Supreme Court Will Decide if Former Employees Can Sue Over Post-Employment Benefits

More than 34 years after the Americans with Disabilities Act (ADA) was enacted, it’s still not entirely clear who can sue under the law. In a case before the U.S. Supreme Court in its upcoming term, justices will decide if former employees can sue over post-employment benefits. The case involves a city that reduced its disability retirement health benefits, allegedly for budgetary reasons.

“This decision will have little to no effect on employers who do not offer post-employment benefits,” said Ryan Bates, an attorney with Hunton Andrews Kurth in Washington, D.C., and Vienna, Va. However, if the upcoming ruling is in the plaintiff’s favor, it may deter employers from offering such benefits based on the fear that they may later be sued for routine adjustments, he added.

“Although most HR professionals already take care to ensure that policies do not have a discriminatory impact on any protected class, post-employment benefits are often the first to be amended when there are budget challenges,” said Ellen Donovan McCann, an attorney with Littler in Boston. If the Supreme Court rules for the plaintiff, “more care may have to be paid to those changes.”

Background

The case, Stanley v. City of Sanford, Fla., was brought by a retired firefighter for the city of Sanford, Fla. When she started working for the city in 1999, one of the fringe benefits was a retirement health insurance subsidy, which covered the cost of health insurance for qualifying retirees until they reached age 65. A retiree was eligible for the subsidy regardless of whether the firefighter retired with 25 years of service or retired for disability reasons, noted Jonathan Mook, an attorney with Ogletree Deakins in Washington, D.C.

In 2003, the city changed its subsidy policy so that those who retired due to disability—but did not have 25 years of service—received the health insurance subsidy only until they began to receive Medicare benefits or 24 months from the date of retirement, whichever came first.

In 2016, the plaintiff was diagnosed with Parkinson’s disease, which limited her movements and caused a loss of dexterity. Two years later, her Parkinson’s disease had progressed to a point where she no longer could perform the physical demands of her job, and she took disability retirement at the age of 47 years old. Because she did not have 25 years of service when she retired, she received the health insurance subsidy for 24 months rather than until she reached 65 years old.

The plaintiff sued the city, contending that the reduction in the retirement health insurance subsidy only for those retiring due to disability constituted discrimination on the basis of disability in violation of the ADA.

Lower Courts’ Rulings

The district court dismissed the plaintiff’s claim because, under precedent in the 11th U.S. Circuit Court of Appeals, lawsuits invoking the employment provisions of the ADA may be brought only by qualified individuals with disabilities, Mook noted. The district court reasoned that qualified individuals are defined by the law as those persons who, with or without reasonable accommodation, can perform the essential functions of the job. By definition, the court found, former employees with disabilities cannot be qualified individuals and therefore may not sue for purported discrimination in post-employment fringe benefits.

The 11th Circuit affirmed. However, it recognized that appellate courts were not uniform in their interpretation of who can sue for violations of the ADA. The 6th, 7th, and 9th Circuits agreed with the 11th Circuit’s holding, Mook said, but the 2nd and 3rd Circuits held that former employees do not lose their right to pursue ADA claims just because they no longer are employed. The Supreme Court will resolve the split in the appellate courts.

Issue Before the Court

The plaintiff argues that the city’s interpretation of the statute erroneously conflates who can be discriminated against with who can sue, Mook said.

According to the plaintiff’s interpretation of the ADA, she was discriminated against when she was a qualified individual and employed by the city and the change was made to eligibility for the health care subsidy until age 65, Mook explained. “But at that point, she had not sustained any injury from the change, and therefore could not file suit,” he said. With her retirement and receipt of only 24 months of the subsidy, she arguably had experienced an injury and had standing to file her lawsuit.

The city maintained that the plain language of the ADA prohibits discrimination against a qualified individual on the basis of disability and defines a qualified individual as an individual who, with or without reasonable accommodations, can perform the essential functions of the employment position that the individual holds or desires.

Because the ADA’s definition uses the present tense, the determination of whether a person is a qualified individual is to be made at the time of the employment action of which the plaintiff complains, the city contends. In the plaintiff’s case, any purported discrimination occurred after she retired when she received the health insurance subsidy for only 24 months. At that time, under the city’s and lower courts’ reasoning, she could not come within the definition of being a “qualified individual.”

How Might the Court Rule?

Mook said that how the Supreme Court might rule is “a toss-up.” While the plain language of statutory construction usually is a winner with the high court, eliminating post-employment benefits from ADA scrutiny might be unfair and contrary to the ADA’s purpose, he said.

Mike McClory, an attorney with Cable Huston in Portland, Ore., predicted the Supreme Court would reverse the 11th Circuit decision but rule that having standing to sue does not mean that the plaintiff prevails on the merits. If the court rules against the plaintiff, current employees may be encouraged to file speculative challenges, which isn’t good policy, he said.

McCann noted that the Supreme Court previously has ruled that former employees could sue for retaliation under Title VII of the Civil Rights Act of 1964. However, she emphasized that, unlike the definition of “employee” under Title VII, the definition of “qualified individual” under the ADA contains present-tense verbs, “which may lead to an interpretation that only a current employee is covered.”