In a June decision, the Supreme Court limited retirees' ability to bring Americans with Disabilities Act (ADA) lawsuits, finding that the ADA generally does not allow claims by retirees or protect post-employment health benefits.
Stanley v. City of Sanford: ADA Lawsuit Over Retiree Health Benefits
In Stanley v. City of Sanford, a retired city firefighter filed a lawsuit alleging that the city's changes to its retiree health coverage discriminated against disabled retirees like her. The Court's decision resolved a prior split among federal appeals courts, as some circuits (the Sixth, Seventh, Ninth, and Eleventh) permitted post-employment ADA claims, while others (the Second and Third) did not.
Originally, Sanford provided subsidized health coverage until age 65 for two categories of retirees: those who retired with 25 years of service, and those who retired because of disability. Later, the city changed the duration of the subsidy for one of these groups: for those who retired because of disability, the city would only provide subsidized health coverage for 24 months. Sometime after the city made this change, the plaintiff began to suffer from a disability. Eventually, the disability forced her to retire, and her subsidized retiree coverage lasted 24 months.
The central question was whether a retiree is a "qualified individual" under Title I of the ADA and can sue for discrimination related to post-employment benefits. The Court found that a retiree is not a "qualified individual" and cannot bring such a suit.
The facts of this case are instructive. The plaintiff alleged that the city made a discriminatory change to its retiree health coverage by shortening the subsidy for individuals who retired because of disability. When the city made that change, the plaintiff was a qualified individual; however, she was not disabled or affected by the change, and therefore was not discriminated against on the basis of disability at that time. When the plaintiff's subsidy expired, she was affected by the change and was arguably discriminated against on the basis of a disability; however, she was not employed or seeking employment and therefore was not a qualified individual at that time.
It is important to note that the Supreme Court's decision does not prohibit all ADA claims concerning post-employment benefits. The Court left open the possibility that a plaintiff might have a viable claim if they were both employed and disabled when the employer changed its retiree health coverage in a way that discriminated against the plaintiff on the basis of disability.
One part of the Court's opinion is quite clear. If the alleged act of disability-based discrimination occurs during an individual's retirement, the retiree cannot challenge that act under the ADA. The retiree may, however, be able to challenge a post-employment change to their benefits under other laws, such as the Employee Retirement Income Security Act (ERISA).
After the Ruling: What Employers Should Know
Before making changes to retiree benefit plans, employers should have the plans and proposed changes reviewed to ensure compliance with the ADA, ERISA, and other applicable laws.
If your organization has questions about the Supreme Court's decision in Stanley v. City of Sanford, its implications, or its application to specific employment practices, please contact the authors or any attorney in Venable's Labor and Employment Group.