Minnesota High Court OKs Unequal Benefits Coverage

June 20, 2002 (PLANSPONSOR.com) - As lawmakers continue discussions about forcing employers to equalize coverage for health problems with that offered for mental problems, Minnesota's high court ruled that companies could offer less mental health coverage.

The court ruled that Anoka County officials didn’t violate the state’s Human Rights Act (MHRA) by capping payments on mental health disabilities coverage at 24 months, according to a BNA report. Justices reversed a lower appeals court ruling, which had upheld plaintiff Gloria Kolton’s MHRA claims.

In their ruling, justices said they relied heavily on federal case law interpreting the federal Americans with Disabilities Act (ADA) which they said also permits the differential between standard health coverage and mental health treatments.

In fact, the justices said, county officials were correct in opting for an employee insurance policy with cheaper premiums because of limited health coverage.
Case Background

Kolton worked for Anoka County as an income maintenance specialist from late 1990 until 1994 when she resigned because of a mental illness. Kolton started getting benefits payments a few months later.

The disability benefits plan, purchased from Sun Life Assurance Co. of Canada, put a cap on payments for disabilities caused by mental illness. Although those physically disabled received coverage until retirement age, mental disability benefits had the two-year cap unless the participant was institutionalized.

Since Kolton was not institutionalized, her disability benefits ended in 1997. She sued two years later, alleging ADA and MHRA violations.

Thrown out

A Minnesota trial judge granted a county request to throw out Kolton’s suit. The Minnesota Court of Appeals threw out the ADA claims but agreed with the MHRA allegations.

In the latest ruling, justices agreed with the county that the state law was sufficiently similar to the ADA that federal courts’ rulings on the ADA shed some light on the state court’s analysis.

“The federal courts are essentially unanimous in rejecting the argument that (the ADA) prohibits distinctions between mental and physical disabilities in coverage for long-term disability benefits,” Justice Joan Ericksen Lancaster said, writing for the court.

Justices cited the insurance industry’s longstanding practice of offering different benefits for different disabilities and the “absence of an explicit legislative condemnation of the practice” as reasons to support the conclusion that the 24-month cap did not violate the MHRA.

The court also found that Kolton’s equal protection rights under the Minnesota and US Constitutions were not violated.

The case is Kolton v. Anoka County, Minn., No. C1-00-2179, 6/13/02.

Read more at Senate Approves Mental Health Benefits Parity Bill .