## Facts

- Leonard F., an employee of Israel Discount Bank of New York, received long-term disability coverage through a group policy issued by Metropolitan Life Insurance Company (MetLife).
- The policy generally provided potentially long-term benefits for disabilities classified as physical, but capped benefits for “mental or nervous” disabilities at two years.
- Leonard became disabled due to a mental impairment and alleged the policy discriminated by providing inferior coverage for mental disabilities compared to physical disabilities.
- Leonard sued MetLife under ADA Title III, challenging the mental-disability benefit limitation.
- MetLife moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), asserting the ADA insurance “safe harbor,” including that the policy was consistent with state law and not a “subterfuge” to evade the ADA.

## Issues

1. Whether MetLife’s mental-disability benefit limitation is protected by the ADA’s insurance safe harbor, including whether a plan adopted before the ADA can be a “subterfuge” to evade the ADA.
2. Whether the district court improperly dismissed under Rule 12(b)(6) by relying on materials outside the pleadings to find that the policy predated the ADA, without converting the motion to summary judgment and allowing discovery.

## Decision

- The Second Circuit vacated the dismissal and remanded.
- The court agreed that, under the controlling interpretation of “subterfuge,” a benefit plan adopted before the ADA generally cannot be treated as a subterfuge to evade the ADA.
- The court held the district court erred procedurally by resolving the key factual question of when the challenged limitation was adopted based on material outside the complaint at the Rule 12(b)(6) stage.
- On remand, the district court was directed to develop an appropriate record on the timing of the policy (or the challenged limitation) and then reapply the safe-harbor analysis.

## Legal Principles

- ADA insurance safe harbor (42 U.S.C. § 12201(c)) permits insurers to underwrite, classify, and administer risks consistent with state law, so long as those practices are not used as a “subterfuge” to evade the ADA.
- “Subterfuge” denotes an evasive scheme; a plan established before a statute’s enactment is generally not a subterfuge to evade that statute absent proof it was designed to circumvent the statute.
- On a Rule 12(b)(6) motion, courts generally may consider only the complaint, documents incorporated by reference or attached, and proper matters for judicial notice.
- If a court considers materials outside the pleadings on a motion to dismiss, it must convert the motion to one for summary judgment, provide notice, and afford a reasonable opportunity for discovery and responsive evidence.

## Conclusion

The Second Circuit required further factual development on whether the challenged mental-disability limitation predated the ADA, holding that the safe-harbor “subterfuge” issue could not be decided against the plaintiff on a Rule 12(b)(6) record that relied on extrinsic evidence.


Leonard F. v. Israel Discount Bank of N.Y., 199 F.3d 99 (2d Cir. 1999)