Anderson v. Gus Mayer Boston Store of Delaware

• Decision Date: 23 March 1996
• Docket Number: No. 1:94-CV-0232.,1:94-CV-0232.
• Citation: 924 F. Supp. 763
• Parties: Edwin C. ANDERSON and Betty D. Anderson, as heirs at law of David S. Anderson, Plaintiffs, v. GUS MAYER BOSTON STORE OF DELAWARE, aka Gus Mayer Boston Store, aka Boston Dry Goods Company dba Boston Store of Texas, Inc., Defendant.
• Court: U.S. District Court — Eastern District of Texas

924 F. Supp. 763

Edwin C. ANDERSON and Betty D. Anderson, as heirs at law of David S. Anderson, Plaintiffs, v. GUS MAYER BOSTON STORE OF DELAWARE, aka Gus Mayer Boston Store, aka Boston Dry Goods Company dba Boston Store of Texas, Inc., Defendant.

No. 1:94-CV-0232.

United States District Court, E.D. Texas, Beaumont Division.

March 23, 1996.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Shimon Kaplan, East Texas Legal Services, Beaumont, TX, for David Scott Anderson, Edwin C. Anderson, Betty D. Anderson.

Daniel V. Flatten, Mehaffy & Weber, Beaumont, TX, for Gus Mayer Boston Store of Delaware.

MEMORANDUM

COBB, District Judge.

Today the court considers cross-motions for summary judgment. The operative issue in this case is whether the defendant, Gus Mayer Boston Store of Delaware (Gus Mayer), violated the Americans with Disabilities Act of 1990¹ (ADA) by discriminating in the privileges, conditions, or terms of employment against David Anderson. Although the disputed facts of this case are not extensive, the controlling area of law is new and not yet definitive.

The ADA requires covered entities² to provide workers with disabilities with equal access to group health insurance plans, if any such plans exist. The ADA seems to make denying a disabled individual insurance of any kind because of that disability (or any proxy associated therewith) a violation of the Act.

After extensive research into the relevant agency interpretations, legislative history, scholarly debate, and case law, this court finds there to be only one genuine issue of material fact in this case. If it were not for the fact question raised by the defense of undue hardship, the plaintiffs would be entitled to judgment as a matter of law against Gus Mayer for violations of the Americans with Disabilities Act. Both the Defendant's Motion for Summary Judgment and the Plaintiffs' Motion for Partial Summary Judgment are DENIED. Trial on the issue of undue hardship will be required to determine liability, and the trial will be held in accordance with the holdings stated below.

CAVEAT

The case sub judice conjures up difficult issues of statutory construction. In the interests of justice and the development of the law, this Court in good faith has made the holdings demanded of it under the pleadings and summary judgment proof presented by the parties. The combined weight of judicial guidance in any number of essential matters to this case could rest upon a single reed; hence, the holdings which follow attempt to be as complete an understanding of the ADA's relevant provisions as this Court could muster from the appropriate authorities.

The issue in this case is simply stated: Does an employer acquit all its ADA duties when it selects a group insurer that has refusal standards³ which effectively deny an employee an equal opportunity to obtain coverage due to the employee's disability-status?⁴ This Court finds that when a group insurer makes it a policy to refuse to extend coverage to an employee with a disability because of that disability, an employer violates the ADA by selecting that group insurer unless he makes provisions for the excluded individual to receive comparable health insurance in some other way. As with other provisions of the ADA, however, an employer may avail itself of the undue hardship defense upon appropriate proof.

BACKGROUND

Gus Mayer, a sole proprietorship owned by Randolph Ney, is a retail store in Beaumont specializing in ladies' fashion wear. David Anderson spent his entire adult working career, starting in 1982, in the employ of Gus Mayer until shortly before his death. After Anderson's death from AIDS, his parents were substituted as plaintiffs in their capacity as his heirs at law.

Gus Mayer in the past had provided its employees with the opportunity to subscribe to a group health policy. Home Life Insurance Company (Home Life) began writing the group's coverage in 1989. As part of the employees' compensation, Gus Mayer paid fifty percent of the premiums charged the group with the participating employees paying the other fifty percent. Home Life adjusted premiums twice each year.

Anderson was diagnosed with testicular cancer in 1988. He had surgery and radiation treatment at that time. Home Life documents illustrate that it is Anderson's cancer which was one source of increased premiums.

Anderson was diagnosed with Human Immunodeficiency Virus (HIV) in July 1991. Fearful that he might lose his health insurance coverage simply because he was HIV-positive, Anderson began seeing a private doctor for his condition, paying out of his own pocket. At this time he also was diagnosed with having Acquired Immunodeficiency Syndrome (AIDS). In August, 1991, this private doctor sent by mistake one bill to Home Life, the Gus Mayer group underwriter. As of that date, Home Life was on notice of Anderson's condition.

In September 1992, Home Life announced a further premium increase of thirty percent. Ney knew around this time of Anderson's HIV-condition. Even keeping in mind that health insurance costs throughout America were increasing as a matter of course, records from Home Life show that much of the increase in the group insurance was due in 1990 to Anderson's cancer and was due in 1991 to Anderson's cancer and AIDS-status.

Some of the group members informed Randolph Ney that if reduced premiums were not secured they would withdraw from the group. The number of employees participating in the group plan at that time had decreased to about twenty.

Ney told his agent Ross Green to seek other coverage with new carriers. Ney was informed that a new carrier, John Alden Life Insurance Company ("JALIC"), had been found and that it had the flexibility to deny some members of the group. In what later seems to have been a pro forma exercise, Ney told his participating employees to fill out application forms for the new insurance. Ney assured the employees that JALIC was the insurer for the group and that there would somehow magically be reduced premiums and more coverage.⁵

Fearful that he would be denied access to the group insurance due to his AIDS-status, Anderson spoke to Ney regarding his concern about the prospective change of coverage. Ney and Green were at a loss for comforting words to the understandably distraught Anderson. After a period of awkward silence, Ney told his long-time employee to wait and see if JALIC allowed him into the group before worrying.

Predictably,⁶ JALIC ended up rejecting Anderson. JALIC's putative reason⁷ for denying Anderson coverage was that he had been treated within the last ten years for cancer. Even after JALIC's decision to deny coverage only in Anderson's case, Gus Mayer decided to go ahead and switch group policies⁸ effective January 1, 1993. Gus Mayer made no timely effort to secure any alternative policies for Anderson either before or after this incident.

Now faced with the terrible realization that his employer would no longer help secure health insurance of any kind for him, Anderson timely filed a complaint with the Equal Employment Opportunity Commission in Houston. Soon thereafter, Anderson left his position with Gus Mayer. On May 4, 1993, the EEOC found that Gus Mayer had committed two violations of the ADA: first, when Gus Mayer denied Anderson access to any group health insurance; second, when Gus Mayer entered into a contract which resulted in the discrimination against Anderson.

After the EEOC issued Interim Guidelines on how the ADA should be applied in the health insurance context,⁹ counsel for Gus Mayer urged an official reconsideration of the agency's Determination. The EEOC agreed to reconsider the matter. On July 1, 1993, the EEOC District Director, Harriet Joan Erlich, replied in letter form. Ms. Erlich stated that the Interim Guidelines applied to situations where disability-based distinctions in coverage had been drawn. Gus Mayer's actions, however, led to a complete denial of health benefits. Here there were no distinctions in coverage terms; rather some people received coverage while Anderson received no coverage of any sort.

This determination by the EEOC is a quintessential example of an agency interpreting its own guidelines (such interpretations are to be afforded great deference). Pursuant to 28 U.S.C. section 1331, Anderson initiated suit in this Court against Gus Mayer.

The Americans with Disabilities Act broadens employment opportunities for millions of disabled workers. This landmark legislation bars discrimination against the disabled in all aspects of employment, public services, public accommodations, and telecommunications.¹⁰

The ADA was the culmination of the disability rights movements efforts to effectuate civil rights protection for Americans with Disabilities.¹¹ It is important to keep in mind that lawmakers made clear that the ADA was norm-changing legislation, akin to the legislative turning points in this country's struggle to overcome racial discrimination. President Bush referred to the Act as a "historic new civil rights Act."¹² Senator Tom Harkin, the champion of the Act, announced it to be the "20th century Emancipation Proclamation for all persons with disabilities,"¹³ while Senator Dole called it "the most comprehensive civil rights legislation our Nation has ever seen."¹⁴ Unlike other legislation designed to settle narrow issues of law, the ADA has a comprehensive reach and should be interpreted with this goal in mind.

ANALYSIS

I. ANALYTICAL FRAMEWORK.

Because the Court has not found any case which promulgates an analytical approach to the issues in this case, an outline of the questions resolved in reaching today's decision is provided. The threshold analysis undertaken in determining whether Gus Mayer violated the Americans with Disabilities Act takes into account the following steps:

1. It is illegal for a covered entity;

2. or a third party in privity

...