The opinion of the court was delivered by: Mihm, Chief Judge.
Defendants also maintain that as a matter of judicial
economy, the Court should abstain in this case because identical
proceedings in separate forums are pending. This argument is now
mooted by Judge McDade's Order of February 28, 1995 denying the
City's Motion to Remand in Case No. 94-1131 and consolidating
that case with this one.
As a further argument for dismissal of Plaintiffs' ADA
claims, Defendants rely on Section 501(c) of the ADA. Section
501(c) provides that subchapters I through III of this chapter
and Title IV of the ADA shall not be construed to prohibit or
42 U.S.C. § 12201(c).
Defendants claim that 501(c) applies to this case because
they have established and observed the terms of a bona fide
benefit plan which is based on underwriting risks, classifying
risks, or administering risks based on or not inconsistent with
state law. The only exception to Section 501(c) is if the plan is
a "subterfuge" to evade the purposes of the ADA. Section 501(c)
provides, with regard to the "subterfuge" exception, that
"Paragraphs (1), (2), and (3) shall not be used as a subterfuge
to evade the purposes of subchapters I and III of this chapter."
Counts I and II are brought pursuant to Title II of the ADA.
Defendants argue that by specifically identifying Titles I and
III, while excluding Title II, Congress has expressed a clear
intent to exempt Title II from the "subterfuge" exception. Thus,
Defendants argue, because the Complaint includes facts
demonstrating that Defendants fall within 501(c)'s exceptions, no
further analysis is required, and their conduct is neither
prohibited nor restricted by the ADA, precluding Plaintiffs from
stating a claim on which relief may be granted.
Despite Defendants' conclusory claims, the meaning and
application of Section 501(c) is not so obvious. Defendants claim
that they fall under 501(c)(2), but have not explained what it
means to observe or administer the terms of a "bona fide benefit
plan" that is based on "underwriting risks, classifying risks, or
administering such risks that are based on or not inconsistent
with State law" and how they meet this standard.
EEOC Interim Policy at 1054-55 n. 15. What does state law say
about underwriting, classifying, and administering risks? Much of
state insurance regulation is based on model legislation drawn up
by the National Association of Insurance Commissioners ("NAIC"),
a national organization of state insurance regulators. Nancy
Perkins, Prohibiting the Use of the Human Immune Deficiency Virus
Antibody Test by Employers, 25 Harv.J. on Legis. 275, 288 (1988).
Since 1960, all 50 states and the District of Columbia have
adopted provisions of the NAIC's Unfair Trade Practices Act
("UTPA") in various forms. Id.; See 215 ILCS § 5/424(1). Section
4G(2) of the Model UTPA, which has been adopted in whole or in
part by 49 states, prohibits:
NAIC, Model Laws, Regulations and Guidelines, Volume IV (January
1993); Daniel A. Engel & Sherri L. Giffin, HOT Employees Benefits
Issues, Vested Coverages, Retaliation and Americans with
Disabilities Act, 28 Tort & Ins.L.J. 711, 741 (1993). Thus, under
the ADA, as the EEOC explains and state law provides, benefit
plan classification and administration of risks with regard to
disabled persons requires the grouping of individuals of the same
class and of essentially the same hazard in the amount of
premiums, benefits payable, or any other terms or conditions of
such benefit plan. See also Section 4G(1) of the NAIC's Model
UTPA (discussing unfair discrimination in life insurance or
Section 3 of the NAIC's Model Regulation on Unfair
Discrimination in Life and Health Insurance on the Basis of
Physical or Mental Impairment prohibits:
NAIC, Model Laws, Regulations and Guidelines, Volume IV (July
1993); See also 215
ILCS §§ 5/236 and 5/364. The ADA's legislative history expressly
adopts state insurance unfair discrimination regulation:
Virtually all States prohibit unfair discrimination
among persons of the same class and equal
expectation of life. The ADA adopts this
prohibition of discrimination. Under the ADA, a
person with a disability cannot be denied insurance
or be subject to different terms or conditions of
insurance based on disability alone, if the
disability does not pose increased risks.
H.Rep. No. 101-485(II), at 136; Senate Report ("S.Rep.") 101-116,
at 84, U.S.Code Cong. & Admin.News 1990, at 419. The House and
Senate Reports further state that:
[W]hile a plan which limits certain kinds of
coverage based on classification of risk would be
allowed under this section, the plan may not refuse
to insure, or refuse to continue to insure, or
limit the amount, extent, or kind of coverage
available to an individual, or charge a different
rate for the same coverage solely because of a
physical or mental impairment, except where the
refusal, limitation, or rate differential is based
on sound actuarial principles or is related to
actual or reasonably anticipated experience.
H.Rep. No. 101-485(II), at 136-37; S.Rep. 101-116, at 85,
U.S.Code Cong. & Admin.News 1990, at 419, 420. These explanations
by the House and Senate of the types of benefit plans and
practices allowed and prohibited under Section 501(c) exactly
mirror Section 3 of the NAIC's Model Regulation on Unfair
Discrimination in Life and Health Insurance on the Basis of
Physical or Mental Impairment. Thus, Congress expected that under
the ADA, a benefit plan or practice which refuses an individual
participation solely because of a disability must be supported by
actuarial principles or related to actual or reasonably
anticipated experience as required by State law.
Congress gave the following examples of what state insurance
law prohibited and what the ADA would also prohibit:
For example, a blind person may not be denied
based on blindness independent of actuarial risk
classification. Likewise with respect to group
health insurance coverage, an individual with a
pre-existing condition may be denied coverage for
that condition for the period specified in the
policy but cannot be denied coverage for illness or
injuries unrelated to the pre-existing condition.
H.Rep. No. 101-485(II), at 137; S.Rep. 101-116, at 85, U.S.Code
Cong. & Admin.News 1990, at 420. The inclusion of pre-existing
condition clauses in health insurance policies is a traditional
insurance underwriting policy allowed by state law. State
insurance law also specifically prohibits discrimination against
blind persons. See 215 ILCS § 5/236(c); 215 ILCS § 5/364.
The legislative history also reveals that Congress did not
intend the ADA to disrupt insurance industry and employer
practices based on risk classification and regulation of
insurance by the states.
As indicated earlier in this report, the main
purposes of this legislation include prohibiting
discrimination in employment, public services, and
places of public accommodation. The Committee does
not intend that any provisions of this legislation
should affect the way the insurance industry does
business in accordance with the State laws and
regulations under which it is regulated. . . .
Because there was some uncertainty over the
possible interpretations of the language contained
in titles I, II and III, as it applies to
insurance, the Committee added section 501(c) to
make it clear that this legislation will not
disrupt the current nature of insurance
underwriting or the current regulatory structure .
. . or the insurance industry in sales,
underwriting, pricing, administrative and other
services, claims, and similar insurance related
activities based on classification or risks as
regulated by the States. . . .
In sum, section 501(c) is intended to afford
insurers and employers the same opportunities they
would enjoy in the absence of this legislation to
design and administer insurance products and
benefit plans in a manner that is consistent with
basic principles of insurance risk classification.
This legislation assures that decisions concerning
the insurance of persons with disabilities which
are not based on bona fide risk classification be
made in conformity with non-discrimination
requirements. Without such clarification, this
legislation would arguably find violative of its
provisions any action taken by an insurer or
employer which treated disabled persons differently
under an insurance or benefit plan because they
represent an increased hazard of death or illness.
The provisions recognize that benefit plans
(whether insured or not) need to be able to
continue business practices in the way they
underwrite, classify, and administer risks, so long
as they carry out those functions in accordance
with accepted principles of insurance risk
H.Rep. No. 101-485(II), at 136-38, U.S.Code Cong. & Admin.News
1990, at 419-421.
Once it is established that a benefit plan or practice meets
501(c)(1), (2), or (3), it will only be found to violate the ADA
if it is shown to be a subterfuge to evade Title I and III's
purposes. What does it mean for a plan or practice that
underwrites, classifies, or administers risks based on or not
inconsistent with State law to be used as a subterfuge to evade
the purposes of Titles I and III? It will again be useful to look
at the ADEA because Congress also used the word "subterfuge" in
that legislation. Plaintiffs argue that the Supreme Court's
interpretation of "subterfuge" in the ADEA does not apply to the
ADA. Defendants maintain that the Supreme Court's interpretation
in Betts, 492 U.S. 158, 109 S.Ct. 2854 (1989), regarding the
meaning and operation of "subterfuge" in the ADEA is applicable
to the ADA.
Section 4(a)(1) of the ADEA provides that it is unlawful for
To fail or refuse to hire or discharge any
individual or otherwise discriminate against any
individual with respect to his compensation, terms,
conditions, or privileges of employment, because of
such individual's age.
29 U.S.C. § 623(a)(1). However, Section 4(f)(2) of the ADEA
provides that it is not unlawful for an employer:
[T]o observe the terms of . . . any bona fide
employee benefit plan such as a retirement,
pension, or insurance plan, which is not a
subterfuge to evade the purposes of this chapter,
except that no such employee benefit plan shall
excuse the failure to hire any individual, and no
such . . . employee benefit plan shall require or
permit the involuntary retirement of any individual
. . . because of the age of such individual.
29 U.S.C. § 623(f)(2).
In McMann, the Supreme Court held that "[i]n ordinary
parlance, and in dictionary definitions as well, a subterfuge is
a scheme, plan, stratagem, or artifice of evasion." McMann, 434
U.S. at 203, 98 S.Ct. at 450. Thus, a pension plan limitation
which required mandatory retirement at age 63, adopted before the
ADEA was passed, "cannot be a subterfuge to evade" the ADEA. Id.
In Betts, it was argued that McMann was no longer good law
because in 1978 Congress amended the ADEA to overrule McMann's
validation of mandatory retirement based on age. Betts, 492 U.S.
at 167, 109 S.Ct. at 2861. The Supreme Court found that the "1978
amendment to the ADEA did not add a definition of the term
`subterfuge' or modify the language of § 4(f)(2) in any way,
other than by inserting the final clause forbidding mandatory
retirement based on age." Id. at 168, 109 S.Ct. at 2862.
"Congress changed the specific result of McMann by adding a final
clause to § 4(f)(2), but it did not change the controlling,
general language of the statute." Id. Thus, the Betts court
reaffirmed its holding in McMann that "subterfuge" be given its
"ordinary" meaning. Only intentional age discrimination violated
section 4(f)(2) of the ADEA based on the ordinary meaning of
"subterfuge," "which, in the context of § 4(f)(2) connotes a
specific `intent . . . to evade a statutory requirement.'" Id. at
171, 109 S.Ct. at 2863 (quoting McMann, 434 U.S. at 203, 98 S.Ct.
at 450). Moreover, a post-Act benefit or pension plan was a
"subterfuge" to evade the purposes of the ADEA only if the
age-based plan provisions were (1) intended to discriminate (2)
"in some non-fringe-benefit aspect of the employment relation."
Betts, 492 U.S. at 181, 109 S.Ct. at 2868.
Does the ADEA's prohibition on discrimination in a non-fringe
benefit aspect of employment with regard to benefit plans apply
to the ADA? The Betts court concluded that in order to be a
"subterfuge," an age-based distinction had to intentionally
discriminate "in a manner forbidden by the substantive provisions
of the Act" and that, if the substantive provisions of the ADEA
banned age-based distinctions in post-Act benefit and pension
plans, Section 4(f)(2)'s exception would be "nugatory with
respect to post-Act plans." Id. at 176, 177, 109 S.Ct. at 2866.
Thus, the Court viewed the substantive prohibitions of the ADEA
as not extending to discrimination in fringe benefits because any
"alternative interpretation would eviscerate § 4(f)(2)." Id.
Likewise, it seems that under the ADA it would render Section
501(c)(1), (2), and (3) meaningless to interpret the subterfuge
sentence as providing that a benefit plan disability distinction
may itself constitute a "subterfuge" because Titles I and III
prohibit all disability-based distinctions in benefit plans. It
would render Section 501(c)(1), (2), and (3) inconsequential to
interpret the subterfuge sentence as meaning that benefit plans
or practices which meet the requirements of paragraphs (1), (2),
and (3) could themselves violate Titles I and III because those
titles ban all benefit plan disability-based distinctions. If
benefit plans or practices that qualify under paragraph (1), (2),
or (3) of Section 501(c) were already prohibited under Titles I
and III, then what would be the purpose of including paragraphs
(1), (2), and (3) in the statute? Under such an interpretation,
benefit plans or practices which qualify under paragraphs (1),
(2), or (3) would be prohibited regardless of Section 501(c)'s
To interpret the last sentence of 501(c) as prohibiting the
use of benefit plans or practices to discriminate against persons
with disabilities in non-fringe benefits decisions (e.g., fire or
refuse to hire an individual) would be logical. The example used
in the House and Senate Reports' discussion of Section 501(c)
supports this interpretation. The House and Senate Reports
interpret the "subterfuge" language of Section 501(c) as
prohibiting an employer from refusing to offer "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." H.Rep. No. 101-485(II), at
136; H.Rep. No. 101-485(III), at 71; S.Rep. 101-116, at 85,
U.S.Code Cong. & Admin.News 1990, at 419, 494.
There is evidence in the ADA's legislative history indicating
that Congress intended the word "subterfuge" to have a different
meaning from that in the ADEA. According to Rep. Edwards:
The term "subterfuge" is used in the ADA simply to
denote a means of evading the purposes of the ADA.
It does not mean that there must be some malicious
intent to evade the ADA on the part of the
insurance company or other organization, nor does
it mean that a plan is automatically shielded just
because it was put into place before the ADA was
passed. Indeed, there is currently a bill moving
through Congress to overturn the Betts decision and
we have no intention of repeating a decision in the
ADA with which we do not agree.
136 Cong.Rec. H4,624 (daily ed. May 17, 1990) (statement of Rep.
Edwards). Senator Kennedy also discussed the use of "subterfuge"
under the ADA and stated that:
[I]t is important to note that the term
"subterfuge," as used in the ADA, should not be
interpreted in the manner in which the Supreme
Court interpreted the term in [Betts]. The term
"subterfuge" is used in the ADA to denote a means
of evading the purposes of the ADA. Under its plain
meaning, it does not connote that there must be
some malicious or purposeful intent to evade the
ADA on the part of the insurance company . . . It
also does not mean that a plan is automatically
shielded just because it was put into place before
the ADA was passed.
136 Cong. Rec. S9,697 (daily ed. July 13, 1990) (statement of
Sen. Kennedy). Further, the House Report states that the
subterfuge language applies regardless of the date the insurance
plan or an employer benefit plan was adopted. H.Rep. No.
101-485(II), at 137;
S.Rep. 101-116, at 85; See also 29 C.F.R. § 1630.16(f), App.
However, these Congressional comments and reports do not
discuss the application of the second holding in Betts that
"subterfuge" was meant only to prohibit benefit plan terms or
practices which discriminated in non-fringe benefit aspects of
the employment relationship because any other meaning would
render § 4(f)(2) of the ADEA nugatory. The House and Senate
Reports and the selected comments from Congressmen indicate only
disapproval with the Betts holding that the definition of
"subterfuge" requires an intent and that pre-ADEA plans could not
be a subterfuge.
Similar to the ADEA, Section 102(a) of Title I of the ADA
prohibits an employer from discriminating in regard to
compensation, terms, conditions, or privileges of employment.
42 U.S.C. § 12112(a). The Betts court interpreted the phrase
"compensation, terms, conditions, or privileges of employment" as
not including benefit plans of the type covered under § 4(f)(2)
of the ADEA. Betts, 492 U.S. 158, 109 S.Ct. 2854. The EEOC
believes that since the ADA, as opposed to the ADEA, "expressly
cover[s] fringe benefits," the ADA is distinguishable from the
ADEA and is thus insulated from Betts' fringe benefit protection.
EEOC Interim Policy at 1053 n. 10.
The House and Senate Reports state that Section 102(a) of the
ADA includes employment decisions in "(6) fringe benefits
available by virtue of employment, whether or not administered by
the covered entity." H.Rep. No. 101-485(II), at 55; S.Rep. No.
101-116, at 25, U.S.Code Cong. & Admin.News 1990, at 337. The ADA
also defines "discriminate" in 42 U.S.C. § 12112(a) as including:
(2) participating in a contractual or other
arrangement or relationship that has the effect
of subjecting a covered entity's qualified
applicant or employee with a disability to the
discrimination prohibited by this subchapter
(such relationship includes a relationship with
an employment or referral agency, labor union,
an organization providing fringe benefits to an
employee of the covered entity, or an
organization providing training and
42 U.S.C. § 12112(b)(2) (emphasis added).
This legislative history of the ADA and Section 12112(b)(2)
can be reconciled with this Court's interpretation of the meaning
of Section 501(c)'s subterfuge sentence. The ADA does prohibit
discrimination in fringe benefits, including benefit plans, but
Congress has also carved out a large exception for benefit plans
which qualify under Section 501(c)(1), (2), or (3). Thus, a
benefit plan or practice which discriminates against persons with
disabilities and does not fall within Section 501(c)(1), (2), or
(3)'s exception violates Section 102(a) of Title I. Section
12112(b)(2) was merely intended to prohibit an entity from doing
through a contractual relationship what it may not do directly.
H.Rep. No. 101-485(III), at 36. An entity may not contract with
organizations which provide employee fringe benefits if the
relationship subjects the disabled employee "to the
discrimination prohibited by this title." Section 102(a)'s
prohibition on discrimination includes benefit plans or practices
which do not meet the requirements of Section 501(c)(1), (2), or
(3). Thus, under Section 12112(b)(2), an employer may not
contract with another organization which discriminates against
the employer's employees in the area of benefit plans if the
organization's practices do not qualify under of Section
501(c)(1), (2), or (3).
The EEOC's Interim Policy provides that insurance decisions
not based on a valid cost rationale are discriminatory and
constitute a subterfuge. According to the EEOC, "`Subterfuge'
refers to disability-based treatment that is not justified by the
risk or costs associated with the disability." Interim Policy at
1054. The EEOC's interpretation of the meaning of the subterfuge
sentence seems to be repetitive of the requirements of at least
paragraphs (1) and (2) of Section 501(c), which require that
benefit plan decisions based on disabilities be based on the
grouping of similar risks and sound actuarial principles or
active or reasonably anticipated experience to be exempt under
the ADA. If a benefit plan or practice qualifies under paragraphs
(1) or (2) because it underwrites,
classifies, or administers risks based on or not inconsistent
with State law and thus is not prohibited by the ADA, what would
it mean to interpret Section 501(c)'s subterfuge sentence as
providing that if that same benefit plan or practice's
disability-based treatment is not justified by the risk or costs
associated with the disability, it violates the ADA? It seems
that if the benefit plan disability-based distinction or
treatment is not based on the risks or costs associated with the
disability, then it would not qualify for 501(c)(1) or (2)'s
exception and is prohibited by Section 102(a).
In Betts, the EEOC also argued that the "subterfuge"
exception to § 4(f)(2) of the ADEA required employers to show a
cost-based justification for age-based distinctions in employee
benefit plans. The Supreme Court rejected this interpretation of
§ 4(f)(2) as including a cost-justification requirement as
contrary to the plain language of the statute. Betts, 492 U.S. at
169-175, 109 S.Ct. at 2862-65. Similarly, the plain language of
Section 501(c)'s "subterfuge" sentence does not mention the risks
or costs of a disability-based distinction.
Plaintiffs argue that the Older Worker Benefit Protections
Act of 1990 amended the ADEA to provide that a benefit plan that
has cost-based justification enjoys a presumption that it is not
an unlawful "subterfuge" to evade the purposes of the Act. See
29 U.S.C. § 623(f)(2). Thus, Plaintiffs argue, Betts does not apply
to the ADA. Section 623(f)(2) of the ADEA, however, does not
redefine the word "subterfuge" as requiring cost-based
Accordingly, the Court rejects the EEOC's Interim Policy's
definition of "subterfuge" and holds that the subterfuge sentence
of Section 501(c) means that a benefit plan disability-based
distinction based on underwriting, classifying, or administering
risks that is based on or not inconsistent with State law may not
be used to discriminate in non-fringe benefit areas of
employment. Since Plaintiffs do not allege that they are being
discriminated against in a non-fringe benefit area of employment,
the subterfuge sentence of Section 501(c) is inapplicable to this
case. Thus, the fact that Title II is omitted from the subterfuge
sentence is not dispositive, as Defendants maintain. Having
decided that the last sentence of 501(c) prohibits using
paragraphs (1), (2), or (3) to discriminate in a non-fringe
benefit aspect of employment and that Plaintiffs have not made
such an allegation here, the Court need not decide whether the
Betts definition of "subterfuge" as including an intent element
applies under the ADA.
Defendants further maintain that "plaintiffs must allege why
501(c) does not preclude their claim." In Betts, the Supreme
Court held that § 4(f)(2) of the ADEA was not a defense to a
charge of age discrimination but, rather, by requiring a showing
of actual intent to discriminate, redefined the elements of a
plaintiff's prima facie case. Betts, 492 U.S. at 181, 109 S.Ct.
Thus, when a employee seeks to challenge a benefit
plan provision as a subterfuge to evade the
purposes of the Act, the employee bears the burden
of proving that the discriminatory plan provision
actually was intended to serve the purpose of
discriminating in some non-fringe-benefit aspect of
the employment relation.
The EEOC's Interim Policy indicates that it should be the
defendant who bears the burden of proving that a health insurance
plan is either a bona fide insured plan that is not inconsistent
with state law, or a bona fide self-insured plan. Interim Policy
at 1054. The EEOC believes that the defendant must also prove
that a challenged disability-based distinction is not being used
as a subterfuge. Id. The EEOC explains that requiring the
defendant to bear the burden of proof is consistent with the
principle that the burden of proof should rest with the party who
has the greatest access to the relevant facts. In the health
insurance context, the defendant employer and/or employer's
insurer has control of the risk assessment, actuarial, and/or
claims data relied upon in adopting the challenged
disability-based distinction. The plaintiff has no access to such
data. Id. Although the EEOC's Interim Policy only addresses
employer-provided health insurance plans and not the application
of the ADA to other types of benefits, such as
employer-provided pension plans and disability insurance, the
EEOC's reasoning applies with equal force to this case. Id. at
1051. Under the Court's prior interpretation of Section 501(c),
the risk assessment and actuarial data that a defendant must
provide to come within the benefit plan exception would be
required under Section 501(c)(1) and (2), not the subterfuge
sentence of Section 501. Whether plaintiffs must bear the burden
of proving that a benefit plan or practice that qualifies under
paragraph (1), (2), or (3) is being used by defendants as a
subterfuge to evade the purposes of Titles I or III (i.e., being
used to discriminate in a non-fringe-benefit aspect of
employment) need not be decided in this case.
In sum, if Defendants prove that they fall within either
Section 501(c)(1), (2), or (3)'s exceptions to the ADA for
benefit plans or practices, then they may prevail. However, the
Court cannot say that Plaintiffs can prove no set of facts in
support of their claim which would entitle them to relief and
that, on the basis of a motion to dismiss, Defendants are
excluded from liability pursuant to Section 501(c)(2), as they
The City also argues that under Section 3-150 and 3-132 of
the Pension Code, it has no authority to grant participation in
the Fund or provide alternative benefits. Section 3-150 of the
Pension Code provides:
A home-rule unit as defined in Article VII of the
1970 Illinois Constitution or any amendment thereto
shall have no power to change, alter or amend, in
any way, the provisions of this article. A
home-rule which is a municipality as defined
in § 3-103 shall not provide singly or as part
of any plan or program, by any means whatsoever,
any type of retirement or annuity benefit to a
police officer other than through the establishment
of a fund as provided in this article.
40 ILCS § 5/3-150. Section 3-132 provides that the Board, not the
City, shall have the power and the duty to control and manage the
"In determining whether a state statute is pre-empted by
federal law and therefore invalid under the Supremacy Clause of
the Constitution, our sole task is to ascertain the intent of
Congress." California Federal Sav. and Loan Ass'n v. Guerra,
479 U.S. 272, 280, 107 S.Ct. 683, 689, 93 L.Ed.2d 613 (1986).
Congress has stated that the purpose of the ADA is:
(1) to provide a clear and comprehensive national
mandate for the elimination of discrimination
against individuals with disabilities;
(2) to provide clear, strong, consistent,
enforceable standards addressing discrimination
against individuals with disabilities;
(3) to ensure that the Federal Government plays a
central role in enforcing the standards
established in this chapter on behalf of
individuals with disabilities; and
(4) to invoke the sweep of congressional authority,
including the power to enforce the fourteenth
amendment and to regulate commerce, in order to
address the major areas of discrimination faced
day-to-day by people with disabilities.
42 U.S.C. § 12101(b). Consistent with the national mandate
eliminating discrimination against individuals with disabilities,
Section 501(b) of the ADA provides that state laws which provide
greater or equal protection to individuals with disabilities are
not preempted. Section 501(c)(1) and (2) provide that state
insurance laws regarding classifying, administering, and
underwriting risks are not preempted as to benefit plans under
the ADA. Section 501(c)(3) "clarifies that self-insured plans,
which are currently governed by the preemption provisions of the
Employment Retirement Income Security Act (ERISA), are still
governed by that preemption provision and are not subject to
state insurance laws." H.Rep. No. 101-485(II), at 137, U.S.Code
Cong. & Admin.News 1990, at 420.
Where Congress has not entirely displaced state regulation:
[F]ederal law may . . . pre-empt state law to the
extent it actually conflicts with federal law . . .
because "compliance with both federal and state
regulations is a physical impossibility" or because
the state law
stands "as an obstacle to the accomplishment and
execution of the full purposes and objectives of
Guerra, 479 U.S. at 281, 107 S.Ct. at 689 (quoting Florida Lime
& Avocado Growers, Inc. v. Paul,
, 142-143, 83 S.Ct.
1210, 1217, 10 L.Ed.2d 248 (1963) and Hines v. Davidowitz,
, 404, 85 L.Ed. 581 (1941)). Thus, state
laws that conflict with the ADA by standing as an obstacle to
full enforcement of Congress' goals or do not fall within the
Section 501(c) benefit plan exception are preempted. Defendants
have not maintained that Sections 3-150 or 3-132 provide greater
or equal rights to disabled persons than the ADA does. These
sections do not relate to insurance classification of risks.
Thus, if it is found that Plaintiffs are being discriminated
against because of their impairments in violation of the ADA and
Sections 3-150 and 3-132 somehow prevent the City from providing
Plaintiffs with benefits, then those sections conflict with the
ADA or are inconsistent with its purposes and are preempted.
Defendants maintain that Count IV should be dismissed because
Plaintiffs have failed to join as a defendant an indispensable
party, the State of Illinois, under Rule 19(a). Defendants argue
that because Plaintiffs challenge the validity of an Illinois
statute which can only be changed or modified by the legislature,
the State of Illinois is an indispensable party. Count IV alleges
Amend. to Complaint, at 2. Count IV also seeks a declaratory
judgment that Section 5/3-150 of the Pension Code is either
preempted by or violates the ADA insofar as it conflicts with the
City's and the Board's duty under the ADA to reasonably
accommodate Piquard's and Duran's alleged disabilities.
Although Plaintiffs allege that the Illinois Pension Code
discriminates against individuals with disabilities on its face,
they do not cite to any specific section which on its face
discriminates against individuals with disabilities. This inexact
and broad allegation is an insufficient reason for requiring
joinder of the State. Defendants' reliance on United States v.
Illinois, 1994 WL 562180 (N.D.Ill. Sep. 12, 1994), is misplaced.
In that case, the court held that the State of Illinois was a
proper party to a similar suit because it was an employer, not
that the State of Illinois was an indispensable party under Rule
19. Id. at *2-3. Further, Defendants cannot rely on Section
5/3-150 to defeat Plaintiffs' ADA and Section 504 claims. The
purpose of Section 5/3-150 is to ensure that all Illinois police
officers receive uniform pension benefits by preventing
individual municipalities from enacting local ordinances that
alter the benefits established by the Illinois Pension Code.
Holmes v. City of Aurora, 1993 WL 512629, *3 (N.D.Ill. Dec. 9,
1993) (citing Illinois law).
Id. at *4. Defendants' claim that the State of Illinois is an
indispensable party because without its joinder complete relief
cannot be accorded among those already parties is rejected.
Finally, the Board's Motion to Dismiss Count IV argues that
it is not an employer under the ADA. This argument is rejected as
it is presented without any citation to authority and supportive
legal memorandum, as required by Local Rule 2.9(B).
42 U.S.C. § 12132. Title II defines "public entity" in relevant
42 U.S.C. § 12131(1). The City admits that it is a local
government within the definition of "public entity." The Board
states that the Fund appears to be an "other instrumentality of
the State," but both the City and the Board maintain that the
Board is not a public entity. Plaintiffs maintain that the Board
is a statutorily-created body responsible for administering the
City's pension funds for the benefit of public employees. 40 ILCS
§ 5/3-128. Two of the Board members may be appointed by the Mayor
of the City. Id. An instrumentality is defined as "something by
which an end is achieved; a means, medium, agency." BLACK'S LAW
DICTIONARY 801 (6th ed. 1990). The relationship between the Board
and the State and City indicate that the Board is a public entity
under the ADA. Holmes v. City of Aurora, 1995 WL 21606, *4
(N.D.Ill. January 18, 1995). The Board is used as the means or
medium by which the City determines eligibility for pension and
disability benefits for its employees.
Duran and Piquard maintain that they are qualified
individuals with disabilities for purposes of Title II of the ADA
since they are individuals with disabilities, astigmatism and
spondylolisthesis respectively, who with or without reasonable
modification to the policies and practices of the Board, meet the
essential requirement for participation in the Fund. Defendants
argue that the questions of whether Plaintiffs are "qualified
individuals with a disability" and "individuals with
disabilities" involve factual matters on which they have not had
an opportunity to conduct discovery, and under Federal Rule of
Civil Procedure 56(f), they cannot submit affidavits complying
with Fed.R.Civ.P. 56(e).
42 U.S.C. § 12131(2). To be "qualified individual[s] with a
disability," Plaintiffs must establish that they are each an
individual with a "disability" as defined in 42 U.S.C. § 12102(2)
of the ADA. Disability is defined as:
(C) being regarded as having such an impairment.
42 U.S.C. § 12102(2). Plaintiffs claim that Defendants regarded
them as having such impairments. The perception of the covered
entity is a key element of the regarded as test. H.Rep. No.
101-485(III), at 30-31.
29 C.F.R. § 1630.2(l).
29 C.F.R. § 1630.2(l), App. Plaintiffs argue that their situation
is directly analogous to the above example where an employee's
work duties were changed due to the employer's perception
regarding an impairment. Plaintiffs further argue that no
discovery on their physical condition is necessary to make a
determination on whether they are individuals with disabilities.
To prove they are disabled under the ADA, Plaintiffs must
establish two components. First, they must show that they are
persons having a qualifying physical or mental impairment. Flasza
v. Holland Motor Exp., Inc., 1994 WL 529392, *5 (N.D.Ill. Sep.
27, 1994). A physical or mental impairment means:
29 C.F.R. § 1630.2(h)(1). "The existence of an impairment is to
be determined without regard to mitigating measures such as
medicines, or assistive or prosthetic devices." 29 C.F.R. §
1630.2(h), App. For example, an individual with hearing loss
would be considered to have an impairment even if the condition
were correctable through use of a hearing aid. Id.
Second, Plaintiffs must show that Defendants treated their
qualifying impairments as substantially limiting one or more of
their major life activities. "Substantially limits" means
"[s]ignificantly restricted as to the condition, manner or
duration under which an individual can perform a particular major
life activity as compared to the condition, manner, or duration
under which the average person in the general population can
perform that same major life activity." 29 C.F.R. §
1630.2(j)(ii). The following factors should be considered in
determining whether an individual is substantially limited in a
major life activity: (i) the nature and severity of the
impairment; (ii) the duration or expected duration of the
impairment; and (iii) the permanent or long-term impact or the
expected long-term impact of or resulting from the impairment.
Id. at § 1620.2(j)(2). In addition to factors listed above, the
following factors should be considered when determining whether
an individual is substantially limited in the major life activity
29 C.F.R. 1630.2(j)(3)(ii). Further, with respect to the major
life activity of working, "substantially limits" means
significantly restricted in the ability to perform either a class
of jobs or a broad range of jobs in various classes as compared
to the average person having comparable training, skills and
abilities. 29 C.F.R. § 1630.2(j)(3)(i). The inability to perform
a single, particular job does not constitute a substantial
limitation in the major life activity of working. Id.