapped individuals receive evenhanded treatment in relation to the nonhandicapped. Id. Therefore, the court concluded, [t]he Act does not require all handicapped persons to be provided with identical benefits. Rather, it seeks to ensure that handicapped individuals have an opportunity to participate in and benefit from programs receiving federal assistance. Id. (citations omitted). 6 Accord Doe v. Colautti, 592 F.2d 704 (3d Cir. 1979); Modderno v. King, 82 F.3d 1059 (D.C. Cir. 1996), cert. denied, 117 S. Ct. 772 (1997). 6 This Court affirmed its earlier interpretation of the Rehabilitation Act in Flight v. Gloeckler, 68 F.3d 61 (2d Cir. 1995). In Flight, the Second Circuit held that the New York Department of Vocational and Educational Services did not violate the Rehabilitation Act when it provided more funds for purposes of van modifications to individuals who could drive than to individuals who only could ride as passengers. In finding that this distinction was not discriminatory, the court observed that disabled individuals were not denied benefits that non-disabled individuals were receiving, since the subsidies for vehicle modifications are made available only to handicapped individuals. Id. at 64 (emphasis in original). 15

22 C. Subsequent Congressional Activity Confirms That the ADA Does Not Prohibit Differing Benefit Levels for Mental and Physical Conditions in Long-Term Disability Benefits Actions taken by Congress since the passage of the ADA confirms that Congress did not intend for the ADA to prohibit differing benefit levels for mental and physical conditions in long-term disability plans. Indeed, the Third Circuit in Ford v. Schering-Plough, 143 F.3d 601, 610 (3d Cir. 1998), cert. denied, 119 S. Ct. 850 (1999), the Fourth Circuit in Rogers v. Dep't of Health and Envtl. Control, 1999 U.S. App. LEXIS 6327 (4th Cir. April 8, 1999), the Sixth Circuit in Parker v. Metropolitan Life Ins. Co., 121 F.3d 1006, 1018 (6th Cir. 1997), cert. denied, 118 S. Ct. 871 (1998), and the Seventh Circuit in EEOC v. CNA Ins. Cos., 96 F.3d 1039, 1044 (7th Cir. 1996), all have held that recent Congressional action confirms the conclusion that the ADA does not require parity in coverage for physical and mental conditions in disability plans. Congress passed the Mental Health Parity Act of 1996, 29 U.S.C. 1185a, in September of 1996, six years after the ADA. The 1996 statute requires a degree of parity of coverage for mental and physical conditions in benefits provided in health insurance policies, not disability plans. Indeed, the Sixth Circuit observed in Parker that: While Congress likely realized that equality between the two types of disabilities [mental and physical] 16

23 was not covered by the ADA, it sought to remedy the absence only in the context of health insurance coverage, not long-term disability policies. Thus, it appears that Congress did not believe the necessity for parity between mental and physical disabilities in long-term disability plans was sufficiently compelling to include them within the purview of the [Mental Health Parity] Act. Parker, 121 F.3d at Even in the context of health insurance coverage, however, the statute mandates only limited parity. Parity is required only with regard to annual and lifetime limits, not the number of treatments a person is to receive or the number of office visits he or she may have. Moreover, demonstrating its extreme caution towards a parity mandate, Congress legislated that if the parity requirements increase an employer s costs by one percent, parity is not required. 29 U.S.C. 1185a(c)(2). The passage of the Mental Health Parity Act demonstrates two points. First, as noted in Parker, it shows that the Congress in 1996 did not think that the ADA already required parity between physical and mental benefits, but rather thought additional legislative action was necessary to provide specifically defined parity requirements. Second, as further 7 In a footnote following this conclusion, the Sixth Circuit indicated that, [t]he converse cannot be argued: Congress did not need to include long-term disability plans in the Mental Health Parity Act because the ADA required parity in such plans. It simply cannot be the case that the ADA would cover long-term disability plans but not group health insurance plans. Parker, 121 F.3d at 1018 n

24 noted in Parker, Congress had every opportunity to mandate parity in benefits in disability plans in this legislation recently passed, yet declined to do so. 8 Last month, bi-partisan legislation was introduced in both the House and Senate to extend further the Mental Health Parity Act s requirements. 9 Once again, the proposed legislation addresses only group health insurance plans, not disability plans. Indeed, Senator Pete Domenici, one of the co-sponsors of the Mental Health Equitable Treatment Act of 1999 introduced 8 In fact, the health insurance parity requirements that eventually passed were defeated when initially proposed as an amendment to the Health Insurance Portability and Accountability Act of 1996, an Act designed to improve health care coverage. The Seventh Circuit took note of this fact in ruling that parity was not required by the ADA: This is well-illustrated by the debate over a proposed amendment to the Health Insurance Portability and Accountability Act of 1996, Pub. L. No , 110 Stat (1996). The amendment, which was defeated before final passage of the bill, would have required parity of coverage for mental and physical conditions. See 142 Cong. Rec. S (daily ed. Aug. 2, 1996) (statement of Sen. Heflin). This debate reinforces our conclusion based on the language of the ADA that the issue of parity among physical and mental health benefits is one that is still in the legislative arena. CNA, 96 F.3d at The Mental Health Equitable Treatment Act of 1999, S.796 was introduced in the Senate by Senators Paul Wellstone and Pete Domenici, while Congresswoman Marge Roukema introduced the Mental Health and Substance Abuse Parity Amendments of 1999, H.R. 1515, in the House of Representatives. Similar legislation was introduced in the last Congressional term but not passed. 18

25 in the Senate, stated when introducing the bill that The introduction of this bill marks a historic opportunity for us to take the next step towards mental health parity...." 145 Cong. Rec (April 14, 1999). Sen. Domenici s statement emphasizes that mental health parity is a concern to Congress in the context of health insurance coverage, not disability plans. Given the numerous consistent decisions of the Courts of Appeals rejecting the notion that the ADA requires parity in LTD plans, Congress inaction in pursuing mental health parity in LTD plans is a clear signal that it shares the courts understanding in this regard. 10 The recent Congressional actions only confirm what Congress already stated in the ADA's legislative history, where both the House and Senate Labor Committees report that: [T]he Committee also wishes to clarify that in its view, as is stated by the U.S. Supreme Court in Alexander v. Choate, 469 U.S. 287 (1985), employee benefit plans should not be found to be in violation of this legislation under impact analysis simply 10 Additionally, proposed legislation was introduced in the 105th Congress entitled the Substance Abuse Treatment Parity Act of These bills would have required parity and nondiscriminatory application of treatment limitations and financial requirements for substance abuse treatment benefits under private group and individual health plans that offer such treatment benefits in addition to medical and surgical benefits. The bills exempt employers with 50 or fewer employees. See S and H.R. 2409, 105th Cong. (1997). The introduction of these bills further indicates that Congress does not view the ADA as mandating parity in employer-provided benefits. 19

26 because they do not address the special needs of every person with a disability, e.g., additional sick leave or medical coverage. S. Rep. No , at 85; H.R. Rep. No , pt.2, at 137, reprinted in 1990 U.S.C.C.A.N. 267, 420. The clear mandate is for equal access to whatever insurance coverage the employer provides, not for the provision of specific types of coverage. Clearly, Congress was not, and still is not, ready to mandate such additional costs that sweeping parity requirements would impose on employers at this point in time. Indeed, the forceful debate over this issue reflects a clear recognition that no statute currently exists that mandates such parity in disability plans. Since the only existing parity requirement vanishes when costs become more than a de minimis expense for employers, it is unthinkable that Congress would have adopted a full parity requirement for LTD plans under the ADA without debate or even notice that it was doing so. II. A RULING THAT DISPARITIES IN BENEFITS FOR MENTAL AND PHYSICAL DISORDERS VIOLATE THE ADA COULD CAUSE EMPLOYERS TO REDUCE OR ELIMINATE DISABILITY BENEFITS ENTIRELY In addition to salaries or wages, paid sick days, and paid vacation days, most private employers offer their employees a variety of fringe benefits. Some of these benefits are entirely sponsored by the employer; others require a contribution from 20

27 the employee, and still others are offered and administered by the employer but fully paid by the employee. No employer has unlimited resources with which to provide such benefits. In large part, choices among benefits are based on the cost of each benefit and the return that the employer receives from making the benefit available. In the case of employer-administered benefits that are paid for by the employee, individuals choose to buy benefits, such as LTD coverage, with dollars taken from finite household budgets. Only in this framework can the full impact of the EEOC s position in this case properly be examined. Often, employers provide or sponsor group health insurance coverage. U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits Survey, Table 1. Percent of full-time employees participating in selected employee benefit programs, (1) medium and large private establishments, 1997 (noting that 76% of full time employees participate in medical care as an employee benefit). Some employers also offer short-term disability benefits. Id. (reporting that 55% of employees participate), which provide income replacement to employees temporarily unable to work due to illness. Some also offer a long-term disability plan to provide additional income replacement beyond the period specified in the short-term disability plan. Id. (reporting that 43% of employees 21

28 participate). According to one source, long term disability plans generally provide income replacement for at least two years and possibly over a lifetime. Benefits are typically 60 percent of base salary." Warren, Gorham & Lamont, HR Series- Policies and Practices. 161:5302 (1998). In addition to fringe benefits they offer voluntarily, employers are legally required to contribute to public disability plans such as Social Security and Workers Compensation. In total, benefits cost an employer, on average, an additional 27.1% of each employee's salary. 11 Increasingly, employers also are offering non-traditional benefits to aid employees in other ways. U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits Survey, Table 2. Percent of full-time employees offered other employee benefits, medium and large private establishments, Some employers sponsor employee assistance programs designed to provide counseling and support to employees facing a wide range of personal problems. Id. (reporting that 61% of full-time employees are offered such programs). Other non-traditional benefits help employees in balancing their work and personal lives. For instance, employers are beginning to institute child 11 Bureau of Labor Statistics, Employer Costs For Employee Compensation, Table 6 Private Industry By Occupational and Industry Group (March 1998). 22

29 care and elder care programs, wellness programs, fitness centers, tuition reimbursement programs, commuting assistance, flexible work hours, and other fringe benefits designed to help employees cope with their non-work responsibilities, enhance their knowledge and potential, and improve their physical and mental well-being. The distinguishing characteristic of the long-term disability benefit plan is that, while the protection is available to all eligible employees, the benefit actually is received only by individuals who are disabled as defined by the plan typically, those who are unable to work. Thus, it is a benefit that will have little direct return for employers, since a large number of employees out on long-term disability will not return to the workforce. Accordingly, from a pure business perspective, LTD benefits, by their very nature, provide no immediate return on the employer's investment. While having some degree of income protection in the event an employee is unable to work may give that employee an increased feeling of security, with an indirect benefit to the employer, the fact remains that when benefits are actually paid, the employer loses the skill and experience of the disabled employee permanently. That is not the case with other types of benefits. Sick leave and short-term disability benefits, for example, provide the employer with obvious advantages. They help prevent the 23

30 spread of illness throughout the workplace and allow individuals who are disabled for a short duration to return to work, preserving for the employer their knowledge, training, and experience. Health insurance, likewise, provides an important return for the employer. It helps maintain a healthy workforce which undoubtedly increases productivity. Vacation time is an asset to the employer, as it improves morale and prevents burnout again increasing productivity. Child-care facilities and elder care programs allow employees to remain in the workforce and concentrate on their jobs without worrying about who is caring for their children or their aging parents. Thus, as the overall costs of benefit plans increase, which inevitably would occur under the EEOC s interpretation of the ADA, employers may be forced to consider eliminating LTD benefits altogether. At the very least, a parity requirement would encourage employers such as Chase to reduce benefits currently provided for long-term physical disabilities, rather than increase those for mental disabilities. Similarly, in plans where the employee pays all or part of the premiums for LTD coverage, other financial demands compete for household budget dollars. When the premiums rise, employees are likely to elect to spend their money elsewhere, choosing necessities or other items that are immediately usable over insurance against adversity that may never come. 24

31 Simply put, it is shortsighted to believe that the EEOC s interpretation of the ADA would result in increasing the benefits available to the disabled, when compliance with that interpretation could also be achieved, at much less cost, by reducing or eliminating disability benefits across the board. When considered in light of Social Security Administration statistics which indicate that 68.8% of those receiving disability benefits do so on account of physical disorders 12 it becomes evident that the EEOC s position ultimately would harm, not benefit, the large majority of individuals with disabilities. Like similar benefit plans industry-wide, the Plan in this case fairly can be characterized as a sound approach designed to provide the most benefits to the largest number of individuals in the face of limited available resources. Out of its limited funds, the Plan distributes the maximum payout to the largest class of disabled individuals, the remaining payout to the smaller class of disabled individuals, and no payout at all to non-disabled individuals. The attempt by the EEOC to portray this type of plan as contrary to the purposes of the ADA is, at best, misguided. 12 Source: Social Security Administration Correspondence & Analysis Response Group (1996). 25

32 The ADA is a carefully crafted balance, created by Congress, that guarantees those with disabilities the right to be treated even-handedly in relation to non-disabled individuals, but also provides employers the flexibility necessary to develop the most effective benefit plans in the face of limited resources. This Court should reject the invitation to disrupt that balance. CONCLUSION For the foregoing reasons, amici EEAC and the Chamber respectfully submit that the decisions of the district court should be affirmed. Respectfully submitted, Stephen A. Bokat Ann Elizabeth Reesman* Robin S. Conrad Corrie L. Fischel Sussan Mahallati Kysela McGUINESS & WILLIAMS NATIONAL CHAMBER LITIGATION 1015 Fifteenth St., N.W. CENTER, INC. Suite H Street, N.W Washington, DC Washington, DC (202) (202) Attorneys for Amici Curiae Attorneys for Amici Curiae EQUAL EMPLOYMENT ADVISORY The Chamber of Commerce of COUNCIL the United States of America May 27, 1999 *Counsel of Record 26

33 CERTIFICATE OF COMPLIANCE I hereby certify that the Brief Amici Curiae of the Equal Employment Advisory Council and The Chamber of Commerce of the United States of America In Support of Defendant-Appellee and In Support of Affirmance complies with Fed. R. App. P. 32(a)(7)(B) and pertinent provisions of Second Circuit Rule 32. The brief is written in 12-point Courier New typeface and has 5,893 words. May 27, 1999 Ann Elizabeth Reesman* Corrie L. Fischel MCGUINESS & WILLIAMS th Street, N.W. Washington, D.C (202) Attorneys for Amici Curiae EQUAL EMPLOYMENT ADVISORY COUNCIL *Counsel of Record

34 CERTIFICATE OF SERVICE I hereby certify that two copies of the Brief Amici Curiae of the Equal Employment Advisory Council and the Chamber of Commerce of the United States of America in Support of Defendant-Appellee and In Support of Affirmance were served today on the following counsel by postage prepaid, first class United States mail addressed as follows: C. Gregory Stewart Meryl R. Kaynard Philip B. Sklover Matthew G. Leonard Vincent J. Blackwood CHASE MANHATTAN LEGAL DEPT. Jodi B. Danis One Chase Manhattan Plaza EQUAL EMPLOYMENT OPPORTUNITY 26th Floor COMMISSION New York, NY Office of General Counsel 1801 L Street, N.W. Washington, D.C May 27, 1999 Ann Elizabeth Reesman* Corrie L. Fischel McGUINESS & WILLIAMS 1015 Fifteenth Street, NW Suite 1200 Washington, D.C (202) Attorneys for Amici Curiae EQUAL EMPLOYMENT ADVISORY COUNCIL *Counsel of Record