Am. Council of Life Ins. v. District of Columbia
| Decision Date | 19 September 1986 |
| Docket Number | Civ. A. No. 86-2131. |
| Citation | 645 F. Supp. 84 |
| Parties | AMERICAN COUNCIL OF LIFE INSURANCE, et al., Plaintiffs, v. DISTRICT OF COLUMBIA, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Richard J.M. Poulson, Peter W. Tredick, John C. Keeney, Jr., John C. Roberts, Jr., Randall D. Eliason, Hogan & Hartson, Washington, D.C., for plaintiffs.
Kathleen A. Carey, Asst. Corp. Counsel, D.C., Washington, D.C., for defendants.
American Council of Life Insurance (ACLI) filed this suit seeking a declaratory judgment that the "Prohibition of Discrimination in the Provision of Insurance Act of 1986" enacted by the District of Columbia Council is unconstitutional under the Fifth Amendment and violates the District of Columbia Self-Government and Governmental Reorganization Act, D.C. Code §§ 1-204 and 1-233(a)(3) (1981). Plaintiffs have moved for summary judgment and for a preliminary injunction. Defendants have moved to dismiss this action or in the alternative for summary judgment.
Upon consideration of the oral arguments and the numerous memoranda filed in this action, the Court finds the statute constitutional and shall grant summary judgment for the defendants.
The "Prohibition of Discrimination in the Provision of Insurance Act of 1986" (hereinafter "the Act" or "D.C. Act") prohibits health, life and disability insurers from discriminating against individuals on the basis of any test screening for AIDS, ARC, or HTLV-III infection and from denying benefits because the individual develops AIDS, ARC or HTLV-III infection. D.C. Act 6-170. Under the Act "an insurer may not deny, cancel, or refuse to renew insurance coverage, or alter benefits covered or expenses reimbursable, because an individual has tested positive on any test to screen for the presence of any probable causative agent of AIDS, ARC, or HTLV-III infection ... nor because an individual has declined to take such a test." D.C. Act 6-170, § 4. Insurers, however, may exclude from coverage applicants diagnosed as having AIDS (acquired immune deficiency syndrome). D.C. Act 6-170, § 6.
The Act imposes a five year moratorium on the use of AIDS screening tests for the purposes of adjusting rates, premiums, dues or assessments. Five years from the date of the Act, insurance companies may seek permission from the Superintendent of Insurance to increase premiums and rates for individuals who test positive for exposure to the probable causative agent of AIDS. D.C. Act 6-170, § 5(b)(1). Before permission is granted, the District of Columbia Commissioner of Public Health must first determine that the test the insurance company proposes to use is reliable and accurate. D.C. Act 6-170, § 5(b)(2).
A report by the D.C. Council states the premises on which the bill was based:
D.C. Council Rpt. at 2 (April 22, 1986). During consideration of this Act the D.C. Council heard from thirty witnesses representing the insurance industry, medical profession and gay community on the advisability and fallibility of passing this law. Def. S.J. Motion Exhs. 1-7.
Insurance companies, for example, presented evidence on the reliability of the AIDS screening tests and predicted that large increases in individual premiums would result if the bill were passed. Def. S.J. Motion Exh. 2. Doctors expressed concern that without the protection of the Act many individuals in the at-risk category would avoid AIDS tests and not seek counseling, both of which are crucial to the AIDS Public Health Program. Def. S.J. Exh. 2.
The Act provides for criminal penalties and civil private causes of action. D.C. Act 6-170 § 9. The Congressional veto period ended without reversal by Congress and the Act became effective on August 7, 1986.
Summary judgment is appropriate when there are no genuine issues of material fact, such that movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The Supreme Court recently clarified the role of summary judgment in litigation, stating:
Rule 56 must be construed with due regard not only for the rights of persons asserting claims and defenses that are adequately based in fact to have those claims and defenses tried to a jury, but also for the rights of persons opposing such claims and defenses to demonstrate in the manner provided by the Rule, prior to trial, that the claims and defenses have no factual basis.
Celotex Corp. v. Catrett, ___ U.S. ___, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). Thus, courts must approach summary judgment motions with an even hand, evaluating all concrete evidence provided, and drawing all inferences in favor of the party opposing the motion.
Judicial review of economic regulation begins with the premise that "legislative Acts adjusting the burdens and benefits of economic life come ... with a presumption of constitutionality, and that the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way." Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 2892, 49 L.Ed.2d 752 (1976). To pass constitutional muster, the D.C. Act must rationally relate to a legitimate government purpose. See, e.g., Gray Panthers v. Administrator, Health Care Financing Administration, 566 F.Supp. 889, 892 (D.D.C.1983). As a preliminary matter, under the rational basis test the D.C. Council clearly has a legitimate interest in regulating the insurance industry. See e.g. California Automobile State Asso. v. Maloney, 341 U.S. 105, 71 S.Ct. 601, 95 L.Ed. 788 (1951). The D.C. Act moreover is protected by the McCarran-Ferguson Act, 15 U.S.C. § 1012(b), to the extent that "the McCarran-Ferguson Act operates to assure that the States are free to regulate insurance companies without fear of Commerce Clause attack." Group Life & Health Insurance Co. v. Royal Drug Co., 440 U.S. 205, 218 n. 18, 99 S.Ct. 1067, 1077 n. 18, 59 L.Ed.2d 261 (1979). The dispute arises, however, over whether the D.C. Council acted in an irrational and arbitrary fashion in enacting a law prohibiting insurers from screening applicants for exposure to AIDS and from raising rates reasonably commensurate with the increased insurance risks.
Plaintiffs argue that the goal of the D.C. Council is to prevent discrimination against individuals who test positive for AIDS virus but might not develop AIDS. Plaintiffs contend that the "use of the screening tests for standard insurance purposes" is nondiscriminatory and, therefore, the statute "bears no rational relation to its purposes." Pltf. S.J. Mem. at 9. The Act, according to the defendants, aims to prevent "unjustified discrimination against citizens of the District of Columbia and to fulfill the public need to promote the availability of broad insurance coverage." Def. S.J. Mem. at 4. Defendants argue that the AIDS tests are neither accurate nor reliable and that, therefore, some individuals will be unjustly denied insurance.
Plaintiffs contend that insurance companies do not behave in a discriminatory manner when they categorize individuals according to group traits or characteristics. Insurance companies base decisions on the risk and not the certainty that an illness or death will occur. Plaintiffs analogize AIDS screening tests to the tests routinely given by insurance companies to determine if an individual suffers from high blood pressure or coronary heart disease. Plaintiffs further note that statutory prohibitions against sickle cell anemia differ from the D.C. statute because sickle cell anemia does not significantly increase risk of mortality. Individuals who test positive for the AIDS virus, though, have a twenty-six times greater chance of early death.
Plaintiffs offer persuasive evidence that the tests accurately target a group of individuals with significantly higher risks. Plaintiffs note, for example, that two ELISA tests followed by a Western blot test are 99.9 percent reliable in determining whether someone has been exposed to AIDS. Plaintiffs, though, presented evidence to this Court that was not available to the D.C. Council at the time the bill was under consideration. The Centers for Disease Control, for example, recently concluded that "for public health purposes, patients with repeatedly reactive screening tests for HTVL-III/LAV antibody ... in whom antibody is also identified by the use of supplemental tests ... should be considered both infected and infective." Morbidity and Mortality Weekly Report 305 (Vol. 35/No. 20, May 23, 1986) (cited in Plaintiffs' Reply). This summer the Wisconsin State Epidemiologist concluded that two positive ELISA tests followed by a Western blot test are "medically significant and sufficiently reliable for the presence of antibody to human T-lymphotropic virus type III."1 Plaintiffs argue that the Wisconsin report demonstrates that the D.C. Council erred in enacting a complete ban on testing. Although the Court agrees that in light of this evidence the D.C. Council should be encouraged to reconsider its decision, this report was not before the Council last spring and therefore cannot prove the irrationality of the law.
Plaintiffs attempt to further demonstrate the arbitrariness of the District of Columbia law, however, by contrasting the Act to California and Maine statutes. California prohibits the use of certain blood tests to determine AIDS susceptibility but does not prohibit insurers from using T-Cell tests, unlike the District of Columbia law which bans any test. Cal. H & S Code § 199.21(f) (Deering 1986). Maine's st...
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