The U.S. Supreme Court dealt a body blow last month to mentally ill individuals fighting discriminatory insurance coverage.

The justices revealed on January 10 that they would not hear the appeal of the case Doe v. Mutual of Omaha in which two men infected with HIV sued their health insurer for violating the Americans With Disabilities Act (ADA). Their Mutual of Omaha policies provide coverage for up to $1 million for almost all types of medical care, but impose an exception for AIDS-related illnesses, which it covers up to a lifetime maximum of $100,000 in one plaintiff’s policy and just $25,000 in the other’s plan.

The plaintiffs, identified as John Doe and Richard Smith, charged that the insurance policies violate the ADA’s prohibition against discrimination in any place of "public accommodation" when based on a person’s illness or disability. Mutual of Omaha argued that the ADA covers access to a product or service, in this case insurance, but does not control its contents. The company did not dispute the plaintiffs’ contention that AIDS was in fact a disability-causing illness.

Doe and Smith were briefly able to savor a triumph over the giant insurer when the U.S. district court in Chicago ruled in their favor in December 1998. Mutual of Omaha immediately appealed the ruling, however, and in June 2000 the 7th U.S. Circuit Court of Appeals shifted the victory to the company’s column when it overturned the lower court’s decision.

The appeals court said that the lower court’s interpretation of the ADA as extending to the scope of insurance policies was incorrect. The intent of the ADA, according to the appeals court, was to ensure equal access to goods and services for disabled people. It gave the analogy of a camera store, which "may not refuse to sell a camera to a disabled person, but is not required to stock cameras specially designed for such persons. Had Congress purposed to impose so enormous a burden on the retail sector of the economy and so vast a supervisory responsibility on the federal courts, we think it would have made its intention clearer and would have at least imposed some standards," the court said.

Mutual of Omaha met Congress’s standards by its willingness to sell insurance policies to HIV-infected individuals, the appeals court stated, and by covering treatment for their medical problems not related to HIV.

Especially troubling for advocates fighting for insurance parity for mental illnesses is the court’s reasoning in which it dismissed the plaintiffs’ insistence on the illegality of caps. "Since most health-insurance policies contain caps," the justices said, "the position urged by the plaintiffs would discriminate among diseases. Diseases that happened to be classified as disabilities could not be capped, but equally or more serious diseases that are generally not disabling, such as heart disease, could be."

The appeals court left Doe and Smith one remedy, however. If they can prove that the caps in their insurance policies "are not consistent with state law and sound actuarial policies," they can try to get relief from their state’s insurance commission.

The Supreme Court did not issue any comments on its refusal to hear the appeal of the 7th Circuit’s decision. Without a ruling from the high court, the appeals court’s holding applies automatically only in Illinois, Indiana, and Wisconsin, the states in its circuit. It will certainly be cited, however, by insurers defending against ADA-related charges in other states.