In Lewis v. Kmart Corp. (June 16, 1999), the U.S. Court of Appeals for the Fourth Circuit ruled that employers may participate in disability insurance plans that distinguish between disabilities caused by mental and physical illnesses without violating the ADA. Fourth Circuit decisions are binding on federal courts in the Carolinas.
Lewis worked for Kmart as a manager at several stores in Virginia and Pennsylvania for more than 10 years. Throughout his employment, Lewis had suffered from bouts of severe depression. His condition eventually worsened, and he was required to take a leave of absence.
When his leave began, Lewis was participating (at his own expense) in a voluntary long-term disability insurance plan offered by Kmart as a fringe benefit. Under the plan, benefits for mental disabilities were capped at two years. However, benefits for physical disabilities could continue until a participant turned 65.
Lewis argued that the ADA requires a long-term disability plan to provide the same levels of benefits for both mental and physical disabilities. The Fourth Circuit disagreed, noting that nothing in the language of the ADA requires that any benefit extended to one category of disabled employees must also be extended to all other categories of disabled employees. Rather, the ADA was designed to ensure that qualified disabled persons were treated equally to non-disabled persons. The Fourth Circuit's ruling is consistent with rulings of other federal circuit courts of appeals on this issue.
Employers in the Carolinas should note that the Lewis decision is limited to benefit distinctions in disability income insurance policies. The Mental Health Parity Act (MHPA), which was passed as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), requires equal benefits for physical and mental illnesses in most group health insurance plans.
The Lewis decision may have additional impact outside the insurance context. For example, based on the Fourth Circuit's reasoning, a prior accommodation offered to a disabled employee should not limit the employer's flexibility in responding to another employee's later request for accommodation. In most circumstances, employers will remain free to evaluate each disabled employee's limitations and circumstances on an individual basis, without fear of setting a binding "precedent" for dealing with other disabled workers.