Amicus Curiae Brief — Greenberg v. H & H Music Co.

| Supreme Court, U.S.

(ty) aon a

No, 91-1283 OCT 1992

In the Supreme Court of the Buvite Abc |

OCTOBER TERM, 1992

FRANK GREENBERG, INDEPENDENT EXECUTOR OF ESTATE

OF JOHN W. MCGANN, DECEASED, PETITIONER

Vv.

H & H Music CoMPANY, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FiFTH CIRCUIT

- BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

KENNETH W. STARR

Solicitor General

MAUREEN E. MAHONEY

Deputy Solicitor General

CHRISTOPHER J. WRIGHT

Assistant to the Solicitor

General

Department of Justice

MARSHALL J. BREGER Washington, D.C. 20530

Solicitor of Labor (202) 514-2217

ALLEN H. FELDMAN

Associate Solicitor

STEVEN J. MANDEL

Deputy Associate Solicitor

EDWARD D. SIEGER —

_ Attorney

Department of Labor

Washington, D.C. 20210

QUESTION PRESENTED

Whether an employer violated Section 510 of the Em-

ployee Retirement Income Security Act of 1974 (ERISA),

29 U.S.C. 1140, which prohibits various forms of inter-

ference with employee rights created or protected by

ERISA, by amending its health benefit plan to reduce

coverage for AIDS-related illnesses after learning that

—<

an employee had AIDS.

TABLE OF CONTENTS

Statutory provision involved l

Statement 2

Discussion soe eeeeseeees .

Conclusion 19

TABLE OF AUTHORITIES

{ ases

Di emingdg Vv. Ame rican Standard. Ine.. 905 F.2d

1124 (7th Cir. 1990) 11,16

Dister Vv. Continental Group, Inc., 859 F.2d 1108

(2d Cir. 1988) 6 10

Espinoza V. Farah Mfq. Co., 414 U.S. 86 (1973) Ll

Fu rnco Const) uction Corp. V. Wate rs, 138 U2. 567

(1978) 10-11, 13

Inge rsoll-Rand Co. Vv. Vel Ve don, ] ] ] aa Ct: 478

(1990) 10, lo

Mi tropolitan Life Ing. os Al Vassachuse tts. ATZ]

U.S. 724 (1985) 1,9

Moore Vv. Me tropolitan Life Ins. Co., 856 F.2d 488

(2d Cir. 1988) 16

Pe rsonnel Adm’r V. Fe e:ley, 442 U2. 256 ( 1979) 12

Severino V. North Fort Myers Fire Control Dist.,

935 F.2d 1179 (11th Cir. 1991) 17

Shaw Vv. Delta Air Lines, Inc... 463 U.S. 85

(1983) 7,8,15

Tackitt v. Prudential Ins. Co., 758 F.2d 1572 (11th

Cir. 1985) 13-14

Vogel v. Inde pe ndence Federal Savings Bank, 728

F. Supp. 1210 (D. Md. 1990) 6

West v. Butler, 621 F.2d 240 (6th Cir. 1980) 10

Statutes and rule:

Americans With Disabilities Act of 1990, Pub. L.

No. 101-336, 104 Stat. 327 817

$ 3(2) (A), 104 Stat. 329 (42 U.S.C. 12102

(2) (A) (Supp. IT 1990) ) 17

(IIT)

IV

Statutes and rule—Continued: Page

S$ 102(a), 104 Stat. 331 (42 U.S.C. 12112(a)

(Supp. II 1990) ) L%

$108, 104 Stat. 337 (42 U.S.C. 12111 note

(Supp. Il 1990) ) 17

Sd501(c), 104 Stat. 369 (42 U.S.C. 12201

(Supp. II 1990) ) 18

Employee Retirement income Security Act of

1974, 29 U.S.C. 1001 ef

S 102(a) (1), 29 U.S.C. 1022 (a) (1) 5

S$ 201(1), 29 U.S.C. 1051 (1) 7,8

$$ 201-211, 29 U.S.C. 1051-1061 (1988 &

Supp. II 1990) aie 8

$ 203 (a), 29 U.S.C. 1053 (a) (1988 & Supp. I

1990) ae 8

$ 203(c), 29 U.S.C. 1053(c) (1988 & Supp. I

1990) s 8

S$ 204(g),29 U.S.C. 1054 (¢) 7,8

s 902 (a) (1) (B), 29 U.S.C. 1182 (a) (1) (B) 9,18

S$ 510, 29 U.S.C. 1140 __...... passim

S$ 601(a), 29 U.S.C. 1161 (a) 9

S$ 602 (1), 29 U.S.C. 1162 (1) 9

$ 602 (2), 29 U.S.C. 1162(2) (1988 & Supp. IJ

1990) 9

S 603 (2), 29 U.S.C. 1163 (2) 9

Rehabilitation Act of 1973, 29_U.S.C. 706(8) (B)

(1988 & Supp. Il 1990) 17

Fed. R. Civ. P. 56(f) 4

Miscellaneous:

EEOC, ADA Handbook (1991) : Bea ne> Teg 17

1 Staff of Subcomm. on Labor of the Senate

Comm. on Labor and Public Welfare, 94th

Cong., 2d Sess., Legislative History of the Em-

ployee Retirement Income Security Act of 1974

(Comm. Print 1976) 10

Iu the Suprenw Court of the United States

OcTOBER TERM, 1992

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ITION FOR A WRIT OF CERTIORARI

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

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STATUTORY PROVISION INVOLVED

1 y Y . ’

| he mplovee Retirement Income Secu

es pervs

RISA oe (*. 1140, provides:

It shall be unlawful for anv person to discharge, fine,

scinline, or diseriminate against

~ “ "opened _ eon a > on eta’ 4

rOY exercising any rig O

‘ ] (it ne pyProvis ns oO] ca} em

1 } .

} : ' Ss suvn¢enantTel SePCTION 120] Ol

, . ; ) ™ ) T

} ne Welfare ‘ nd Pens n PI ns D lo-

\ ’ S { ()] et (] } t ) al rosé

STATEMENT

The complaint included claims for damages based upon

the amount of MceGann’s uninsured medical expenses

H & H Br. in Opp. App. 8a-9a, 14a-15a.,

a. Section 510 provides, in pertinent part, that a

employer may not “discharge’” or “discriminate against”

plan participant ‘for exercising any right to which hi

niitled under the provisions of an employee benefit

ERISA] ’ or for the purpose of interferine

ne attainment of any right to which such partici-

) become entitled under the plan.” 29 U.S.C

ITi0. MeGann alleged that the reduction in the lifetime

rage for AIDS treatment violated both the

liation” clause of Section 510 (discrimination “for

exercising any right”) and the “interference” clause (¢

crimination “for the purpose of interfering with the at-

tainment of any right’). H & H Br. in Opp. App. 8a.

Re ndents filed a motion for summary judgment

vy an evidentiary submission detailing the cir-

nces surrounding the August 1, 1988. plan amend-

ments. lvespondents’ submission indicated that the terms

| ermitted H & H to alter its coverage obliga-

lons at any time, and that H & H had notified its em-

of thiy feature of the plan in accordance with

the disclosure requirements of ERISA. Pet. App. A38s.

After I] & H ned of McGann’s illness, it decided to

wise its option to make changes in the benefits pro-

led for the stated purpose of “preserving the financial

Integrity of the welfare plan.” H & H Br. in Opp. App.

Ha; Pet. Anp. ABs,

Life Insurance Co, was first the insurer of H & H’ plan and later

the administrator of H & H’s self-insured plan. MeGann alleged

that they conspired with H & H to violate Section 510 and that th

ondent al oO \ rolate d vat ious state law « nonde nt contended

That the state law claims were preempted by ERISA. the district

urt dismissed those claims, and MeGann did not appeal the di

a re

plover.” Pet. App. All-Al2. Here, H & H_ specifically

retained discretion to modify plan coverage at any time.

Id, at A12-A13. To accept McGann’s argument, the court

stated, effectively would mean that an employer could not

reserve the right to amend its plan. /d. at A13-A14.

The court of appeals found unpersuasive MeGann’s re-

liance on Section 510 cases involving wrongful discharge.

Secuion 510 specifically prohibits a “discharge” under-

taken “for the purpose of interfering with the attainment

of any right.” The cases cited by MeGann were resolved

under that portion of Section 510, and did not address the

very different question of when an emplover’s amendment

of the terms of a plan can be characterized as unlawful

“discrimination.” Pet. App. Al6 & n.27.. In the court’s

view, the cases more relevant to this issue were those hold-

ing that ERISA gives an employer the right to amend its

Welfare benefit plans and does not require different

groups of participants to be treated equally. /d. at A19-

A26, The court concluded that “ERISA does not broadly

prevent an employer from ‘discriminating’ in the creation,

alteration or termination of employee benefit! | plans,”

and Section 510 “does not prohibit an employer from

electing not to cover or continue to cover AIDS, while

covering or continuing to cover other catastrophic ill-

nesses, even though the employer's decision in this respect

may stem from some ‘prejudice’ against AIDS or its vic-

tims generally.” Pet. App. A29-A30. Such discrimination

- The court also distinguished Vogel v. Independence Federal Sa

wgs Bank, 728 F. Supp. 1210 (D. Md. 1990), the only case cited

by MeGann “in which a court has ruled that a change in the terms

and conditions of an employee-benefit{ | plan could constitute illegal

discrimination under section 510." Pet. App. Al6. In that case the

employer changed insurers, and the new policy “covered all previ

ously covered employees * * * with the exception of Leonard Vogel.”

728 F. Supp. at 1216. The court noted that in this case, in contrast,

“i tihe poest-August 1, 1988 $5,000 AIDS cove rage limit applies to ma

uny and all employees.” Pet. App. A18.

CUSSION

S

DI

The decision of the court of appeals does not conflict

with the decision of any other court, and the gravamen of

the complaint—fairness to persons who are sick or dis-

abled—is a subject that has now been addressed by the

Americans with Disabilities Act of 1990 (ADA). We

accordingly do not believe that further review is war-

ranted in this case.

1. a. This case essentially involves the enforceability

of two terms in the H & H benefit plan: one which re-

served the right to amend the plan to reduce or eliminate

coverage at any time, and one which provided less favor-

able treatment to persons suffering from AIDS. In pro-

Visions governing the permissible content of employee

benefit plans, set forth in Part Two of Subtitle B of Sub-

chapter I of ERISA (Part Two), 29 U.S.C. 1051-1061

(1988 & Supp. II 19901, Congress directly identified cer-

tain plan terms that are required or prohibited. It is

therefore significant, as the court of appeals concluded,

that Part Two of ERISA weuld clearly permit an em-

ployer to include the two terms at issue in its employee

health insurance plan.

The Court’s decision in Shaw v. Delta Air Lines. Lire..

163 U.S. 85 (1985), confirms that by declining to regu-

late the content of the terms oi health plans, ERISA

“does not itself proscribe discrimination in the provision

of employee benefits,” id. at 91. As a result, terms differ-

entiating among diseases are permitted. The same is true

with respect to terms reserving the right to amend a health

care plan to reduce existing coverage at any time. Al-

though Congress mandated that pension benefits must

vest, 29 U.S.C. 10581a) (1988 & Supp. 1] 19900, and re-

stricted an employer’s right to amend pension plans by

altering the vesting schedule, 29 U.S.C. 1053'¢) (1588

& Supp. Il 1990), or decreasing accrued benefits, 2°

U.S.C. 1054'g), Congress specifically provided that these

limitations did not apply to health benefit plans, 29 U.S.C.

9

1051/1)."." See Metropolitan Life Ins. Co. Vv. Massachu-

setts, 471 U.S. 724, 732 (1985) ‘observing that ERISA

“imposes upon pension plans a variety of substantive re-

quirements relating to participation * * and vesting”’

but that it ‘does not regulate the substantive content of

welfare-benefit plans”).

Instead of regulating the content of self-insured em-

ployee health plans, ERISA adopted the rule that a

participant’s right to benefits are, by and large, those

defined by the terms of the contract.’ See 29 U.S.C.

1132(a)(1)(B) ‘participant may sue “to recover bene-

fits due to him under the terms of his plan”) (‘emphasis

added). There is no claim in this case, however, that

H & H did not pay benefits in accordance with the terms

of the plan, or that the amendments were not adopted in

conformance with the requirements of the plan.’ Peti-

tioner’s right to recover benefits must accordingly turn

on whether the plan amendments in issue, although

facially legitimate under Part Two of ERISA, neverthe-

less violated Section 510, 29 U.S.C. 1140.

* Congress has provided that plans must provide for the continua

tion of health coverage in certain circumstances. For example, a

group health plan must provide that a terminated employee is eligi

ble to continue to be covered for a period of time ranging from

1X months to 360 months. See 29 U.S.C. 1161 a), 1162(2 1988

& Supp. If 1990), 1165(2). If coverage for employees is modified.

mtinuation coverage is modified in the same manner. 29 USC

1162(1).

‘States may mandate that insured health benefit plans provid

certain benefits, however. Metropolitan Life, 471 U.S. at 729-747

(upholding a Massachusetts law requiring insurance companies to

provide specified Minimum mental health care benefits in any health

insurance plan offered in the State). Such laws do not apply, how

ever, to self-funded employer plans such as the one in issue here

* The terms of some plans may permit amendments with a purely

prospective impact only, and preclude plan amendments. such as the

one in issue, which also eliminate continuing coverage for individ

uals with pre-existing conditions. Such issues of plan interpretation

may be raised in a benefit claim action under Section 502(a)(1)(B)

of ERISA, 29 U.S.C. 1182(a)(1)(B). No such claim was made here

10

b. As this Court recognized in Ingersoll-Rand Co. V.

McClendon, 111 S. Ct. 478, 485 11990); Section 510 was

“crucial” to the scheme of regulation adopted by Con-

gress so that “employers would |not| be able to cireum-

vent the provision of promised benefits.” See also Dister

v. Continental Group, Inc., 859 F.2d 1108, 1111 (2d Cir.

1988) (stating that Section 510 “was designed primarily

to prevent ‘unscrupulous employers from discharging or

harassing their employees in order to keep them from

obtaining vested pension rights,’’’ quoting West v. Butler,

621 F.2d 240, 245 (6th Cir. 1980)).° By way of example,

an employer who is not entitled to amend a plan to pre-

vent the imminent vesting of an employee’s pension bene-

fit under Part Two of ERISA, should not be able to cir-

cumvent that statutory requirement by terminating the

employee.

Consistent with that purpose, Section 510 prohibits

certain types of conduct—any action to “discharge, fine,

suspend, expel, discipline, or discriminate against a par-

ticipant’’—inflicted for the specific purpose of interfering

with rights protected by the plan or ERISA. Section

510 does not broadly prohibit all types of “discrimination”’

against participants. Like other similar laws, its limited

terms make clear that Section 510 only prohibits discrim-

ination undertaken for the purposes expressly made ‘“im-

permissible’ (see Furnco Construction Corp. v. Waters,

‘In Dister, for example, the plaintiff alleged that he had been

discharged four months before he would have qualified for earls

retirement, resulting in a loss to him of $550,000. 859 F.2d at 1115.

Congress had specifically contemplated that Section 510 would bar

discharges that were intended to prevent emplovees from vesting:

Senator Hartke stated that “[t]he key to effective pension reform

is early vesting, but a vesting provision is no better than the protec-

tion employees have against improper discharge—including layoff

discipline or other discrimination that puts an employee out of a

job before vesting is achieved, thereby defeating his pension claim.”

1 Staff of Subcomm. on Labor of the Senate Comm. on Labor and

Public Welfare, 94th Cong., 2d Sess., Legislative History of the

Employee Retirement Income Security Act of 1974, at 1244 (Comm.

Print 1976); see also id. at 1641 (statement of Sen. Javits).

1]

438 U.S. 567, 577 (197811) by the terms of the statute.

See, e.g., Espinoza v. Farah Mfq. Co., 414 U.S. 86, 95

(1973) ‘discrimination against aliens did not violate

Title VII because it is not among the “kinds of diserimi-

nation the Act makes illegal’).

The court of appeals was thus correct in its conclusion

that the facially legitimate plan amendment at issue

could only be unlawful under Section 510 if it was adopted

for the purpose of retaliating against a participant “for

exercising any right * * * under the plan [or

ERISA|” or ‘for the purpose of interfering with the

attainment of any right to which such participant may

become entitled under the plan [or ERISA].” 29 U.S.C.

1140." Inclusion of the discriminatory amendment for

any other reason, whether due to racial or social animus,

is simply not forbidden by the plain language of Section

510.

The correctness of the ruling below accordingly turns

on Whether there was sufficient proof in the record of the

“kinds of discrimination,” Espinoza, 414 U.S. at 95, pro-

hibited by Section 510. We share the court of appeals’

view that there was-not.

2. a. Turning first to the retaliation clause of Section

910, we do not believe that the record created a genuine

issue of fact on the question whether H & H amended

the plan for the “impermissible” purpose of discriminat-

ing against MeGann “for exercising any right to which

*

‘In our view, Section 510 is applicable to plan amendments made

for purposes prohibited by that Section, and is not limited to protec-

tion of the overall employment relationship. But see, ¢.g., Deeming

V. American Standard, Inc., 905 F.2d 1124, 1127 (7th Cir. 1990).

Thus, for example, plan amendments made in retaliation for filing

a breach of fiduciary duty action should be unlawful. We also

do not believe that there is any basis in the language of Section

510 tor limiting the reach of the provision to employers. See Gen.

Am. Br. in Opp. 15-19. The provision applies to “any person,” not

just employers. And some of the proscribed actions—such as fines

and expulsion. appear to be aimed more at unions than emplovers

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13

disadvantaging women did not rebut evidence of a non-

discriminatory purpose because the adverse impact on the

protected group was “essentially an unavoidable conse-

quence of a legislative policy that has in itself always

been deemed to be legitimate”). In the context of em-

piovee benefit plan administration, it is completely pre-

dictable that plan amendments eliminating or reducing

certain types of benefits, and which are made for the

legitimate purpose of saving costs, will often have a

‘proportionately adverse effect on persons who have

inmitted claims for that type of benefit under the terms

“the plan. As the Court explained in Furnco Construc-

tion Ce rp. V. Waters, 438 U.S. 567, 580 (1978). “we

liscriminatory animus” where “experience has

hat in the absence of any other explanation it is

e likely than not that those actions were bottomed on

nissible considerations,” and evidence of discrim-

nation must be evaluated “in light of common experi-

ence.” /d. at 577. Because plan amendments motivated

issible cost considerations will often adversely

ticipants who have asserted rights under a plan,

n experience” dictates that evidence of such an

fect on McGann was not alone sufficient to rebut H & H’s

f permissible motives.

For similar reasons, the fact that submission of a

claim for benefits has a causal connection with a subse-

quent reduction in coverage does not itself provide a

ufficient basis for inferring impermissible discrimina-

‘lon against persons who exercise protected ERISA rights,

at least on the facts of this case. An amendment designed

(oO save money would normally (and reasonably) be based

on experience under the plan, so that, for example, an

‘mendment that decreases dental benefits should not be

held unlawful because the amendment was prompted by

expensive claims for dental benefits.* A holding that

Such a decrease would not be materially different from the limi-

tation at r=sue in Tachitt V Praude } tial Ins. Co... TDR F.2d 1572

14

a plaintiff like petitioner has a viable retaliation claim

would mean, in effect, that health benefits vest—once

a participant files a claim for some type of benefit, the

benefit may not be decreased. But as we have described.

Congress did not require plans to provide vested health

benefits.

(iil) We do not suggest that a participant adversely

affected by a discriminatory plan amendment would never

be able to establish a reasonable inference that the amend-

ment Was made for impermissible purposes. For exam-

ple, if a participant who files a breach of fiduciary duty

action—-a right protected by ERISA—is singied out for

adverse treatment under a health plan amendment. there

would be a strong inference that the amendment was

made for an impermissible retaliatory purpose. That

inference might weil be strong enough to create a gen-

uine issue of pretext even if the employer submitted evi-

dence that the amendment was supported by cost con-

siderations. As we view this case. however, what is

missing is any cognizable argument that H & H’s justi-

fication for its amendment was pretextual. As the court

of appeals coneluded, “there is nothing in the record to

Suggest that |respondents’|] motivation was other than as

they asserted, namely to avoid the expense of paving for

AIDS treatment * * *, no more for McGann than for

any other present or future plan beneficiary who might

suffer from AIDS.” Pet. App. A10-A11.

11th Cir. 1985). In that case, the Office of Personne] Management

(OPM) approved an amendment to a federal health care plan that

limited home nursing payments to $2,500 per vear. The reduction

was designed, along with other changes, to avoid an increase in

premiums. A retired federal employee who previously had been

reimbursed for home nursing expenses of $80,000 per vear chal-

lenged the amendment under the Administrative Procedure Act,

alleging that OPM’s decision to approve the benefit change was

arbitrary and capricious. The court rejected the challenge.

Ee |

15 7

b. Furning to the second kind of discrimination for-

bidden by ERISA, the record also did not establish that

ii & H reduced AIDS treatment “for the purpose of

intervering’ with MeGann’s “attainment of any right”

‘o which he might have become “entitled” within the

meaning of Section 510. As the court of appeals ex-

nlained, the clause does not refer to “any right to which

an emplovee may conceivably become entitled.” but to

“any right to which an employee may become entitled

Hursuant to an existine enforceable obligation assumed

by the employer.” Pet. App. All-A12. On this record.

it Was appropriate for the court to conclude that H & H

Was simply exercising its own reserved right to amend

ts plan to reduce expenses, and did not thereby imper-

nissibly interfere with any right protected under Section

etitioner’s reading of Section 510 simply cannot be

econciled with the statute. Instead of preventing “‘cir-

cumvent/ion|] * * * of * * * promised benefits.” Jnqersoll-

Rand, 111 S. Ct. at 485, that readine of Section 510 would

elfectively create rights and benefits that were never

remised by the employer and never mandated bv

Congress, |

First, petitioner’s construction would effectively nro-

hibit any discrimination among types of illnesses, con-

trary to the Court’s conclusion that “ERISA does not

mandate that employers provide any particular benefits,

and does not itself proseribe discrimination in the pro-

ision of employee benefits.” Shaw, 463 U.S. at 91. Con-

istent with the premise stated in Shaw, health benefit

ans routinely discriminate among participants suffer-

ing from different types of illnesses, Many plans. for

example, limit coverage for mental illness. Such diserim-

ina'ion has never been called into question under ERISA.

hv any court, or the Department of Labor, which admin-

e'evant provisions of the Act. Under peti-

mers construction of Seetion 510, however. such pro-

16

visions would be unlawful because their purpose neces-

sarily is to prevent persons with mental disorders from

to treatment under the

(

~

the “attainment of any right”

terms of the plan. Section 510 cannot reasonably be read

in that manner.

Second, petitioner’s reading of Section 510 would also

esult in the vesting of health care benefits—a_ result

Congress clearly chose not to mandate under Part Two

f ISRISA—because any plan amendment reducing exist-

ing coverage would necessarily interfere with the “attain-

,

of a participant’s “‘right’’ to continue to make such

claims in the future. It is therefore only reasonable to

conclude that when the sponsor of a plan has reserved an

ment’

absolute right to amend its plan, an emplovee has no

“right” protected by this clause of Section 510 to prevent

lan amendments made for the purpose of altering exist-

ing coverage to save costs.

As the Seventh Circuit explained in a case involving

an amendment reducing benefits, ‘“{t]o say that the

»rovision was eliminated in order to prevent the |em-

ovees|! from obtaining the benefits of the * * * provision

is a tautology which highlights the fact that this sort of

allegation cannot support a $510 claim.” Deeming vV.

Amertean Standard, Inc., 905 F.2d 1124, 1127 (1990).

Any other conclusion would effectively negate an employ-

er’s right to amend plans to decrease benefits, despite

Congress’s determination that such a right was important

to the statutory scheme adopted. See Moore v. Metropo!-

tan Life Ins. Co., 856 F.2d 488, 492 (2d Cir. 1988)

(“!wlith regard to an employer’s right to change med-

ical plans. Congress evidenced its recognition of the need

for flexibility” due to “inflation, changes in medical prac-

tice and technology, and increases in the costs of treat-

ment indenendent of inflation’’).

3. On balance, we are not persuaded that this case

warrants review. Although the issue itself is important,

of appeals has adopted a conflicting interpreta-

. no couyt

a ia ee

17

tion of Section 510. Accordingly, review is unnecessary

at this time to ensure the uniformity of lower court deci-

sions interpreting ERISA. We instead believe that the

issues Of health care policy implicated by this case are

more appropriately addressed in the context of other

existing federal law and pending legislative initiatives.

a. A fair reading of the complaint and affidavit sub-

mitted by McGann suggests that this case is really about

discrimination against persons with AIDS, and not dis-

crimination against persons exercising KE RISA-protected

rights. Since this case was litigated, however, the law

has changed considerably. The legality of such discrim-

ination under the terms of employee benefit plans will

undoubtedly be tested in cases arising under the Ameri-

cans with Disabilities Act of 1990 (ADA). which took

effect for most employers in July of 1992. See Pub. L.

No. 101-336, $108, 104 Stat. 337 (1990) (42 U.S.C.

12111 note ‘Supp. II 1990) ).

The ADA prohibits discrimination against disabled in-

dividuals with respect to compensation and “other terms,

conditions, and privileges of employment.” ADA § 102(a).

104 Stat. 331-332 142 U.S.C. 12112(a) (Supp. IT 19901).

Since the courts have held that AIDS is a protected

handicap under the Rehabilitation Act of 1973, see, e.¢7.,

Severino Vv. North Fort Myers Fire Control Dist.. 935

F.2d 1179, 1182 n.4 (11th Cir. 1991), and the ADA’s

definition of disability is substantially the same as the

Rehabilitation Act’s definition, see 29 U.S.C. 706(8) (B)

(1988 & Supp. II 1990) and ADA § 3(2)(A), 104 Stat.

329-330 (42 U.S.C. 12102(2)(A) ‘Supp. II 1990). per-

sons with AIDS are protected by the ADA. See EEOC.

ADA Handbook, at I-28 (1991). Accordingly, discrimi-

nation against persons with AIDS in the provision of em-

ployee benefits is unlawful under the ADA unless the

challenged action is protected by the provision of the ADA

allowing insurers and plan administrators to observe the

terms of ‘ta bona fide benefit plan” that is not “used as a

,

subterfuge” to evade the purposes of the ADA. ADA

201(¢e), 104 Stat. 369-870 (42 U.S.C. 12201(¢c) (Supp.

If 1990) 5.

Because Congress directiy addressed the subject of

AIDS discrimination in employee benefit plans under the

ADA, claims such as that in issue will likely turn

on the requirements imposed on employers under that

law. The need for review in this case is therefore fur-

ther diminished.

b. This case also raises an issue of health care policy

beyond diserimination against AlDS—whether health in-

surance plan amendments reducing or eliminating cover-

age for a particular type of illness should be applicable

to persons, like McGann, already suffering from that

illness. In some cases an employee may be able to prevail

in a benefit claim action under Section 502(a)(1)(B) of

ERISA, 29 U.S.C. 11382(a)(1)'(B), based upon a claim

that, under the terms of the plan, the employer did not in

fact reserve an unfettered right to amend the plan, but

instead promised to pay all expenses resulting from a

disease an employee contracts prior to the date of the

amendment. But the scope of the promise made by an

employer depends on the terms of the plan at issue and

that question would be addressed in a benefit claim action

under Section 502(a)(1!)(B). No such question is pre-

sented in this case.

19

CONCLUSION

The petition for a writ of certiorar1 should be denied.

KENNETH W. STARR

Solicitor General

MAUREEN E. MAHONEY

Deputy Solicitor General

CHRISTOPHER J. WRIGHT

Assistant to the Solicitor

General

MARSHALL J. BREGER

Solicitor of Labor

ALLEN H. FELDMAN

Associate Solicitor

STEVEN J. MANDEL

Dep f ty Associate Sol icitor

E;DWARD D. SIEGER

Attorney

Department of Labor

OCTOBER 1992

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