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CINCINNATI-Employers and insurers that cap long-term disability benefits for mental illnesses and not physical impairments are not in violation of accommodation provisions of

the Americans with Disabilities Act, a federal appeals court has ruled.

In a much-anticipated decision, the full 6th U.S. Circuit Court of Appeals ruled Aug. 1 that employer-provided long-term disability plans are not goods offered by a place of public accommodation and therefore are not subject to Title III of the ADA.

The 8 to 5 decision reverses a three-judge panel decision last October that said Title III of the ADA not only prohibits discrimination in terms of physical access to places of public accommodation but also prohibits discrimination in terms of goods and services-including insurance products-offered at those places (BI, Nov. 4, 1996).

The 6th Circuit ruling in Ouida Sue Parker vs. Metropolitan Life Insurance Co., Schering-Plough Corp. and Schering-Plough Health Care Products Inc. re See Mental on page Mental volves around Schering-Plough's LTD plan, which MetLife administers.

Schering-Plough said it "is gratified with the ruling. . .and believes the court's decision comports with the principles of the Americans with Disabilities Act."

MetLife said in a statement: "We believe this decision will have a positive impact on preserving flexibility and controlling the costs of employee benefit plans."

However, Kaye Burson, an attorney with Rutledge & Rutledge in Memphis, Tenn., who represented the plaintiff, said, "I'm positive we'll take it to the Supreme Court."

Ms. Parker, who suffers from severe depression and has been unable to perform her job at Schering-Plough since 1990, alleges her employer's long-term disability plan discriminates against people with mental illnesses because under the plan, people with mental illnesses receive disability benefits for up to two years, while people with physical illnesses continue to receive benefits until age 65.

In affirming a lower court ruling, the 6th Circuit said the ADA expressly limits discrimination in employment practices to Title I and that an employer-provided LTD plan administered by an insurer does not fall within the purview of Title III because health plans are not goods provided by a place of public accommodation.

"The public cannot enter the office of MetLife or Schering-Plough and obtain the long-term disability policy that (Ms. Parker) obtained. (Ms.) Parker did not access her policy from MetLife's insurance office. Rather, she obtained her benefits through her employer. There is, thus, no nexus between the disparity in benefits and the services which MetLife offers to the public from its insurance offices," the court said.

The ADA does not "prohibit an insurance company from differentiating between different disabilities. The same policy is provided to all employees who, when they receive it, are not disabled but working. The fact that some may become disabled for different reasons does not amount to discrimination in providing the policy. The ADA simply does not mandate equality between individuals with different disabilities. Rather, the ADA.*.*.prohibits discrimination between the disabled and the non-disabled," the majority concurred.

Most employer-provided disability plans impose two-year caps on LTD benefits for mental illnesses as a means to reduce costs, benefit experts say. The recent appellate ruling, while limited in range, is good news for benefit managers who likely would have had to scrap their old plans.

Benefit consultants and labor attorneys say while the ruling is positive for employers, the issue will likely turn up in the Supreme Court or Congress.

"It's a much better decision for employers," noted Henry Saveth, a principal with William M. Mercer Inc.'s Washington Resource Group. "It recognizes that employer disability cases should be brought under the employment title of the Act, not the public accommodations title."

Gerald L. Maatman Jr., a labor attorney with Baker & McKenzie in Chicago, said the 6th Circuit ruling contradicts a ruling in a case by the 1st U.S. Circuit Court of Appeals in Boston. In that case, Carparts Distribution Ctr. vs. Automotive Wholesalers Assn. of New England Inc., the court concluded that Title III is not limited to the mere denial of physical access to places of public accommodation.

The case involved lower caps placed on lifetime benefits for AIDS-related illnesses but not on other illnesses (BI, Oct. 24, 1994).

There is "conflict in the circuits," he said. "An employer in New Hampshire is subject to a different rule than an employer in Ohio." This is "a recipe for the Supreme Court" to decide a general rule for everyone in the United States, he said.

Mary Case, a principal with The Kwasha Lipton Group in Fort Lee, N.J., agreed the case will most likely be decided by the Supreme Court but added it did not make sense to her why this case was originally brought under the ADA in the first place, as opposed to being left for public policy.

"The ADA is all about enabling people to work. This case is about an individual not working," she said. Whether mental illnesses should be treated the same as physical illnesses is a public policy issue, she said.

Indeed, Congress did pass the Mental Health Parity Act last year, but the law involves group medical plans, not disability benefits.

The law, which takes effect Jan. 1, 1998, requires employers with 50 or more employees to offer in their group medical plans the same annual and lifetime limits for treatment of mental illnesses and disorders as they provide for physical problems. Employers, however, can still continue to impose higher deductibles and copayments in their plans for treatment of mental disorders.

Ms. Case said she wouldn't be surprised if the issue regarding mental illnesses and disability benefits was addressed in an expanded version of the new law.

Ouida Sue Parker vs. Metropolitan Life Insurance Co., Schering-Plough Corp. and Schering-Plough Health Care Products Inc., 6th U.S. Circuit Court of Appeals; No. 95-5269.