Carparts Distrib. Ctr. v. Automotive Wholesaler's, C-92-592-L.

• Decision Date: 19 July 1993
• Docket Number: No. C-92-592-L.,C-92-592-L.
• Citation: 826 F. Supp. 583
• Parties: CARPARTS DISTRIBUTION CENTER, INC., et al. v. AUTOMOTIVE WHOLESALER'S ASSOCIATION OF NEW ENGLAND, et al.
• Court: U.S. District Court — District of New Hampshire

826 F. Supp. 583

CARPARTS DISTRIBUTION CENTER, INC., et al. v. AUTOMOTIVE WHOLESALER'S ASSOCIATION OF NEW ENGLAND, et al.

No. C-92-592-L.

United States District Court, D. New Hampshire.

July 19, 1993.

James P. Reidy, Sheehan, Phinney, Bass & Green, P.A., Manchester, NH, for plaintiffs.

James H. Schulte, Burns, Bryant, Hinchey, Cox & Schulte, PA, Dover, NH, for defendants.

Order

LOUGHLIN, Senior District Judge.

Presently before the court is plaintiffs', Carparts Distribution Center, Inc. (Carparts), Daniel W. Drish and Shirley M. Senter, Co-Executors of the Estate of Randy J. Senter, Motion to Amend Complaint.

By order dated May 12, 1993, this court granted plaintiffs the opportunity to amend their complaint and on June 24, 1993, plaintiffs filed an amended complaint adding claims under the Americans With Disabilities Act of 1990, New Hampshire statutory law and common law. Defendants thereafter filed their objection to the amended complaint. However, as the plaintiffs were granted leave to amend, defendants' objection will be treated as a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6).

Facts

The facts of this case are set out in this court's order of January 4, 1993 (Doc. 7). Briefly, plaintiff Randy Senter was owner and sole shareholder of Carparts, an automotive parts wholesale distributor. Randy Senter was afflicted with Acquired Immune Deficiency Syndrome (AIDS) and as a result of AIDS-related illnesses he died on January 17, 1993. On February 9, 1993 Shirley M. Senter and Daniel W. Drish were appointed Co-Executors for Randy Senter's estate.

Defendant Automotive Wholesalers Association of New England, Inc. (AWANE) is the sponsor of a health benefit plan known as the Automotive Wholesalers Association of New England, Inc., Insurance Plan (AWANE PLAN), a self-funded uninsured medical reimbursement plan maintained for the benefit of AWANE members. At all times relevant hereto, Carparts was a member of AWANE and received group health coverage for its employees from AWANE.

Plaintiff Randy Senter was diagnosed HIV positive on May 12, 1986. Some time after this, AWANE and AWANE PLAN capped lifetime benefits for AIDS-related illnesses to $25,000.00 effective January 1, 1991. Otherwise, lifetime benefits were provided up to $1 Million per individual. Plaintiffs claim that this cap on AIDS-related illnesses was instituted with knowledge that Randy Senter was diagnosed HIV-positive and subject to AIDS-related expenses. Medical bills for Randy Senter total $119,753.02 of which only $25,000 has been paid by AWANE PLAN.

Discussion

The court will address each count of plaintiffs' amended complaint in turn.

Count I

Although count I of plaintiffs' proposed amended complaint is entitled "Title III of the Americans With Disabilities Act", (hereinafter "the Act"), the complaint raises claims involving other titles of the Act. Therefore, those portions of the Act relevant to the present discussion are the prohibition of discrimination based on disability in employment (title I) and discrimination by public accommodations (title III). Title V of the Act, entitled "Miscellaneous Provisions", deals with insurance and will also be discussed in this order. The court will address each title separately.

a) Title I

Title I of the Act, entitled "Employment" provides:

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.

42 U.S.C. § 12112(a). Covered entity is defined to include "an employer, employment agency, labor organization, or joint labor-management committee." 42 U.S.C. § 12111(2). Carparts, as the former employer of Randy Senter, qualifies as a covered entity. Paragraph 24 of plaintiffs' amended complaint states that AWANE and AWANE PLAN are also covered entities under § 12111(2). This is incorrect. Neither AWANE nor AWANE PLAN qualify as a covered entity as that term is defined in the statute as neither was an employer of Randy J. Senter. Title I is therefore inapposite with respect to defendants.

Paragraph 33 of plaintiffs' amended complaint alleges that the Act

... required covered entities, such as the defendants, to avoid discriminatory employment practices relative to employees with actual or perceived disabilities. Discrimination under the Act includes the use of standards or methods of administration by a covered entity `that has the effect of discrimination on the basis of disability' ... (quoting 42 U.S.C. § 12112(b)(3)(A)).

Doc. 10, p. 14, para 33. Since neither defendant qualifies as a covered entity, § 12112(d)(3)(A) is inapposite. Carparts, as a covered entity, however is prohibited from "participating in a contractual or other arrangement or relationship", 42 U.S.C. § 12112(b)(2), which subjects its employees such as Randy Senter to discrimination prohibited by title I. Id. For example, title I of the Act makes it unlawful for a covered entity to discriminate on the basis of disability against a qualified individual with a disability in regard to, among other things, fringe benefits available by virtue of employment, whether or not administered by the covered entity. See 29 C.F.R. § 1630.4(f); 42 U.S.C. § 12112(a). Health insurance such as that provided by defendants is considered a fringe benefit. Thus, liability under title I of the Act for the alleged discrimination against Randy Senter would lie, if at all, with Carparts, the covered entity, for subjecting Randy Senter to the alleged discriminatory practices of the defendants. Liability does not extend to the defendants under title I.

b) Defendants' independent duty to Carparts

Plaintiffs allege that Carparts, by participating in a "contractual or other arrangement" with defendants which allegedly discriminated against Randy Senter, caused Carparts to subject Randy Senter to discrimination and therefore AWANE breached a separate independent duty owed to Carparts under the Act. See Doc. 10, para. 36. Although plaintiffs may have a valid claim based on some contract theory, plaintiffs cite no authority, nor can this court can find either case law or any wording in the Act itself that creates such a duty on the part of defendants under the Act.

c) Title III — Public Accommodation

What appears to be the brunt of count I of plaintiffs' amended complaint is the claim that defendants' alleged discriminatory practices with respect to Randy Senter represent violations of Title III of 42 U.S.C. § 12182, entitled "Prohibition of discrimination by public accommodations". This section provides:

(a) General rule. 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. § 12182(a). The term public accommodation is defined to include "professional office of a health care provider, hospital, or other service establishment". See 42 U.S.C. § 12181(7)(F). Defendants simply do not qualify as "places of public accommodation". The court interprets this definition of public accommodation as being limited to actual physical structures with definite physical boundaries which a person physically enters for the purpose of utilizing the facilities or obtaining services therein. Neither AWANE, nor AWANE PLAN possesses those characteristics. Neither of defendants is a health care provider to which Randy Senter went to in order to obtain health services. Randy Senter received medical treatment from various hospitals and physicians for his illness. Had Randy Senter been refused admittance or treatment by these hospitals or physicians based upon his illness then a violation of the Act would have occurred. There is no such claim in plaintiffs' amended complaint. While the argument could be made that the cap on coverage for AIDS-related medical expenses has the direct effect of preventing one afflicted with AIDS from obtaining medical treatment from health care providers, the Act, as written, provides no remedy for one in such a predicament.

d) Title V

Count I of plaintiffs' complaint raises a claim under title V of the Act which is entitled "Miscellaneous Provisions" and provides in relevant part:

(c) Insurance. Titles I through IV of this Act shall not be construed to prohibit or restrict —...

(2) a person or organization covered by this Act 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 Act from establishing, sponsoring, observing or administering the terms of a bona fide plan that is not subject to State laws that regulate insurance.

Paragraphs ... (2), and (3) shall not be used as a subterfuge to evade the purpose of Titles I and III 42 U.S.C. §§ 12111 et seq., 12181 et seq.

42 U.S.C. § 12201(C)(2)-(3). The legislative history of § 12201(c) is informative:

... The decision to include this section may not be used to evade the protections of title I pertaining to employment, title II pertaining to public services, and title III pertaining to public accommodations beyond the terms of points (1), (2) and (3), regardless of the date an insurance plan or employer benefit plan was adopted.

For example, an employer could not deny a qualified applicant a job because the employer's current insurance plan does not cover the person's disability or because of the increased costs of the insurance.

Moreover, while a plan which limits certain kinds of coverage based on classification of risk would be allowed under

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