Landmark Court Decision Against Kmart Strikes Down Unfair Disability Coverage For Severe Mental Illness

Posted on June 15, 1998

Arlington, VA - In the first lawsuit of its kind to go to trial in the United States, a federal court late last week held that a long-term disability policy which provides lower benefits for people with severe mental illnesses than other medical disorders is unfair and discriminatory.

U.S. District Court Judge Leonie Brinkema has ordered Kmart Corporation to resume paying disability benefits and penalties up to $654,000 to an employee who has severe depression. In 1995, Front Royal, Va., manager Harold Lewis was hospitalized when his depression worsened and he was forced to stop working and go on disability. His benefits were terminated after only 24 months, which violates the Americans with Disabilities Act (ADA), according to this precedent-setting decision.

"This historic case is a victory for every hard-working American who also happens to have a severe mental illness," said Laurie Flynn, executive director for the National Alliance for the Mentally Ill (NAMI). "This court ruling confronts the long-standing stigma companies have used to rob employees with a mental illness from equal disability protection."

The decision held that Kmart offered no rationale for the discriminatory policy and "… provided inferior coverage for mental as opposed to physical disabilities." Further, Kmart was found to offer Lewis a benefit plan "which discriminates against him on the basis of his mental disability."

Providing financial support and legal technical assistance for Lewis, NAMI hailed the decision as a milestone in the ongoing fight to end discrimination against people with severe mental illnesses. "This court ruling is a turning point toward ending second-class treatment for millions of Americans and their families," said Flynn. "Companies like Kmart should be on notice that the days of discriminatory business practices are numbered. This decision gives heart to consumers, family members and other advocates engaged in the fight to overcome these unjustifiable barriers."

NAMI: Court Strikes Down Kmart's Discriminatory Disability Policy - June 15, 1998

An employee of Kmart for more than 10 years, Lewis purchased a long-term disability policy in 1986 believing it would provide him and his family adequate protection should his condition worsen. "As devastating as it was to discover that the protection I was paying for would not continue to help me or my family, I saw a wrong that I had to right," said Lewis. "If others with mental illnesses are spared the same pain that my family and I have experienced, then it's all been worth it."

John Rush, a psychiatrist from Dallas, Tx., a leading expert on depression who served as an expert in this case, praised the judge for recognizing that major depression is a medical disorder, just like heart disease, cancer, and diabetes. "Brain malfunctions cause disabilities just like malfunctions of other organs like the heart," said Rush. "Today's new medical technologies provide positive proof. So called 'mental illnesses' are brain diseases."

The Court ordered Kmart to amend its policy to provide Lewis with the same long-term disability benefits available to those who suffer from other medical disorders. The decision will presumably also apply to other Kmart employees who reside within the scope of the court's jurisdiction. Kmart has not announced whether it plans to appeal the decision.

With more than members, NAMI is the nation's leading organization solely dedicated to improving the lives of persons with severe mental illnesses, including schizophrenia, bipolar disorder (manic-depressive illness), major depression, obsessive-compulsive disorder, and severe anxiety disorders. NAMI has more than 1,140 state and local affiliates in all 50 states, the District of Columbia, Puerto Rico, and Canada. NAMI's efforts focus on support to persons with serious brain disorders and to their families; advocacy for nondiscriminatory and equitable federal, state and private-sector policies; research into the causes, symptoms and treatments for brain disorders; and education to eliminate the pervasive stigma surrounding severe mental illness.

Lewis v. Kmart Anti-Discrimination Case Legal Background Information

Harold Lewis, 44, began working for Kmart in 1984. He was first diagnosed with severe biological depression in 1979. He obtained treatment and was able to function normally. Even after his diagnosis, Lewis steadily rose in the company, ultimately achieving the position of store manager at the Kmart store in Winchester, VA.

In 1986, Lewis purchased a long-term disability policy Kmart was offering through Aetna Life Insurance Company, a policy he paid for exclusively out of his own pocket with no employer contribution. Following are the events that led Lewis to apply for long-term disability with Aetna:

• In 1995, Lewis took medical leave after being hospitalized for severe depression.
• Lewis was advised by his doctor not to return to work upon his release from the hospital.
• Lewis applied for long-term disability benefits at this time and was approved by Aetna.
• The policy, like many long-term disability policies, limits benefits for "mental or nervous disorders" to 24 months, even though it provides coverage for other physical disabilities until the policy holder reaches age 65.
• In 1996, Lewis learned that his biological illness was classified as "mental" by Aetna, and therefore subject to the 24 month cap.

In 1997, Lewis formally brought suit against Kmart in the U.S. District Court for the Eastern District if Virginia stating that defendants Kmart and Aetna had discriminated against him on the basis of his disability which was in violation of the Americans with Disabilities Act (ADA). NAMI and its Campaign to End Discrimination provided financial support and legal technical assistance for Lewis throughout the case, which went to trial in April, 1998.

John Rush, M.D., a leading expert in the diagnosis and treatment of clinical depression served as an unpaid witness for Lewis. He provided scientific testimony on the biomedical nature of brain disorders and equated severe mental illnesses to other physical disorders.

Judge Leonie M. Brinkema handed down her decision on June 11, 1998. She ruled that Kmart violated the ADA by offering a benefit plan which discriminates on the basis of mental disability. Specifically, Brinkema wrote, "In this case Kmart offered plaintiff insurance benefits which provided inferior coverage for mental as opposed to physical disabilities… We, therefore, conclude that Kmart has violated 42 U.S.C. Sect. 12112 (the ADA) by offering Lewis a benefit plan which discriminates against him on the basis of his mental disability." The court ordered Kmart to provide Lewis with long-term disability benefits equivalent to those provided for other physical disabilities. If he remains disabled until age 65, he will receive benefits totaling $654,532.77.

This is the first case of its kind in the country to go to trial and be decided on the merits.