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A large employer has surrendered in a long legal battle challenging its right to offer disability insurance protection that discriminates against employees disabled by mental illnesses.
The disabled plaintiff who brought the suit, identified in court documents only as Leonard F., won a settlement from the Israel Discount Bank of New York, which insisted that the restrictions its disability policy imposed on payments for mental disabilities was allowed by law, even though its coverage for physical disabilities was far more generous.
The case was developed in 1995 in large part through the resources of the New York State Psychiatric Association (NYSPA), whose general counsel and executive director, Seth Stein, acted as co-counsel for Leonard F. New York Lawyers for the Public Interest also represented Leonard F.
The case, Leonard F. v. Israel Discount Bank of New York, was a trailblazing test of the reach of the Americans With Disabilities Act (ADA), a federal law that since 1992 has barred employers, public facilities, and other entities from enacting policies or behaving in a way that discriminates against an individual based on that person's disability. Except for disabilities attributable primarily to substance abuse, the law specifically includes mental illnesses within the scope of its protections.
While the terms of the February 17 settlement prohibit discussion of its details, it was disclosed soon after that time that the bank agreed to modify its disability insurance policy to apply the same provisions and coverage to mental disabilities as it does to physical ones. In an agreement with the Equal Employment Opportunity Commission (EEOC), which entered the case on behalf of the disabled employee, the bank will offer equal disability coverage for physical and mental illnesses for the next three years. At that point, the EEOC hopes, there will be enough case law on this aspect of the ADA that the bank will have no choice but to offer parity coverage permanently.
This case was one of the first instances in which APA tapped into its $1 million litigation fund to support a legal case. That fund, whose oversight committee is chaired by former APA president Harold Eist, M.D., was established in 1995 to provide financial backing for lawsuits likely to have a national impact on psychiatrists and their patients. In setting up the litigation fund, APA Trustees were particularly interested in identifying major lawsuits that challenge discriminatory policies directed at individuals with mental illnesses. APA gave $50,000 from the fund to assist in the suit (Psychiatric News, October 20, 1995; April 4, 1997).
"The Americans With Disabilities Act is not an option-it is the law, and employers must abide by its guidelines," APA Medical Director Steven M. Mirin, M.D., told Psychiatric News "As patient advocates, the APA membership demanded action to support such litigation, and we responded."
Under the policy contested by Leonard F., an assistant vice president who had to retire because of severe depression, employees disabled because of a psychiatric disorder were eligible to receive disability payments for two years. Their physically disabled colleagues, however, were entitled to do so until they reached age 65.
Despite the settlement agreement, the bank still insists that its disability policy did not violate the ADA, according to its general counsel, Theodore Itzkowitz. The bank's decision to settle just prior to trial "was based on an economic reality of how much this [case] was going to cost me to try," he said. The bank did not admit liability as part of the settlement.
"The settlement of this lawsuit demonstrates how the law can work to achieve parity and fairness for persons with disabilities because of mental illness," NYSPA legal counsel Stein said. "We successfully challenged and overturned a long-standing discrimination against persons with mental illness. . . ."
Stein also praised both APA and the NYSPA for their support in bringing this case to court.
NYSPA President Edward Gordon, M.D., emphasized that his organization plans to "continue its efforts to advocate for laws guaranteeing parity for the treatment of mental illness" and will support future litigation on the issue. "Insurance discrimination is one of the most pernicious elements of the stigma against mental illness," he said.
The EEOC's position on the discrimination issue in this suit stemmed from its contention that while health insurance coverage is generally not within the purview of the ADA, it does hold that the law covers disability insurance. The commission maintains that everyone who qualifies for employee disability benefits has already met the criteria for being disabled, and thus any related terms and provisions must meet the nondiscrimination standards of the ADA.
In a statement released after the settlement was announced, EEOC Chair Paul M. Igasaki said that the agreement "goes a long way toward ensuring that individuals with mental disabilities are treated the same as individuals with physical disabilities in employer-provided. . . insurance plans." He also pointed out that it costs employers little extra money to provide disability coverage that offers parity between mental and physical disorders.
Still to be resolved in this case is the status of Metropolitan Life, the company that wrote the bank's disability insurance policies. It was originally a codefendant in the case, but a lower court ruled that Leonard F. had no legal standing to sue the insurance company because it was not considered a public accommodation, one of the entities over which Congress extended the ADA's dominion. Stein and his colleagues are studying whether to appeal the lower court ruling.
-K.H.