SUMMARY: Disability discrimination action is brought pursuant to Title III of the Americans with Disabilities Act (ADA) and the North Dakota Human Rights Act (NDHRA). Court granted motion to dismiss for failure to state a claim. The court concludes the facts alleged did not state a claim under the ADA or NDHRA.

Case Name: Community 1^st Natl Bank v. Phoenix Life Ins.
Case Number: A3-99-175
Docket Number: 24
Date Filed: 6/7/00
Nature of Suit: 440

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
SOUTHEASTERN DIVISION

ORDER

This disability discrimination action is brought pursuant to Title III of the Americans with Disabilities Act (ADA) and the North Dakota Human Rights Act (NDHRA). Before the court is defendant's Fed. R. Civ. P. 12(b)(6) motion to dismiss for failure to state a claim upon which relief may be granted (doc. #5). ⁽¹⁾ Plaintiffs oppose the motion (doc. #13). The matter came on for hearing on June 5, 2000 in Fargo, North Dakota, and was thereafter taken under advisement.

Plaintiff John Doe is purportedly an individual with a disability as defined by the ADA, specifically 42 U.S.C. § 12102(2). ⁽²⁾ Plaintiff Community First National Bank is the trustee of the "John Doe Irrevocable Insurance Trust Agreement." Defendant Phoenix Home Life Insurance Company is a life insurance company principally located in Hartford, Connecticut.

Briefly stated, on October 14, 1988, plaintiff Doe purchased from defendant a term life insurance policy with a face value of $1,000,000. ⁽³⁾ Doe was not disabled at the time. The policy, in full force and effect during all times pertinent, provided in part:

    Part 6: Lifetime Benefits

    The right to convert this policy

    Subject to the terms contained in this section, you have the right to convert this policy, without evidence of insurability, to a new policy on the life of the same insured under this policy but on a different plan of insurance.

. . . .

    The conversion must be exercised while this policy is in full force and no later than the Final Conversion Date [October 14, 2003] . . . .

    [The new policy] may be on any of the following plans of insurance:

    a. whole life insurance with a level death benefit[.]

. . . .

    The new policy will not contain any disability benefits unless a disability provision, included in this policy at the time of conversion, provides otherwise.

    If the policy contains an option to convert which is exercised while this rider is in effect, the new policy will contain this rider, provided:

. . . .

. . . .

    If the insured is totally disabled on the date of conversion, the new policy will contain this rider only if conversion is made on the Final Conversion Date [October 14, 2003] . . . .

Thus, the rider effectively prohibits plaintiff from converting the policy to whole life while enjoying the benefits of the rider until the final policy conversion date.

Unfortunately, Doe became disabled, and, on or about March 24, 1994, applied for and received from defendant a waiver of premiums pursuant to the rider. Indeed, defendant continues to waive premiums on the policy to this day. The policy was transferred to plaintiff Community First National Bank as trustee of the aforementioned trust agreement on or about December 12, 1996.

Plaintiffs filed this action on December 13, 1999, challenging the rider's prohibition on converting the policy to whole life while enjoying the benefits of the rider. Plaintiffs allege the prohibition constitutes an unnecessary and discriminatory eligibility criteria for purposes of Title III ⁽⁴⁾ of the ADA; is inconsistent with North Dakota law (specifically the NDHRA, N.D. Cent. Code §§ 14-02.4, et seq.) and/or constitutes a subterfuge to evade the ADA; ⁽⁵⁾ and violates the NDHRA itself. Defendant responds with the instant motion, "primarily" arguing plaintiffs' inability to convert the policy to whole life while continuing to enjoy the premium waiver is not discriminatory. Plaintiffs counter that the policy is discriminatory on its face, since it prohibits disabled insureds from converting their term insurance policy together with the waiver of premium rider, while allowing non-disableds to do so.

The court agrees with defendant, and concludes the facts alleged by plaintiffs do not state a claim for relief under the ADA or NDHRA. ⁽⁶⁾ It is axiomatic that a person alleging discrimination under these statutes must show that the defendant took adverse action against the plaintiff that was based upon the plaintiff's disability. See Amir v. St. Louis Univ., 184 F.3d 1017, 1027 (8^th Cir. 1999). To be sure, as plaintiffs creatively argue, the Waiver of Premiums for Disability Rider treats disabled insureds who are currently enjoying its benefits differently than non-disabled insureds who are merely paying for it; but this does not amount to adverse action vis-a-vis non-disabled insureds. Cf. id. at 1027-28; Krauel v. Iowa Methodist Med. Ctr., 95 F.3d 674, 677-78 (8^th Cir. 1996). Indeed, to hold otherwise would allow plaintiffs to change the terms of the policy midstream to reap a benefit clearly unavailable to non-disableds. Neither the ADA nor NDHRA contemplate such a result. See 42 U.S.C. § 12182(b)(1)(A)(i).

The court notes that its conclusion that this action should be dismissed in no part reflects a determination as to the applicability of the ADA to the contents of the insurance policy at issue, nor the effect of the safe harbor provision and/or McCarran-Ferguson Act. Indeed, the court assumes for purposes of this motion that none of these issues poses an impediment to plaintiffs' claims. The court simply finds that the application of the Waiver of Premiums for Disability Rider to plaintiffs in this case was not discriminatory.

For the foregoing reasons, defendant's motion to dismiss for failure to state a claim is GRANTED, and plaintiffs' complaint (doc. #1) is hereby DISMISSED. ⁽⁷⁾

IT IS SO ORDERED.

Dated this _____ day of June, 2000.

1. Defendant also moves for dismissal pursuant to Rules 10(a) and 12(b)(2) for "lack of jurisdiction over the fictitious plaintiffs," and for dismissal for lack of standing. Given the disposition of the 12(b)(6) motion, the court need not reach these issues.

2. A person is disabled within the meaning of the ADA if he demonstrates that he has a physical or mental impairment that substantially limits one or more of his major life activities, that he has a record of such an impairment, or that he is regarded as having such an impairment. 42 U.S.C. § 12102(2)(A-C). For purposes of this motion, plaintiff Doe's status as disabled is not in dispute.

3. The complaint refers to a second policy, but plaintiffs have agreed to dismiss any claims reference it (doc. #13).

4. Title III of the ADA, 42 U.S.C. §§ 12181-12189, generally prohibits discrimination on the basis of disability by so-called "public accommodations," and includes an "insurance office" among the facilities that qualify as "public accommodations" so long as its operations "affect commerce." 42 U.S.C. § 12181(7)(F).

5. This allegation references section 501(c) of Title V of the ADA, 42 U.S.C. § 12201(c), a/k/a, the "safe harbor" provision, which states as follows:

Subchapters I through III of this chapter and title IV of this Act shall not be construed to prohibit or restrict--

(1) an insurer[] . . . from underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law[] . . . .

Paragraph[] (1) . . . shall not be used as a subterfuge to evade the purposes of [the ADA].

6. The ADA, of course, "provides guidance" in interpreting the NDHRA. See Engel v. Montana-Dakota Util., 595 N.W.2d 319, 322 (N.D. 1999).

The court is mindful that a Rule 12(b)(6) motion should not be granted unless it appears beyond a doubt that plaintiffs can prove no set of facts which would entitle them to relief. In making this determination, the court assumes all facts alleged in the complaint are true, and construes those facts liberally in plaintiffs' favor. Schmedding v. Tnemec Co., Inc., 187 F.3d 862, 864 (8^th Cir. 1999).

7. The court will maintain the current caption in deference to plaintiff Doe's desire to remain anonymous.