                                                 Filed: June 29, 1999

                   UNITED STATES COURT OF APPEALS

                       FOR THE FOURTH CIRCUIT


                             No. 98-2179
                           (CA-97-1230-A)



Harold Lewis,

                                                Plaintiff - Appellee,

          versus


Kmart Corporation,

                                              Defendant - Appellant.



                             O R D E R



     The court amends its opinion filed June 16, 1999, as follows:

     On page 2, section 5, line 4 -- counsel’s name is corrected to

read “Jodi Beth Danis.”

                                      For the Court - By Direction



                                         /s/ Patricia S. Connor
                                                  Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HAROLD LEWIS,
Plaintiff-Appellee,

v.

KMART CORPORATION,
Defendant-Appellant,

and

AETNA INSURANCE COMPANY; AETNA
LIFE INSURANCE COMPANY,
Defendants.

NATIONAL RETAIL FEDERATION;
CHAMBER OF COMMERCE; EQUAL
EMPLOYMENT ADVISORY COUNCIL;
AMERICAN COUNCIL OF LIFE
                                   No. 98-2179
INSURANCE; THE HEALTH INSURANCE
ASSOCIATION OF AMERICA; THE
NATIONAL ALLIANCE FOR THE
MENTALLY ILL; EMPLOYMENT LAW
CENTER; AMERICAN PSYCHIATRIC
ASSOCIATION; DISABILITY RIGHTS
ADVOCATES; DISABILITY RIGHTS
EDUCATION AND DEFENSE FUND;
NATIONAL ASSOCIATION OF
PROTECTION AND ADVOCACY SYSTEMS;
NATIONAL DEPRESSIVE AND MANIC
DEPRESSIVE ASSOCIATION; WORLD
INSTITUTE OF DISABILITY; EQUAL
EMPLOYMENT OPPORTUNITY
COMMISSION,
Amici Curiae.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-97-1230-A)

Argued: March 2, 1999

Decided: June 16, 1999

Before WILKINS, NIEMEYER, and HAMILTON, Circuit Judges.

_________________________________________________________________

Vacated and remanded by published opinion. Judge Hamilton wrote
the opinion, in which Judge Wilkins and Judge Niemeyer joined.

_________________________________________________________________

COUNSEL

ARGUED: John Charles Fox, FENWICK & WEST, L.L.P., Palo
Alto, California, for Appellant. Jeanne Goldberg, VICTOR M.
GLASBERG & ASSOCIATES, Alexandria, Virginia, for Appellee.
Jodi Beth Danis, Office of General Counsel, EQUAL EMPLOY-
MENT OPPORTUNITY COMMISSION, Washington, D.C., for
Amicus Curiae EEOC. ON BRIEF: Victor M. Glasberg, VICTOR
M. GLASBERG & ASSOCIATES, Alexandria, Virginia, for Appel-
lee. C. Gregory Stewart, General Counsel, Philip B. Sklover, Asso-
ciate General Counsel, Vincent J. Blackwood, Assistant General
Counsel, EQUAL EMPLOYMENT OPPORTUNITY COMMIS-
SION, Washington, D.C., for Amicus Curiae EEOC. Robert P. Joy,
Robert P. Morris, MORGAN, BROWN & JOY, L.L.P., Boston, Mas-
sachusetts, for Amicus Curiae National Retail Federation. Ann Eliza-
beth Reesman, Corrie L. Fischel, MCGUINESS & WILLIAMS,
Washington, D.C.; Stephen A. Bokat, Robin S. Conrad, Sussan
Mahallati Kysela, NATIONAL CHAMBER LITIGATION CENTER,
INC., Washington, D.C., for Amici Curiae Chamber of Commerce, et
al. Phillip E. Stano, Terri Sorota, AMERICAN COUNSEL OF LIFE
INSURANCE, Washington, D.C.; Jeffrey L. Gabardi, HEALTH
INSURANCE ASSOCIATION OF AMERICA, Washington, D.C.;

                     2
Gregory G. Katsas, Cinton R. Pinyan, JONES, DAY, REAVIS &
POGUE, Washington, D.C., for Amici Curiae ACLI, et al. Ronald S.
Honberg, NATIONAL ALLIANCE FOR THE MENTALLY ILL,
Arlington, Virginia; Claudia Center, THE EMPLOYMENT LAW
CENTER, San Francisco, California, for Amici Curiae National Alli-
ance, et al.

_________________________________________________________________

OPINION

HAMILTON, Circuit Judge:

In Rogers v. DHEC, No. 97-2780, 1999 WL 193895 (4th Cir. April
8, 1999), we held that Title II, § 202 of the Americans With Disabili-
ties Act of 1990 (the ADA), 42 U.S.C. § 12132, does not require a
long-term disability plan that is sponsored by a public entity to pro-
vide the same level of benefits for mental and physical disabilities. In
the present appeal, this court is called upon to decide whether the
same holds true under Title I, § 102(a) of the ADA, 42 U.S.C.
§ 12112(a), when the plan's sponsor is a private employer. We hold
it does.

I.

In 1984, Kmart Corporation (Kmart) hired Harold Lewis (Lewis)
as a management trainee. Over the course of the next eleven years,
Lewis held various management positions at numerous Kmart stores
in Pennsylvania and Virginia. Lewis had suffered from bouts of
severe depression since 1979. However, by March 13, 1995, Lewis'
condition had worsened such that he took a leave of absence from his
position as the store manager of the Kmart store in Front Royal, Vir-
ginia.

Beginning in 1976, Kmart offered a long-term disability plan on an
optional basis to its managerial employees with the full costs of the
plan to be paid by the employees who elected to participate. At the
time Lewis took disability leave on March 13, 1995, the long-term
disability plan in place was known as the 1993 Long Term Disability
Plan (the 1993 LTD Plan).1 The 1993 LTD Plan capped disability
_________________________________________________________________

1 Kmart had contracted with Aetna Life Insurance Company (Aetna) to
provide the insurance policy underlying the 1993 LTD Plan.

                     3
benefits for mental disabilities at two years, but only capped disability
benefits for physical disabilities upon a participant turning age sixty-
five. Lewis elected to participate in the 1993 LTD Plan.

While Lewis was on disability leave, he applied for disability bene-
fits under the 1993 LTD Plan. Lewis began receiving such benefits
on September 19, 1995, but learned by the spring of 1996 that Aetna
had classified his condition as mental in nature, and therefore, his dis-
ability benefits would cease on September 18, 1997.

On July 2, 1996, more than a year before the termination of his
benefits, Lewis filed a charge of disability discrimination against
Kmart with the Equal Employment Opportunity Commission
(EEOC). The charge alleged that Lewis had been subjected to dis-
crimination on the basis of his mental disability, because he was given
less disability insurance coverage than a person with a physical dis-
ability. After receiving a right to sue letter from the EEOC, Lewis
filed the present action on August 6, 1997, alleging that Kmart vio-
lated his rights under Title I, § 102(a) of the ADA to be free from dis-
crimination on account of his disability in the terms and conditions
of his employment.2

Following discovery and the district court's denial of two summary
judgment motions made by Kmart, the district court conducted a
bench trial on April 13, 1998. On June 11, 1998, the district court
entered judgment in favor of Lewis, providing him with the following
relief: (1) a declaration that the two-year cap on disability benefits for
employees disabled by mental illness violates Title I, § 102(a) of the
ADA; and (2) a permanent injunction mandating the continued pay-
ment of monthly benefits according to the terms presented by Kmart
in its post-trial memorandum regarding damages, so long as Lewis
remains disabled within the meaning of the 1993 LTD Plan, and until
he reaches age sixty-five. The district court also issued an accompa-
nying memorandum opinion. See Lewis v. Kmart, 7 F. Supp.2d 743
(E.D.Va. 1998).
_________________________________________________________________

2 Lewis also brought an ADA claim against Aetna, but the district court
granted summary judgment in favor of Aetna on the ground that the stat-
ute of limitations had run on the claim. See Lewis v. Kmart, 993 F. Supp.
382, 387 (E.D.Va. 1998). This claim is not at issue in the present appeal.

                     4
Kmart noted a timely appeal.

II.

Title I, § 102(a) of the ADA provides:

           No [employer] shall discriminate against a qualified indi-
          vidual with a disability because of the disability of such
          individual in regard to job application procedures, the hir-
          ing, advancement, or discharge of employees, employee
          compensation, job training, and other terms, conditions, and
          privileges of employment.

42 U.S.C. § 12112(a); see also 42 U.S.C. § 12111(2). Title I, § 102(b)
of the ADA, entitled "Construction," provides, in relevant part:

          As used in subsection (a) of this section, the term"discrimi-
          nate" includes--

          ***

           (2) participating in a contractual or other arrangement
          or relationship that has the effect of subjecting a covered
          entity's qualified applicant or employee with a disability to
          the discrimination prohibited by this subchapter (such rela-
          tionship includes a relationship with an employment or
          referral agency, labor union, an organization providing
          fringe benefits to an employee of the covered entity, or an
          organization providing training and apprenticeship pro-
          grams) . . . .

42 U.S.C. § 12112(b)(2).

Kmart argues, inter alia, that the district court erred as a matter of
law in ruling that the 1993 LTD Plan's provision of less long-term
disability benefits for a mental disability than for a physical disability
violates Title I, § 102(a) of the ADA. Thus, the issue before this court
is whether Title I, § 102(a) of the ADA requires a long-term disability
plan that is sponsored by a private employer to provide the same level

                     5
of benefits for mental and physical disabilities. This is a question of
statutory interpretation, which we review de novo. See Shafer v. Pres-
ton Mem'l Hosp., 107 F.3d 274, 277 (4th Cir. 1997).

In Rogers, we resolved this question in the context of Title II, § 202
of the ADA, which applies to public entities.3 See 1999 WL 193895,
at *1. In relevant part, Title II, § 202 of the ADA provides that "no
qualified individual with a disability shall, by reason of such disabil-
ity, be excluded from participation in or be denied the benefits of the
services, programs, or activities of a public entity, or be subjected to
discrimination by any such entity." 42 U.S.C.§ 12132.

The plaintiff-appellant in Rogers, Major Rogers (Rogers), was
employed by the South Carolina Department of Health and Environ-
mental Control (the State) as a maintenance engineer for twenty-two
years. See 1999 WL 193895, at *1. The State sponsored a long-term
disability plan for employees such as Rogers (the State LTD Plan),
which provided one year of benefits for mental disabilities and bene-
fits to age sixty-five for physical disabilities. See id. After being diag-
nosed with a panic-anxiety disorder, Rogers applied for long-term
benefits under the State LTD Plan based on a psychological disability.
See id.

When Rogers' long-term disability benefits ended after one year,
he sued the State and the administrator of the State LTD Plan on the
basis that the State LTD Plan discriminated against him in violation
of Title II, § 202 of the ADA. See id. Of relevance in the present
appeal, like Lewis, Rogers alleged that he was illegally discriminated
against because he was denied the same level of long-term disability
benefits as a plan participant with a physical disability. See id. The
district court dismissed the case, pursuant to Federal Rule of Civil
Procedure 12(b)(6), for failure to state a claim upon which relief can
be granted, "holding that a disparity in benefits between physical and
mental disabilities in a benefit plan is not unlawful discrimination
under [Title II, § 202 of] the ADA." See id.
_________________________________________________________________

3 We issued our decision in Rogers after oral argument in the present
appeal.

                     6
On appeal, we recognized that the State satisfied the first part of
Title II, § 202 of the ADA, which prohibits a qualified individual with
a disability from being "excluded from participation in or . . . denied
the benefits of the services, programs, or activities of a public entity,"
42 U.S.C. § 12132, because Rogers was not excluded from participat-
ing in, nor denied the benefits of, the State LTD Plan. See Rogers,
1999 WL 193895, at *2. The broad question, we stated, however, was
"whether the `subjected to discrimination' phrase in [Title II, § 202]
was intended to require equal benefits for mental and physical disabil-
ities." Id. While recognizing that the plain language of the ADA does
not answer this question, we emphasized that Supreme Court jurispru-
dence regarding a sister act of the ADA, the Rehabilitation Act, 29
U.S.C. §§ 701-796l, the ADA's "safe harbor" provision, 42 U.S.C.
§ 12201(c), and the related legislative history, a public policy state-
ment of the EEOC, the applicability of another provision of the ADA,
and post-ADA congressional activity gave us guidance on the issue.
See Rogers, 1999 WL 193895, at *2. After examining each of these
sources, we stated that "[e]verything that we have considered--from
pre-ADA Supreme Court cases on the Rehabilitation Act to post-
ADA congressional activity--leads us to one conclusion: the ADA
does not require South Carolina to provide the same level of benefits
for mental and physical disabilities in its long-term disability plan for
state employees." Id. at *4. We also recognized that our holding was
consistent with recent opinions from the Third, Sixth, and Seventh
Circuits. Id. at *1 (citing Ford v. Schering-Plough Corp., 145 F.3d
601, 608 (3d Cir. 1998), cert. denied, 119 S. Ct. 850 (1999); Parker
v. Metropolitan Life Ins. Co., 121 F.3d 1006, 1015 (6th Cir. 1997) (en
banc), cert. denied, 118 S. Ct. 871 (1998); EEOC v. CNA Ins. Co., 96
F.3d 1039, 1044 (7th Cir. 1996)).

For purposes of the issue presented in the present appeal, no mate-
rial distinction exists between Title I, § 102(a) of the ADA and Title
II, § 202 of the ADA. Indeed, for purposes of the issue presented in
the present appeal, the only difference between these two sections is
the nature of the employing entity, which is a distinction without a
difference. Certainly Congress did not intend for an employer's liabil-
ity for illegal discrimination under the ADA to turn on the private ver-
sus public nature of the employing entity.

Because no material distinction exists between Title I, § 102(a) of
the ADA and Title II, § 202 of the ADA for purposes of the issue

                     7
before us in the present appeal, our reasoning in Rogers, see id. at
1999 WL 193895, at *2-5, equally applies to resolve that issue. We,
accordingly, adopt our reasoning in Rogers and hold that Title I,
§ 102(a) of the ADA does not require a long-term disability plan that
is sponsored by a private employer to provide the same level of bene-
fits for mental and physical disabilities.

Finally, we note that our holding that Title I,§ 102(a) of the ADA
does not require a long-term disability plan that is sponsored by a pri-
vate employer to provide the same level of benefits for mental and
physical disabilities is consistent with the Supreme Court decision
principally relied upon by Lewis: O'Connor v. Consolidated Coin
Caterers Corp., 517 U.S. 308 (1996). In O'Connor, the defendant-
employer claimed the plaintiff-employee could not establish a prima
facie case under the Age Discrimination in Employment Act (ADEA),
see 29 U.S.C. §§ 621-634, because he had been replaced by someone
who was also in the protected class, i.e., someone over the age of
forty. In rejecting that argument, the Court explained that the ADEA:

          does not ban discrimination against employees because they
          are aged 40 or older; it bans discrimination against employ-
          ees because of their age, but limits the protected class to
          those who are 40 or older. The fact that one person in the
          protected class has lost out to another person in the pro-
          tected class is thus irrelevant, so long as he has lost out
          because of his age.

O'Connor, 517 U.S. at 312.

According to Lewis, O'Connor requires us to read Title I, § 102(a)
of the ADA to prohibit an employer from sponsoring a long-term dis-
ability plan that provides less benefits to one category of disabled per-
sons than another category of disabled persons. More specifically,
Lewis argues that, inasmuch as he received disability benefits for a
shorter period of time because his disability was a mental disability,
he "has lost out because" of his disability and, therefore, under
O'Connor, he has a viable claim under Title I, § 102(a) of the ADA.

In addressing Lewis' argument, we initially note that the Supreme
Court has never held that it is unlawful under the ADA or the Reha-

                     8
bilitation Act to give preferential treatment to one disability over
another. In fact, in Traynor v. Turnage, 485 U.S. 535 (1988), the
Supreme Court upheld under § 504(a) of the Rehabilitation Act, 29
U.S.C. § 794(a), the extension of educational benefits to one class of
disabled persons and not to others. Id. at 552. According to the Court,
the preferential treatment of one disability over another was permissi-
ble under § 504(a) of the Rehabilitation Act because "[t]here is noth-
ing in the Rehabilitation Act that requires that any benefit extended
to one category of handicapped persons also be extended to all other
categories of handicapped persons." Id. at 549. In reaching this hold-
ing, the Court emphasized that "the central purpose of § 504 . . . is
to assure that handicapped individuals receive `evenhanded treatment'
in relation to nonhandicapped individuals," id. at 548.

We conclude O'Connor is of no help to Lewis. First, there is no
meaningful way to distinguish Traynor from this case. Section 504(a)
of the Rehabilitation Act provides, in pertinent part:

          No otherwise qualified individual with a disability in the
          United States . . . shall, solely by reason of her or his dis-
          ability, be excluded from the participation in, be denied the
          benefits of, or be subjected to discrimination under any pro-
          gram or activity receiving Federal financial assistance or
          under any program or activity conducted by any Executive
          agency or by the United States Postal Service.

Id. The sister provision of § 504(a) of the Rehabilitation Act, 29
U.S.C. § 794(a), is Title I, § 102(a) of the ADA. We may presume
Congress was aware of the Supreme Court's interpretation of § 504(a)
of the Rehabilitation Act when it passed the ADA in 1990 and
included antidiscrimination language in Title I, § 102(a) that parallels
§ 504(a) of the Rehabilitation Act. See Cannon v. University of
Chicago, 441 U.S. 677, 696-97 (1979). Cf. Rogers, 1999 WL 193895,
*3 ("We may presume that Congress was aware of the Supreme
Court's interpretation of § 504 of the Rehabilitation Act when it
(Congress) passed the ADA in 1990 and included antidiscrimination
language in § 12132 that parallels § 504 of the Rehabilitation Act.").

Second, reliance on O'Connor simply does not make intuitive
sense. As recognized in Traynor, our federal disability statutes ensure

                    9
that disabled persons are treated evenly in relation to nondisabled per-
sons. See 485 U.S. at 548. Thus, our federal disability statutes are not
designed to ensure that persons with one type of disability are treated
the same as persons with another type of disability. In contrast, the
ADEA, which was at issue in O'Connor, ensures that all persons over
the age of forty are treated evenly on account of their age in relation
to all other persons, not just those persons under the age of forty.
Therefore, the ADA and the Rehabilitation Act permit preferential
treatment between disabilities, but the ADEA does not permit prefer-
ential treatment to any person at the expense of any other person over
the age of forty on account of age.4

III.

In conclusion, we hold that Title I, § 102(a) of the ADA does not
require a long-term disability plan that is sponsored by a private
employer to provide the same level of benefits for mental and physi-
cal disabilities. Accordingly, we vacate the district court's memoran-
dum opinion filed on June 11, 1998, its final judgment in favor of
Lewis, and remand with instructions to enter judgment in favor of
Kmart.

VACATED AND REMANDED
_________________________________________________________________

4 Kmart alleges the district court committed several other errors alterna-
tively entitling it to relief. Given the dispositive nature of our holding
with respect to Kmart's appeal, we need not and do not address these
other alleged errors.

                    10
