The lack of parity in her employer’s disability insurance benefits drove Jane Fitts to sue her former employer, Federal National Mortgage Association (Fannie Mae). She won her case in February against the mortgage giant and its disability insurer Unum Life Insurance Company of America. The defendants plan to appeal the ruling.
Fitts, an attorney employed by Fannie Mae in the District of Columbia since 1982, was diagnosed with bipolar disorder in 1995. Unable to work, she applied for disability benefits, which she received for two years. However, she protested to Unum that it had unfairly terminated her benefits at the end of that period. She claimed her bipolar disorder should have been classified as a physical illness, which would have entitled her to receive benefits until she was age 65. Unum disagreed, and Fitts filed suit against Unum and Fannie Mae in 1999 in U.S. District Court for the District of Columbia.
Fitts claimed that the defendants violated the Americans With Disabilities Act of 1990 and the Employee Retirement Income Security Act (ERISA) of 1974. The court dismissed the ADA Title I claim, finding that Fitts was ineligible to sue because she was not a "qualified individual with a disability," but totally disabled and unable to work, according to the 1999 ruling. The court also dismissed Fitts’s ADA Title III claim because the long-term disability policy was not "a good or service provided by any place of public accommodation."
Fitts’s ERISA claim was heard by the court because a legal provision entitles a plan participant or beneficiary to "recover benefits under the terms of the plan," according to the ruling.
The court upheld Unum’s classification of Fitts’s bipolar disorder as a mental illness. Fitts appealed her case to the U.S. Court of Appeals for the District of Columbia Circuit, which found that the lower court used a standard that was favorable to the employer. The appellate court sent the case back for a second review under a neutral standard.
Fitts v. Federal National Mortgage Association, et al., turned on Unum’s definition of mental illness in its disability policy under Fannie Mae’s benefit plan as a "mental, nervous, or emotional disease or disorder of any type."
A legal doctrine (contra proferentem) requires ambiguous contract terms to be interpreted against the drafter, which in this case was Unum and Fannie Mae.
ERISA, which regulates employee benefit plans, requires insurance policies to be written in a manner that can be understood by the average plan participant, according to the February court opinion.
Fitts argued that that the plan’s definition of mental illness was ambiguous and that bipolar disorder was excluded based on its physical characteristics.
She presented brain scans of the parietal lobe in the left side of her brain that showed atrophy compared with brain scans of a healthy person her age.
Bipolar-disorder expert Frederick Goodwin, M.D., stated on behalf of Fitts that bipolar disorder is a neurobiological disorder that affects the physical and chemical structure of the brain. He testified that bipolar disorder is a physical illness because "it afflicts the brain, which is a physical organ of the body," according to the court opinion.
Fitts’s treating psychiatrist, Suzanne Griffin, M.D., also stated that bipolar disorder causes physical changes in the brain.
The defendants countered that bipolar disorder is a mental illness, rather than biological, and is recognized in DSM-IV, which is widely accepted as the "official nomenclature of mental disorders."
Peter Mirkin, M.D., a psychiatrist employed by Unum, also stated that bipolar disorder is typically treated by psychiatrists using psychotherapy and psychotropic drugs. He cautioned that biological markers were insufficient to characterize bipolar disorder as a physical illness because "all illnesses recognized in DSM-IV may correlate with biological changes."
U.S. District Court Judge Henry Kennedy agreed with Fitts’s assertion that Unum’s definition of mental illness was ambiguous, because the expert witnesses disagreed on the definition based on different interpretations of the biological and psychological factors.
Ron Honberg, J.D., legal director of the National Alliance for the Mentally Ill, told Psychiatric News, "The decision has more symbolic than far-reaching significance. It would have more impact if the court had ruled that Fannie Mae and Unum violated the ADA [because] Unum, the largest long-term disability insurer in the nation, would have been required to change its discriminatory policy."
Renee Binder, M.D., chair of APA’s Commission on Judicial Action, commented to Psychiatric News, "The decision was positive in that the court understood that bipolar disorder is a brain-based illness and that people with the disorder are entitled to long-term disability benefits. But the fact that that disability insurers distinguish between physical and mental disorders shows they don’t recognize that they are equally disabling."
Mary Giliberti, J.D., senior staff attorney at the Bazelon Center for Mental Health Law, told Psychiatric News that Fitts wouldn’t have had to file the lawsuit if there was parity in disability benefits.
"Employees should only have to prove that they are too disabled to work," said Giliberti, who has represented numerous people with mental illnesses in disability cases. "The limitation on disability benefits can be devastating. One client of mine committed suicide when she found out about her limited benefits, and another client had to foreclose on her home," said Giliberti.
Honberg said, "Most people assume that their long-term disability benefits apply to mental illnesses and physical illnesses. But that is rare."
Indeed, it took NAMI two years to find a long-term disability insurer that offered the same benefits for "mental" and "physical" illnesses, said Honberg. NAMI did find one in 1998, and employees have had to pay a slightly higher premium for the policy. For example, an employee earning $36,000 annually paid $5.59 a month under the old plan, which offered two years of mental disability benefits; since 1998 that same employee pays $6.67 a month—a difference of $12.96 a year, said Honberg.
"The bottom-line is that employees should decide whether parity in disability insurance is worth paying slightly higher premiums for," said Honberg.
The lawyers agreed that parity in disability insurance needs to be addressed at the federal and state levels. Honberg testified in 1999 before a Maine banking and insurance committee that was debating a measure that would mandate disability insurance parity. Although the committee was informed about NAMI’s relatively small premium increases, the measure did not pass because opponents claimed it would lead to much higher premiums, said Honberg.
The opinion of the U.S. Court of Appeals for the District of Columbia Circuit in the Fitts case is posted at www.ll.georgetown.edu/Fed-Ct/Circuit/dc/opinions/99-5327a.html. ▪