Ford v. Schering Plough Corp

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit

5-22-1998

Ford v. Schering Plough Corp
Precedential or Non-Precedential:

Docket 96-5674

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Recommended Citation
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Filed May 22, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 96-5674

COLLEEN V. FORD,
Appellant

v.

SCHERING-PLOUGH CORPORATION;
SCHERING CORPORATION;
METROPOLITAN LIFE INSURANCE COMPANY

On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 96-cv-01991)

Argued January 28, 1998

BEFORE: MANSMANN, COWEN and ALITO, Circuit Judges

(Filed May 22, 1998)

Maureen S. Binetti, Esq. (Argued)
Wilentz, Goldman & Spitzer
90 Woodbridge Center Drive
P.O. Box 10
Woodbridge, NJ 07095

Counsel for Appellant
Colleen V. Ford
Robert J. Gregory, Esq.
(Argued)
Room 7032
Equal Employment Opportunity
Commission
1801 L Street, N.W.
Washington, DC 20507

Counsel for Amicus-Appellant
Equal Employment Opportunity
Commission

Corrie L. Fischel, Esq.
McGuiness & Williams
1015 15th Street, N.W.
Suite 1200
Washington, DC 20005

Counsel for Amicus-Appellee
Equal Employment Advisory
Council

Patricia A. Dunn, Esq.
Jones, Day, Reavis & Pogue
1450 G Street, N.W.
Suite 700
Washington, DC 20005-2088

Counsel for Amicus-Appellee
American Council Life Insurance

Ronald S. Cooper, Esq.
Steptoe & Johnson
1330 Connecticut Avenue, N.W.
Washington, DC 20036

Counsel for Amicus-Appellee
Association of Private Pension
And Welfare Plans
Blue Cross and Blue Shield
Association

Thomas F. Campion, Esq. (Argued)
Lee E. Miller

2
 Shanley & Fisher
131 Madison Avenue
Morristown, NJ 07962-1979

Counsel for Appellee
Schering Plough Corporation

Allen I. Fagin
Aaron J. Schindel
Ronald S. Rauchberg
Proskauer, Rose, Goetz &
Mendelsohn
1585 Broadway
New York, NY 10036

Allan M. Marcus, Esq. (Argued)
Metropolitan Life Insurance
Company
Law Department
One Madison Avenue
New York, NY 10010-3690

Sondra M. Hirsch, Esq.
Metropolitan Life Insurance
Company
One Meadowlands Plaza
1st Floor
East Rutherford, NJ 07073

Counsel for Appellee
Metropolitan Life Insurance
Company

OPINION OF THE COURT

COWEN, Circuit Judge.

This appeal presents the purely legal question of whether
a disparity between disability benefits for mental and
physical disabilities violates the Americans with Disabilities
Act of 1990 (ADA), 42 U.S.C. S 12101 et seq. (1994). The
plaintiff-appellant, Colleen Ford, sued her employer,
Schering-Plough Corporation (Schering), and the carrier of

3
Schering's group insurance policy, Metropolitan Life
Insurance Company (MetLife), alleging that the two-year
cap applicable to benefits for mental disabilities, but not for
physical disabilities, violates the ADA. On September 12,
1996, the District Court for the District of New Jersey
granted the defendants' motion to dismiss Ford's complaint
under Federal Rule of Civil Procedure 12(b)(6). Ford
appealed. We will affirm the order of the district court
dismissing Ford's complaint even though we differ with the
district court by finding Ford eligible to file suit under Title
I of the ADA.

I.

The facts concerning the plaintiff's employment and her
disability are not in dispute. Ford was an employee of
Schering from 1975 until May of 1992, when she became
disabled by virtue of a mental disorder and was unable to
continue her employment. While she served as an
employee, Ford enrolled in the employee welfare benefits
plan offered by Schering through MetLife. The plan
provided that benefits for physical disabilities would
continue until the disabled employee reached age sixty-five
so long as the physical disability persisted. Regarding
mental disabilities, however, the plan mandated that
benefits cease after two years if the disabled employee was
not hospitalized. Ford found herself in this latter category,
suffering from a mental disorder yet not hospitalized and
thus ineligible for a continuation of her benefits past the
two-year limit. Her benefits expired on Nov. 23, 1994.

Ford filed a charge of discrimination with the Equal
Employment Opportunity Commission (EEOC). The EEOC
issued her a "right-to-sue" letter on January 31, 1996.
Subsequently, Ford filed a three-count complaint against
Schering and MetLife alleging discrimination in violation of
the ADA. The defendants filed motions to dismiss the
complaint pursuant to Rule 12(b)(6) and, in the alternative,
for summary judgment. The district court granted the
defendants' Rule 12(b)(6) motion, dismissing the complaint
for failure to state a claim. This appeal followed.

4
II.

We have jurisdiction under 28 U.S.C. S 1291 (1994), and
our review over the district court's order is plenary. When
considering a Rule 12(b)(6) motion, we accept as true all the
allegations set forth in the complaint, and we must draw all
reasonable inferences in the plaintiff's favor. See Schrob v.
Catterson, 948 F.2d 1402, 1405 (3d Cir. 1991). Dismissal of
a plaintiff's claim under Rule 12(b)(6) occurs only if the
plaintiff "can prove no set of facts in support of his claim
which would entitle him to relief." Conley v. Gibson, 355
U.S. 41, 45-46, 78 S. Ct. 99, 102 (1957).

III.

Because the facts of this case are not in dispute, our
analysis focuses on the legal question of whether the
disparity between mental and physical disability benefits
violates the ADA and, as a preliminary issue, whether Ford
is even eligible to sue under the ADA. We will address
Ford's claims under Titles I and III seriatim.

A.

Ford's first claim alleges that the defendants' group
insurance plan violates Title I of the ADA because of the
disparity in benefits between mental and physical
disabilities. Title I of the ADA proscribes discrimination in
the terms and conditions of employment and mandates in
relevant part:

(a) General rule

No covered entity shall discriminate against a
qualified individual with a disability because of the
disability of such individual in regard to job application
procedures, the hiring, advancement, or discharge of
employees, employee compensation, job training, and
other terms, conditions, and privileges of employment.

(b) Construction

As used in subsection (a) of this section, the term
"discriminate" includes--

5
 . . . .

(2) participating in a contractual or other
arrangement or relationship that has the effect of
subjecting a covered entity's qualified applicant or
employee with a disability to the discrimination
prohibited by this subchapter (such relationship
includes a relationship with . . . an organization
providing fringe benefits to an employee of the covered
entity[)] . . . .

42 U.S.C. S 12112(a)-(b) (emphasis added). As the plaintiff
correctly observes, the defendants' group insurance plan is
a fringe benefit of employment at Schering. Ford claims
that the defendants violated Title I of the ADA because the
mental-physical disparity constitutes discrimination against
her on the basis of her disability.

i.

Before addressing the merits of Ford's Title I claim, we
must first ascertain whether Ford is eligible tofile suit
under Title I. While the district court held that Ford lacked
"standing[,]" Dist. Ct. Op. at 7, the question of standing is
not at issue in this case. Indeed, Ford has been"injured in
fact" by the denial of her benefits, which is"an injury to
[herself] that is likely to be redressed by a favorable
decision." Simon v. Eastern Ky. Welfare Rights Org., 426
U.S. 26, 38, 96 S. Ct. 1917, 1924 (1976). Furthermore,
Ford's interest is arguably within the zone of interests
regulated by the ADA. See id. at 39 n.19, 96 S. Ct. at 1925
n.19. Instead of ascertaining Ford's standing, we must
assess Ford's eligibility under the ADA's requirements to file
suit.

Title I of the ADA restricts the ability to sue under its
provisions to a "qualified individual with a disability[,]"
whose characteristics are defined as follows:

The term "qualified individual with a disability"
means an individual with a disability who, with or
without reasonable accommodation, can perform the
essential functions of the employment position that
such individual holds or desires. For the purposes of

6
 this subchapter, consideration shall be given to the
employer's judgment as to what functions of a job are
essential, and if an employer has prepared a written
description before advertising or interviewing applicants
for the job, this description shall be considered
evidence of the essential functions of the job.

42 U.S.C. S 12111(8). Thus, an individual eligible to sue
under Title I of the ADA must be disabled but still able to
perform his or her job duties with or without a reasonable
accommodation by the employer. Ford, however, admits
that she is currently unable to work even with a reasonable
accommodation. Indeed, her disabled status is the reason
for her desire to receive the disability benefits at issue here.

The defendants-appellees argue that Ford is clearly
ineligible to sue under Title I of the ADA because she is
currently disabled, and they point to our recent statement
that "a person unable to work is not intended to be, and is
not, covered by the ADA." McNemar v. Disney Store, Inc., 91
F.3d 610, 618 (3d Cir. 1996), cert. denied, ___ U.S. ___, 117
S. Ct. 958 (1997). McNemar focused on whether an
individual is judicially estopped from claiming to be a
"qualified individual with a disability" when he represented
to governmental agencies that he was completely disabled.
In McNemar, an HIV-positive man represented to
government agencies that he was completely disabled for
the purpose of receiving disability benefits. At the same
time, he asserted that he was a "qualified individual with a
disability[,]" meaning that he could work with or without a
reasonable accommodation, in his suit against his former
employer under the ADA for wrongful discharge. As a
result, we concluded that the district court was within its
discretion in finding that McNemar's representations to
government agencies estopped him from claiming that he
was a "qualified individual with a disability" under Title I.
See id. at 617-18.

At first glance, McNemar seems to cover the instant case
since Ford has asserted she is completely disabled for
purposes of disability benefits yet is now asserting she is a
"qualified individual with a disability" for purposes of her
ADA suit. However, despite its apparent relevance,
McNemar is distinguishable. In McNemar, the plaintiff's

7
situation vis-a-vis the ADA did not give rise to the
possibility that, for reasons intrinsic to the ADA, there was
an ambiguity in the definition of "qualified individual with
a disability[.]" The essence of McNemar's suit was that he
could still work despite his disability (meaning that he was
wrongfully discharged), yet he simultaneously received
benefits for being unable to work due to his disability.
McNemar's situation did not unearth an internal
contradiction in the ADA; instead, the contradiction in
McNemar's position arose between McNemar's various
representations, namely his claim of wrongful discharge
and his assertion to government agencies that he was
completely disabled.

In the instant case, Ford is also attempting to qualify
under Title I's eligibility requirement, but the factual
predicate of her claim (that she is disabled and deserving of
disability benefits) matches the representation she made to
qualify for the benefits she already received. Unlike the
McNemar plaintiff, Ford illuminates an internal
contradiction in the ADA itself, namely the disjunction
between the ADA's definition of "qualified individual with a
disability" and the rights that the ADA confers. Title I of the
ADA prohibits discrimination by employers regarding the
"terms, conditions, and privileges" of employment, 42
U.S.C. S 12112(a), including "fringe benefits" such as
disability benefits. Id. S 12112(b)(2). Yet, as Ford and the
EEOC as amicus argue, restricting eligibility to sue under
Title I to individuals who can currently work with or without
a reasonable accommodation prevents disabled former
employees from suing regarding discrimination in disability
benefits. Once an individual becomes disabled and thus
eligible for disability benefits, that individual loses the
ability to sue under a strict reading of Title I's definition of
"qualified individual with a disability" because that
individual can no longer work with or without a reasonable
accommodation. In order for the rights guaranteed by Title
I to be fully effectuated, the definition of "qualified
individual with a disability" would have to permit suits
under Title I by more than just individuals who are
currently able to work with or without reasonable
accommodations.

8
This disjunction between the explicit rights created by
Title I of the ADA and the ostensible eligibility standards for
filing suit under Title I causes us to view the contents of
those requirements as ambiguous rather than as having an
unassailable plain meaning. "The plainness or ambiguity of
statutory language is determined by reference to the
language itself, the specific context in which that language
is used, and the broader context of the statute as a whole."
Robinson v. Shell Oil Co., ___ U.S. ___, ___, 117 S. Ct. 843,
846 (1997) (citing Estate of Cowart v. Nicklos Drilling Co.,
505 U.S. 469, 477, 112 S. Ct. 2589, 2594-95 (1992), and
McCarthy v. Bronson, 500 U.S. 136, 139, 111 S. Ct. 1737,
1740 (1991)). The locus of the ambiguity is whether the
ADA contains a temporal qualifier of the term "qualified
individual with a disability[.]" If the putative plaintiff must,
at the time of the suit, be employable with or without a
reasonable accommodation, then a disabled former
employee loses his ability to sue to challenge discriminatory
disability benefits. Alternatively, the term "qualified
individual with a disability" may include former employees
who were once employed with or without reasonable
accommodations yet who, at the time of suit, are completely
disabled.

The Supreme Court's recent decision in Robinson, which
concerned the scope of Title VII of the Civil Rights Act of
1964, 42 U.S.C. S 2000e et seq. (1994), contributes to this
ambiguity by lending support for interpreting Title I of the
ADA to permit suits by disabled individuals against their
former employers concerning their disability benefits. Cases
interpreting Title VII are relevant to our analysis of the ADA
because the ADA is essentially a sibling statute of Title VII.
Indeed, the ADA's accompanying House report states that
the purpose of the ADA is "to provide civil rights protections
for persons with disabilities that are parallel to those
available to minorities and women." H.R. Rep. No. 101-485,
pt. 3, at 48 (1990), reprinted in 1990 U.S.C.C.A.N. 267, 471.
Furthermore, the ADA incorporates by reference several
terms defined in Title VII. See 42 U.S.C. S 12111(7)
(incorporating Title VII's definitions of "person", "labor
organization", etc.).

In Robinson, the Supreme Court analyzed whether former
employees are allowed to bring suits against their previous

9
employers under Title VII for post-termination retaliation
such as negative job references. The Court found that the
term "employees" as used in S 704(a) of Title VII was
ambiguous regarding its temporal reach, i.e., whether it
covered only current employees or encompassed former
employees as well. See ___ U.S. at ___, 117 S. Ct. at 846-
48. Resolving this ambiguity, the Court held that the term
encompassed former employees in order to provide former
employees with a legal recourse against post-termination
retaliation. See id. at ___, 117 S. Ct. at 848-49; see
also Charlton v. Paramus Bd. of Educ., 25 F.3d 194, 200 (3d
Cir. 1994) (former employee may file a retaliation claim
against a former employer under Title VII).

As with the term "employees" in Title VII, the ADA
contains an ambiguity concerning the definition of
"qualified individual with a disability" because there is no
temporal qualifier for that definition. Congress could have
restricted the eligibility for plaintiffs under the ADA to
current employees or could have explicitly broadened the
eligibility to include former employees. Since Congress did
neither but still created rights regarding disability benefits,
we are left with an ambiguity in the text of the statute
regarding eligibility to sue under Title I.

We resolve this ambiguity by interpreting Title I of the
ADA to allow disabled former employees to sue their former
employers regarding their disability benefits so as to
effectuate the full panoply of rights guaranteed by the ADA.
This is in keeping with the ADA's rationale, namely "to
provide a clear and comprehensive national mandate for
the elimination of discrimination against individuals with
disabilities . . . [and] to provide clear, strong, consistent,
enforceable standards addressing [such] discrimination
. . . ." 42 U.S.C. S 12101(b)(1)-(2) (emphasis added). Our
decision is also in keeping with the Supreme Court's
Robinson decision, which found that the temporal reach of
Title VII encompasses former employees, and our pre-
Robinson decision to that effect in Charlton, 25 F.3d at 200.

By adopting this interpretation, we part ways with the
Seventh and Eleventh Circuits, both of which tendered
decisions prior to Robinson.1 In EEOC v. CNA Ins.
_________________________________________________________________

1. The Sixth Circuit in Parker v. Metropolitan Life Ins. Co., 99 F.3d 181
(6th Cir. 1996), analyzed whether a plaintiff was eligible to sue under

10
Companies, 96 F.3d 1039 (7th Cir. 1996), the Seventh
Circuit rejected the suit of an individual in a position
similar to Ford's. Litigating on behalf of the former
employee, the EEOC argued that the individual was eligible
to sue under Title I by arguing that an analogy may be
drawn to decisions allowing former employees to sue
employers for retaliation under Title VII. The Seventh
Circuit rejected this argument by noting that no
discrimination against the plaintiff occurred during her
employment, while, in the Title VII retaliation situation,
actual harm occurred by virtue of the retaliation. As the
Seventh Circuit wrote, "[N]othing happened that
discriminated against her during the time she was working
at CNA. The only thing that occurred was CNA's 1985
decision to reduce the long-term benefits available to all of
its employees for mental health problems." Id. at 1045.
However, the Seventh Circuit's brief analysis conflates two
issues, the first being whether the individual could sue
regarding fringe benefits while completely disabled, and the
second being whether the individual's suit had merit and
was based upon actual discrimination. The Seventh Circuit
essentially declined to find the individual eligible to sue
because her suit lacked merit. Therefore, we do notfind the
Seventh Circuit's reasoning persuasive regarding whether
Ford is eligible to sue in the instant case as opposed to
whether her suit has merit.2
_________________________________________________________________

Title I. However, that decision was vacated by the granting of the
plaintiff's petition for rehearing en banc. See 6th Cir. R. 14(a). The en
banc decision did not address the Title I issue because it was not raised
by the plaintiff's petition for rehearing en banc. See Parker v.
Metropolitan Life Ins. Co., 121 F.3d 1006, 1009 n.2 (6th Cir. 1997) (en
banc), cert. denied, ___ U.S. ___, 118 S. Ct. 871 (1998).

2. The EEOC also argued in CNA that the disabled person was in the
"employment position" of "disability benefit recipient." Id. at 1043
(internal quotation marks omitted). According to the Seventh Circuit, the
EEOC claimed that, "[b]ecause CNA imposes no job-related duties on any
of the beneficiaries of its long-term disability plan, [the plaintiff] by
definition can perform the essential functions of her position: there are
none . . . ." Id. at 1043-44. The Seventh Circuit rejected that argument
because, in its words, "[a]n `employment position' is a job[,]" id. at
1044,
meaning that receiving disability benefits did not qualify as an
employment position. However, Ford does not offer this argument in the
instant litigation.

11
We also disagree with the Eleventh Circuit's ruling in
Gonzales v. Garner Food Services, Inc., 89 F.3d 1523 (11th
Cir. 1996). In Gonzales, as in the instant case, a disabled
former employee sued his former employer under the ADA
regarding alleged discrimination in disability benefits. The
Eleventh Circuit recognized the possible analogy between
the Title VII retaliation context and the ADA situation, but
it refused to adopt this analogy and to grant the plaintiff
permission to sue. Instead, the Eleventh Circuit argued
that, "[a]bsent clearly expressed legislative intent to the
contrary, the plain language of the statute should be
conclusive." Id. at 1528. The Eleventh Circuit concentrated
on what it believed to be the plain meaning of the ADA, that
only currently employable individuals could sue. However,
it failed to address the possibility that the disparity between
the rights created by the ADA and the apparent legal
remedy fashioned by the ADA creates an ambiguity in the
eligibility requirements for obtaining a remedy.

In sum, we respectfully disagree with the district court
and sister courts of appeals. We find that Title I of the ADA
does permit disabled individuals to sue their former
employers regarding their disability benefits. We reach this
conclusion because the ADA's proscription of
discrimination in fringe benefits generates the need for
disabled individuals to have legal recourse against such
discrimination and exposes the temporal ambiguity in the
ADA's definition of "qualified individual with a disability[.]"
We resolve this ambiguity in favor of a broad temporal
interpretation of "qualified individual with a disability[,]"
that disabled former employees, no longer able to work with
or without reasonable accommodations, can sue their
former employers concerning alleged discrimination in their
package of disability benefits. Our impetus for this
conclusion also comes from the Supreme Court's Robinson
decision allowing former employees to sue under Title VII of
the Civil Rights Act of 1964.

ii.

Having established Ford's eligibility to sue under Title I,
we must now ascertain whether she states a claim that
survives the defendants' Rule 12(b)(6) motion. Ford

12
essentially claims that the disparity between benefits for
mental and physical disabilities violates Title I of the ADA.
However, Ford's argument does not support a finding of
discrimination under Title I.

While the defendants' insurance plan differentiated
between types of disabilities, this is a far cry from a specific
disabled employee facing differential treatment due to her
disability. Every Schering employee had the opportunity to
join the same plan with the same schedule of coverage,
meaning that every Schering employee received equal
treatment. So long as every employee is offered the same
plan regardless of that employee's contemporary or future
disability status, then no discrimination has occurred even
if the plan offers different coverage for various disabilities.
The ADA does not require equal 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.

This analysis is supported by Supreme Court and Third
Circuit precedent concerning the Rehabilitation Act of
1973, 29 U.S.C. S 794 (1994), to which we may look for
guidance in interpreting the ADA. See Gaul v. Lucent
Technologies, Inc., 134 F.3d 576, 580 (3d Cir. 1998). In
Alexander v. Choate, 469 U.S. 287, 105 S. Ct. 712 (1985),
plaintiffs sued in response to the Tennessee Medicaid
program's reduction in the number of inpatient hospital
days for which it would pay. The plaintiffs claimed that the
reduction would have a disproportionate effect on
handicapped individuals since they would require longer
inpatient care than non-handicapped individuals. However,
the Supreme Court held that the limit on inpatient hospital
care was "neutral on its face[ ]" and did not "distinguish
between those whose coverage will be reduced and those
whose coverage will not on the basis of any test, judgment,
or trait that the handicapped as a class are less capable of
meeting or less likely of having." Id. at 302, 105 S. Ct. at
720-21. According to the Supreme Court, handicapped
citizens did not suffer from discrimination because both
handicapped and non-handicapped individuals were
"subject to the same durational limitation." Id. at 302, 105
S. Ct. at 721.

13
Building on Alexander, the Supreme Court in Traynor v.
Turnage, 485 U.S. 535, 108 S. Ct. 1372 (1988), dismissed
a challenge to a federal statute precluding the Veterans
Administration from granting extensions to a ten-year
delimiting period for veterans to claim their benefits if the
veterans' disabilities arose from their own willful
misconduct, defined by regulations as including alcoholism.
The Supreme Court rejected the argument that the statute
discriminated against one type of disability, namely
alcoholism. "There is nothing in the Rehabilitation Act that
requires that any benefit extended to one category of
handicapped persons also be extended to all other
categories of handicapped persons." Id. at 549, 108 S. Ct.
at 1382.

We have likewise held, in the context of the
Rehabilitation Act, that a state's medical assistance statute
need not treat every disability equally. In Doe v. Colautti,
592 F.2d 704 (3d Cir. 1979), we dismissed a challenge to a
Pennsylvania statute that provided unlimited
hospitalization for physical illness in a private hospital but
restricted hospitalization for mental illness in private
mental hospitals. We rejected the argument that the
differential level of benefits violated the Rehabilitation Act
by noting that, "[i]n the treatment of their physical
illnesses, the mentally ill receive the same benefits as
everyone else. A mental patient with heart disease, for
instance, is as entitled to benefits for treatment of the heart
disease as would be a person not mentally ill." Id. at 708.
Our holding in Doe is supported by the D.C. Circuit's
decision in Modderno v. King, 82 F.3d 1059 (D.C. Cir.
1996), cert. denied, ___ U.S. ___, 117 S. Ct. 772 (1997), in
which the D.C. Circuit rejected a challenge brought by a
former spouse of a foreign service officer against the
Foreign Service Benefit Plan under the Rehabilitation Act
based upon the plan's lower level of benefits for mental
illness as compared to physical illness.

Aside from Supreme Court and Third Circuit precedent in
the Rehabilitation Act context, claims under the ADA
similar to Ford's have been rejected by three courts of
appeals in published opinions. While we disagree with the
Seventh Circuit's reasoning in CNA regarding the plaintiff's

14
eligibility to sue, we agree with its discussion regarding the
merits of the plaintiff's claim. In rejecting the plaintiff's
challenge to the disparity between benefits for mental and
physical illnesses, the Seventh Circuit stated:

One of those terms, conditions, or privileges of
employment may be a pension plan, but there is no
claim here that CNA discriminated on the basis of
disability in offering its pension plan to anyone. It did
not charge higher prices to disabled people, on the
theory that they might require more in benefits. Nor
did it vary the terms of its plan depending on whether
or not the employee was disabled. All employees--the
perfectly healthy, the physically disabled, and the
mentally disabled--had a plan that promised them
long-term benefits from the onset of disability until age
65 if their problem was physical, and long-term
benefits for two years if the problem was mental or
nervous. . . .

[The plaintiff] raises a different kind of discrimination
claim, more grist for the ERISA mill or the national
health care debate than for the ADA. She claims that
the plan discriminates against employees who in the
future will become disabled due to mental conditions
rather than physical conditions; their present dollars
(unbeknownst to them) are buying only 24 months of
benefits, instead of benefits lasting much longer.
However this is dressed up, it is really a claim that
benefit plans themselves may not treat mental health
conditions less favorably than they treat physical
health conditions. Without far stronger language in the
ADA supporting this result, we are loath to read into it
a rule that has been the subject of vigorous, sometimes
contentious, national debate for the last several years.
Few, if any, mental health advocates have thought that
the result they would like to see has been there all
along in the ADA.

CNA, 96 F.3d at 1044 (citations omitted). Likewise, in
Krauel v. Iowa Methodist Med. Ctr., 95 F.3d 674 (8th Cir.
1996), the Eighth Circuit rejected a challenge under the
ADA to an insurance plan that denied coverage for
infertility. Analogizing the infertility exclusion to differential

15
benefits for mental and physical illnesses, the Eighth
Circuit stated, "Insurance distinctions that apply equally to
all insured employees, that is, to individuals with
disabilities and to those who are not disabled, do not
discriminate on the basis of disability." Id. at 678. Finally,
the Sixth Circuit in Parker rejected a claim similar to Ford's
made against the same defendants as in the instant case.
As the Sixth Circuit held, "Because all the employees at
Schering-Plough, whether disabled or not, received the
same access to the long-term disability plan, neither the
defendants nor the plan discriminated between the disabled
and the able bodied." 121 F.3d at 1015-16; cf . Brennen v.
Comptroller of the State of N.Y., 100 F.3d 942, 1996 WL
19057 (2d Cir. 1996) (unpublished table decision) (benefits
extended to one category of disabled persons need not be
extended to all other categories).

The cases finding no violation of the ADA by a disparity
in benefits between mental and physical disabilities are
supported by the ADA's legislative history. As the Senate
Labor and Human Resources Committee report states:

In addition, employers may not deny health
insurance coverage completely to an individual based
on the person's diagnosis or disability. For example,
while it is permissible for an employer to offer
insurance policies that limit coverage for certain
procedures or treatments, e.g., only a specified amount
per year for mental health coverage, a person who has
a mental health condition may not be denied coverage
for other conditions such as for a broken leg or for
heart surgery because of the existence of the mental
health condition. A limitation may be placed on
reimbursements for a procedure or the types of drugs
or procedures covered[,] e.g., a limit on the number of
x-rays or non-coverage of experimental drugs or
procedures; but, that limitation must apply to persons
with or without disabilities. All people with disabilities
must have equal access to the health insurance
coverage that is provided by the employer to all
employees.

S. Rep. No. 101-116, at 29 (1989).

16
In addition, legislative history subsequent to the ADA's
passage evinces that Congress did not believe that the ADA
mandated parity between mental and physical disability
benefits. In 1996, the Senate defeated an amendment to the
Health Insurance Portability and Accountability Act of
1996, Pub. L. No. 104-191, 110 Stat. 1936 (1996) (codified
primarily in Titles 18, 26 and 42 of the U.S. Code), which
would have mandated parity in insurance coverage for
mental and physical illnesses. Such an amendment would
have been unnecessary altogether if the ADA already
required such parity. See 142 Cong. Rec. S9477-02 (daily
ed. Aug. 2, 1996) (statement of Sen. Heflin); see also CNA,
96 F.3d at 1044. Furthermore, Congress then passed the
Mental Health Parity Act of 1996, Pub. L. No. 104-204, Title
VII, 110 Stat. 2944 (1996) (codified at 29 U.S.C.S 1185a
and 42 U.S.C. S 300gg-5), which mandates, inter alia, that
a health insurance plan containing no annual or lifetime
limit for medical benefits cannot have such limits on
mental health. Such congressional action reveals both that
the ADA does not contain parity requirements and that no
parity requirements for mental and physical disability
benefits have been enacted subsequent to the ADA.

iii.

Ford attempts to buttress her challenge to the disparity
between benefits for mental and physical disabilities by
pointing to section 501(c) of the ADA, which contains the
"safe harbor" provision covering the insurance industry.
This section, codified at 42 U.S.C. S 12201(c), reads as
follows:

(c) Insurance

Subchapters I through III of this chapter and title IV
of this Act shall not be construed to prohibit or restrict
--

(1) an insurer, hospital or medical service
company, health maintenance organization, or any
agent, or entity that administers benefit plans, or
similar organizations from underwriting risks,
classifying risks, or administering such risks that
are based on or not inconsistent with State law; or

17
 (2) a person or organization covered by this
chapter from establishing, sponsoring, observing or
administering the terms of a bona fide benefit plan
that are based on underwriting risks, classifying
risks, or administering such risks that are based
on or not inconsistent with State law; or

(3) a person or organization covered by this
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.

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 U.S.C. S 12201(c). Ford essentially claims that, once she
presents a prima facie case alleging discrimination in
disability benefits, Schering and MetLife must present
actuarial data demonstrating that their plan is not a
"subterfuge[.]" Hence, according to Ford, the district court
erred in granting the defendants' Rule 12(b)(6) motion since
the defendants had not offered data justifying the actuarial
basis for the disparity in benefits.

Ford's argument must fail, however, since it runs
contrary to Supreme Court precedent, ignores our statutory
duty regarding insurance regulation and distorts the role of
this court. First, Ford's argument that Schering and MetLife
must justify their insurance plan contradicts the Supreme
Court's interpretation of a provision similar to section
501(c) in the context of the Age Discrimination in
Employment Act (ADEA), Pub. L. No. 90-202, 81 Stat. 602
(1967) (codified at 29 U.S.C. S 621 et seq. (1994)). Prior to
Congress's elimination of the term "subterfuge" from the
ADEA in 1990, see Older Workers Benefit Protection Act of
1990, Pub. L. No. 101-433, 104 Stat. 978, the ADEA
granted an exemption from the ADEA's prohibition of age
discrimination to an employee benefit plan that was not "a
subterfuge[.]" 29 U.S.C. S 623(f) (1988). In Public Employees
Retirement Sys. of Ohio v. Betts, 492 U.S. 158, 109 S. Ct.
2854 (1989), the Supreme Court rejected a challenge to an
insurance plan that rendered covered employees ineligible

18
for disability retirement once they reached age sixty.
Relying on its decision in United Air Lines, Inc. v. McMann,
434 U.S. 192, 98 S. Ct. 444 (1977), the Supreme Court
concluded that the term "subterfuge" must be given its
ordinary meaning of " `a scheme, plan, stratagem, or artifice
of evasion.' " Betts, 492 U.S. at 167, 109 S. Ct. at 2861
(quoting McMann, 434 U.S. at 203, 98 S. Ct. at 450). In
addition, the Supreme Court found that requiring an
insurance company to justify its coverage scheme had no
basis in the statutory language. See id. at 170-71, 109 S.
Ct. at 2863; see also McMann, 434 U.S. at 203, 98 S. Ct.
at 450.

The Supreme Court's definition and analysis of the
ADEA's use of the term "subterfuge" are applicable to the
ADA's use of the term "subterfuge[.]" Congress enacted
section 501(c) of the ADA in 1990, see Pub. L. No. 101-336,
104 Stat. 369 (1990), while the Supreme Court decided
Betts in 1989. Congress therefore is presumed to have
adopted the Supreme Court's interpretation of "subterfuge"
in the ADEA context when Congress enacted the ADA.
"[W]here, as here, Congress adopts a new law incorporating
sections of a prior law, Congress normally can be presumed
to have had knowledge of the interpretation given to the
incorporated law, at least insofar as it affects the new
statute." Lorillard v. Pons, 434 U.S. 575, 581, 98 S. Ct. 866,
870 (1978); see Standard Oil Co. of N.J. v. United States,
221 U.S. 1, 59, 31 S. Ct. 502, 515 (1911) ("[W]here words
are employed in a statute which had at the time a well-
known meaning at common law or in the law of this
country, they are presumed to have been used in that
sense unless the context compels to the contrary."). "Had
Congress intended to reject the Betts interpretation of
subterfuge when it enacted the ADA, it could have done so
expressly by incorporating language for that purpose into
the bill that Congress voted on and the President signed."
Krauel, 95 F.3d at 679; accord Modderno, 82 F.3d at 1064.
Accordingly, as the Supreme Court held in the ADEA
context, the term "subterfuge" does not require an
insurance company to justify its policy coverage after a
plaintiff's mere prima facie allegation.

The second reason that Ford's argument must fail is that
it ignores our statutory duty under the McCarran-Ferguson

19
Act regarding insurance cases. Pursuant to that Act, "No
Act of Congress shall be construed to invalidate, impair, or
supersede any law enacted by any State for the purpose of
regulating the business of insurance . . . unless such Act
specifically relates to the business of insurance . . . ." 15
U.S.C. S 1012(b) (1994). The ADA does not "specifically
relate[ ] to the business of insurance[,]" id., and does not
mention the term "insurance" in its introductory section
entitled "Findings and purpose[.]" See 42 U.S.C. S 12101.
Accordingly, we will not construe section 501(c) to require
a seismic shift in the insurance business, namely requiring
insurers to justify their coverage plans in court after a mere
allegation by a plaintiff. This second reason is integrally
related to the third reason Ford's argument regarding
section 501(c) fails, namely that requiring insurers to justify
their coverage plans elevates this court to the position of
super-actuary. This court is clearly not equipped to become
the watchdog of the insurance business, and it is unclear
exactly what actuarial analysis the defendants would have
to produce to disprove the charge of "subterfuge[.]" See
Modderno, 82 F.3d at 1062-63 (noting confusion as to
exactly what actuarial data would be sufficient).

B.

Ford's second claim against Schering and MetLife is that
the disparity in benefits for mental and physical disabilities
violates Title III of the ADA. Title III reads in relevant part
as follows: "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. S 12182(a).
Relying on the principle that courts should avoid
interpreting statutes in a manner rendering some words
redundant, see United States v. Alaska, ___ U.S. ___, ___,
117 S. Ct. 1888, 1918 (1997), Ford and the U.S. Dept. of
Justice as amicus essentially argue that the phrase
"services, . . . privileges, [and] advantages" covers
discrimination in realms different than physical access to
facilities or else these words would be superfluous. Ford

20
can also cite to the ADA itself for the proposition that an
"insurance office[ ]" is a public accommodation under Title
III. 42 U.S.C. S 12181(7)(F) (listing examples of public
accommodations including "insurance office[]").

The fact that an insurance office is a public
accommodation, however, does not mean that the
insurance policies offered at that location are covered by
Title III. In the instant case, Schering and MetLife offered
disability benefits to Ford in the context of her employment
at Schering, meaning that the disability benefits constituted
part of the terms and conditions of Ford's employment.
Terms and conditions of employment are covered under
Title I, not Title III. "Title III is not intended to govern any
terms or conditions of employment by providers of public
accommodations or potential places of employment;
employment practices are governed by title I of this
legislation." S. Rep. No. 101-116, at 58 (1989); see H.R.
Rep. No. 101-485, pt. 2, at 99 (1990), reprinted in 1990
U.S.C.C.A.N. 303, 382. Therefore, Ford cannot state a claim
against her employer, Schering, pursuant to Title III.
See Parker, 121 F.3d at 1015.

Regarding MetLife, the disability benefits that Ford
challenges do not qualify as a public accommodation and
thus do not fall within the rubric of Title III. The plain
meaning of Title III is that a public accommodation is a
place, leading to the conclusion that " `[i]t is all of the
services which the public accommodation offers, not all
services which the lessor of the public accommodation
offers[,] which fall within the scope of Title III.' " Id. at 1011
(quoting Stoutenborough v. National Football League, Inc.,
59 F.3d 580, 583 (6th Cir. 1995) (a television broadcast is
not covered by Title III)). This is in keeping with the host of
examples of public accommodations provided by the ADA,
all of which refer to places. See 42 U.S.C. S 12181(7).3 Since
_________________________________________________________________

3. Section 12181(7) reads as follows:

The following private entities are considered public accommodations
for purposes of this subchapter, if the operations of such entities affect
commerce--

(A) an inn, hotel, motel, or other place of lodging, except for an
establishment located within a building that contains not more than five

21
Ford received her disability benefits via her employment at
Schering, she had no nexus to MetLife's "insurance office"
and thus was not discriminated against in connection with
a public accommodation. Furthermore, the "goods, services,
facilities, privileges, advantages, or accommodations"
concerning which a disabled person cannot suffer
discrimination are not free-standing concepts but rather all
refer to the statutory term "public accommodation" and
thus to what these places of public accommodation provide.
Ford cannot point to these terms as providing protection
from discrimination unrelated to places.
_________________________________________________________________

rooms for rent or hire and that is actually occupied by the proprietor of
such establishment as the residence of such proprietor;

(B) a restaurant, bar, or other establishment serving food or drink;

(C) a motion picture house, theater, concert hall, stadium, or other
place of exhibition or entertainment;

(D) an auditorium, convention center, lecture hall, or other place of
public gathering;

(E) a bakery, grocery store, clothing store, hardware store, shopping
center, or other sales or rental establishment;

(F) a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel
service, shoe repair service, funeral parlor, gas station, office of an
accountant or lawyer, pharmacy, insurance office, professional office of
a health care provider, hospital, or other service establishment;

(G) a terminal, depot, or other station used for specified public
transportation;

(H) a museum, library, gallery, or other place of public display or
collection;

(I) a park, zoo, amusement park, or other place of recreation;

(J) a nursery, elementary, secondary, undergraduate, or postgraduate
private school, or other place of education;

(K) a day care center, senior citizen center, homeless shelter, food
bank, adoption agency, or other social service center establishment; and

(L) a gymnasium, health spa, bowling alley, golf course, or other place
of exercise or recreation.

42 U.S.C. S 12181(7).

22
Restricting "public accommodation" to places is in
keeping with jurisprudence concerning Title II of the Civil
Rights Act of 1964, 42 U.S.C. S 2000a (1994). Title II
proscribes racial and religious discrimination in"the goods,
services, facilities, privileges, advantages, and
accommodations of any place of public accommodation
. . . ." 42 U.S.C. S 2000a(a). This proscription has been
limited to places rather than including membership in an
organization, see Welsh v. Boy Scouts of Am., 993 F.2d
1267, 1269-75 (7th Cir. 1993), and rather than
encompassing an organization's operations unconnected to
any physical facility. See Clegg v. Cult Awareness Network,
18 F.3d 752, 755-56 (9th Cir. 1994).

Confining "public accommodation" to places is also in
keeping with the Dept. of Justice's regulations to this effect:

The purpose of the ADA's public accommodations
requirements is to ensure accessibility to the goods
offered by a public accommodation, not to alter the
nature or mix of goods that the public accommodation
has typically provided. In other words, a bookstore, for
example, must make its facilities and sales operations
accessible to individuals with disabilities, but is not
required to stock Brailled or large print books.
Similarly, a video store must make its facilities and
rental operations accessible, but is not required to
stock closed-captioned video tapes.

28 C.F.R. pt. 36, app. B, at 640 (1997). Just as a bookstore
must be accessible to the disabled but need not treat the
disabled equally in terms of books the store stocks, likewise
an insurance office must be physically accessible to the
disabled but need not provide insurance that treats the
disabled equally with the non-disabled. While the Dept. of
Justice has issued other documents stating that Title III
does cover the substance of insurance contracts, see Dept.
of Justice, Title III Technical Assistance Manual: Covering
Public Accommodations and Commercial Facilities S III-
3.11000, at 19 (Nov. 1993) ("Insurance offices are places of
public accommodation and, as such, may not discriminate
on the basis of disability in the sale of insurance contracts
or in the terms or conditions of the insurance contracts
they offer."), such an interpretation is "manifestly contrary"

23
to the plain meaning of Title III and, accordingly, is not
binding on this court. Chevron U.S.A., Inc. v. Natural
Resources Defense Council, 467 U.S. 837, 844, 104 S. Ct.
2778, 2782 (1984); see Parker, 121 F.3d at 1012 n.5.
Furthermore, since we find the plain meaning of "public
accommodation" and 42 U.S.C. S 12182(a) to be clear, we
have no need to analyze the ADA's legislative history.

We also note that, by aligning ourselves with the Sixth
Circuit's Parker decision regarding the definition of "public
accommodation[,]" we part company with the First Circuit
in this regard. In Carparts Distribution Ctr., Inc. v.
Automotive Wholesaler's Ass'n of New England, Inc., 37
F.3d 12 (1st Cir. 1994), the First Circuit held that Title III
is not limited to physical structures. The First Circuit
pointed to the inclusion of "travel service" in the list of
public accommodations and noted:

Many travel services conduct business by telephone or
correspondence without requiring their customers to
enter an office in order to obtain their services.
Likewise, one can easily imagine the existence of other
service establishments conducting business by mail
and phone without providing facilities for their
customers to enter in order to utilize their services. It
would be irrational to conclude that persons who enter
an office to purchase services are protected by the
ADA, but persons who purchase the same services over
the telephone or by mail are not. Congress could not
have intended such an absurd result.

Id. at 19 (citing 42 U.S.C. S 12181(7)(F)). However, as the
Sixth Circuit pointed out in Parker, 121 F.3d at 1014, the
First Circuit failed to read the examples of public
accommodations that piqued the First Circuit's interest in
the context of the other examples of public
accommodations. The litany of terms, including
"auditorium," "bakery," "laundromat," "museum," "park,"
"nursery," "food bank," and "gymnasium[ ]" refer to places
with resources utilized by physical access. 42 U.S.C.
S 12181(7)(D)-(F), (H)-(L). Pursuant to the doctrine of
noscitur a sociis, the terms that the First Circuit finds
ambiguous should be interpreted by reference to the
accompanying words of the statute "to avoid the giving of

24
unintended breadth to the Acts of Congress." Jarecki v.
G.D. Searle & Co., 367 U.S. 303, 307, 81 S. Ct. 1579, 1582
(1961). Accordingly, we do not find the term "public
accommodation" or the terms in 42 U.S.C. S 12181(7) to
refer to non-physical access or even to be ambiguous as to
their meaning.

In sum, Ford fails to state a claim under Title III of the
ADA since the provision of disability benefits by MetLife to
Schering's employees does not qualify as a public
accommodation.

IV.

For the above reasons, we will affirm the September 12,
1996, order of the district court dismissing Ford's
complaint for failure to state a claim. Unlike the district
court, we find that Ford is eligible to sue under Title I.
However, Ford fails to state a claim under Titles I or III and
errs in asserting that the "safe harbor" provision of Title V
requires insurance companies to justify their coverage
plans after a plaintiff's prima facie allegation.

25
ALITO, Circuit Judge, concurring in the judgment:

I agree with the majority that Ford fails to state a claim
under the Americans with Disabilities Act (ADA). However,
I reach this conclusion based solely on the insurance "safe
harbor" provision located in section 501(c) of the ADA. See
42 U.S.C. S 12201(c).

Section 501(c) provides that Titles I and III of the ADA
"shall not be construed to prohibit or restrict" the terms of
a bona fide insurance plan. 42 U.S.C. S 12201(c). This
exemption applies so long as it is not "used as a subterfuge
to evade the purposes of" the ADA. Id. As the majority
recognizes, the term "subterfuge" must be construed in
accordance with the Supreme Court's decision in Public
Employees Retirement Sys. of Ohio v. Betts, 492 U.S. 158
(1989). See Maj. Op. at 18-19. Betts concerned a "safe
harbor" provision that exempted fringe benefit plans from
coverage by the Age Discrimination in Employment Act
(ADEA). See 29 U.S.C. S 623(f)(2) (1988).1 Like section
501(c), the ADEA exemption provided that it would not
protect a plan that was "a subterfuge to evade the purposes
of" the Act. Id. In interpreting this language, the Court
concluded that an employee benefit plan adopted prior to
the enactment of the ADEA could not be considered a
subterfuge to evade the purposes of the ADEA. Betts, 492
U.S. at 166-69 (reaffirming the holding of United Air Lines,
Inc. v. McMann, 434 U.S. 192, 203 (1977)). Under the same
reasoning, the insurance plan challenged by Ford cannot be
considered a subterfuge to evade the purposes of the ADA
since the plan was adopted prior to the enactment of the
ADA.2 See Modderno v. King, 82 F.3d 1059, 1063-1065
_________________________________________________________________

1. Following Betts, section 623(f)(2) was amended by the Older Workers
Benefit Protection Act of 1990, Pub. L. No. 101-433, S 103(1), 104 Stat.
978.

2. The disputed portions of the plan have been in effect since at least
1985. App. at 69, 87. The ADA was enacted in 1990. See 42 U.S.C.
S 12101.

Three justices in McMann rejected the majority's conclusion that a
plan adopted prior to the enactment of the ADEA could not be a
subterfuge to avoid the purposes of that Act. See 434 U.S. at 204-05
(White, J., concurring); id. at 219 n.13 (Marshall, J., joined by Brennan,

26
(D.C. Cir. 1996) (holding that an insurance plan enacted
prior to the importation of ADA standards into the
Rehabilitation Act could not be considered a subterfuge to
evade those standards). Accordingly, the defendants' plan is
insulated from attack by section 501(c).

I further note that Ford's complaint as currently framed
fails to allege that the defendants ever developed a"specific
intent" to evade the purposes of the ADA. See Betts, 492
U.S. at 171. In Betts, the Court wrote:

[W]hen an employee seeks to challenge a benefit plan
provision as a subterfuge to evade the purposes of the
Act, the employee bears the burden of proving that the
discriminatory plan provision actually was intended to
serve the purpose of discriminating in some non-fringe-
benefit aspect of the employment relation.

Betts, 492 U.S. at 181. Under this reading of "subterfuge,"
Ford could not successfully challenge the defendants'
insurance plan unless she could show that it was intended
to serve the purpose of discriminating in some non-
insurance-benefit aspect of her relationship with the
defendants. Ford's complaint contains no such allegation of
intent.

Given the effect of section 501(c) on Ford's claims, I do
not think that it is necessary for the court to conclude that
distinguishing between people with different disabilities for
insurance purposes is not discrimination based on
disability. See Maj. Op. at 12-13. In fact, it would seem that
making such distinctions does constitute discrimination in
the most basic sense of the word. See Webster's Third New
International Dictionary at 648 (defining discrimination as
_________________________________________________________________

J., dissenting). According to these justices, a pre-Act plan could become
a subterfuge if it was maintained after the passage of the ADEA in order
to evade the purposes of that Act. One could argue that this position is
stronger under the ADA's "safe harbor" provision due to difference in the
statutory language. Compare 29 U.S.C. S 623(f) ("is not a subterfuge to
evade the purposes of" the ADEA) (emphasis added) with 42 U.S.C.
S 1201(c) ("shall not be used as a subterfuge to evade the purposes of"
the ADA) (emphasis added). However, I do not believe that this change is
sufficient to avoid the mandate of McMann and Betts.

27
"the making or perceiving of a distinction or difference").
However, we need not wrestle with the question of what
might or might not constitute unlawful insurance
discrimination under the ADA had Congress not addressed
the issue; Congress did address the issue and provided an
explicit answer in section 501(c).

In light of the ease with which Ford's claims can be
resolved under section 501(c), I would not reach the more
difficult issues of: 1) whether a former employee who can
no longer work can meet Title I's "qualified individual with
a disability" requirement; and 2) whether Title III's public
accommodation provision guarantees anything more than
physical access. These issues have divided the circuits, and
I would reserve judgment until we are confronted with a
case in which the unique considerations of insurance plans
are not at stake.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

28