Essentially, Paul gets kicked off the Lake Windsor Middle School soccer team because his disability prevents him from being covered under the school's accident insurance plan.
Insurers often won't cover disabled students without charging higher premiums for such players. Meanwhile, other insurers may decline to insure a school sports team altogether, if any number of students on the team have egregious disabilities.
To explain, many schools must purchase sports insurance today, and some even purchase catastrophic accident insurance. Both pay for injuries sustained during the playing of a sport; however, the second pays for medicals costs above a certain amount, usually in the millions of dollars.
So, why is sports insurance necessary? The answer is that sports insurance protects schools from expensive lawsuits, in the event that a student is injured. Injured students may sustain economic and non-economic damages, such as physical injuries, permanent impairment, and emotional suffering. To recuperate their costs, they may sue the school.
In Paul's case, Lake Windsor Middle School simply does not want to risk being declined for insurance. Depending on the disability, sports insurers may decline to insure a student or even the entire team. In their opinion, Paul's disability (visual impairment) is a liability, potentially exposing him to more injuries than the typical student.
So, despite Paul's ability to play (and play well), his supposed visual handicap status on the IEP (which Paul's mom filled out) is a significant mark against him.