Supreme Court Decides Post-Retirement Benefits Disability Case
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Supreme Court Decides Post-Retirement Benefits Disability Case

Supreme Court Decides Post-Retirement Benefits Disability Case

Last week, the Supreme Court held in Stanley v. City of Sanford that to prevail under Title I of the ADA, “a plaintiff must plead and prove that she held or desired a job, and could perform its essential functions with or without reasonable accommodation, at the time of an employer’s alleged act of disability-based discrimination.”  This case involved a retiree and post-retirement health benefits and could have presented significant financial challenges for local governments had the Supreme Court issued a broad ruling in the plaintiff / petitioner’s favor.  Instead, the decision limits the reach of disability discrimination claims by retirees and allows local governments continued latitude to change post-retirement health benefits without significant risks of liability. Though as explained below, the decision leaves open the door for some exposure in this area.

Title I of the Americans with Disabilities Act bars employers from “discriminat[ing] against a qualified individual on the basis of disability in regard to . . . compensation” and other matters. 42 U. S. C. §12112(a). The statute defines a “qualified individual” as “an individual who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.” §12111(8).

Ms. Stanley served the City of Sanford, Florida as a firefighter from 1999 until shortly after she was diagnosed with Parkson’s disease in 2016.  Although she was initially able to work for approximately 2 more years, her disease left her incapable of performing her job and she took disability retirement in November 2018, after working for the city for 19 years.

Under the policy in place when Stanley joined the fire department, she was entitled to receive free healthcare through the city until age 65 if she retired for a qualified disability reason (which she did).  Unbeknownst to Stanley, the city changed its policy in 2003 (four years into her employment) and under the new policy, disability retirees were only entitled to free health insurance for 24 months after retiring whereas those who retired after 25 years of service would continue to receive health insurance up until the age of 65.  (Those who retired before 25-years of service without a qualifying disability were entitled to no health insurance).

Ms. Stanely sued after she retired on disability, arguing providing different health insurance benefits to those who retire after 25-years of service versus those who retire earlier due to a disability violates the ADA.

The parties both agreed that retirement benefits qualify as compensation under the statute (and the Supreme Court therefore did not reach that issue and assumed that they did without deciding that).  The only issue before the Court was whether the statute addresses discrimination against retirees.

The Eleventh Circuit concluded that Title I of the ADA does not reach allegations of discrimination against a retiree “who does not hold or desire to hold an employment position” that she is capable of performing with reasonable accommodation.

In a 7-2 opinion authored by Justice Gorsuch, the Supreme Court affirmed that ruling.  The Court relied on the text of the statute and focused on the term “qualified individual” and the use of the verb tense in the statute.  The Court emphasized that Congress chose terms like “discriminate against” and someone who “can perform the essential functions of the job” that she “holds or desires.”  (emphasis in Court’s opinion).  The use of the present tense verbs indicates Congress chose to limit the reach of the statute only to those that can do the job with or without a reasonable accommodation, not retirees who “neither hold nor desire a job at the time of an alleged act of discrimination.”

Various other provisions in the statute like examples of reasonable accommodations and definitions of discrimination which include qualification standards and employment tests lend further support for the Court’s conclusion that the mandate “aims to protect jobseekers” and that it “makes no sense in the context of retirees who do not seek employment.”  The Court mused “[i]t would be strange for employers to test the job skills of former employees who do not plan to return to work.”  The focus of the statute, the Court emphasized, is on current and prospective employees, not retirees.

The Court also found that the language for the anti-retaliation provision of the ADA also supported its conclusion because in that provision, Congress referred to “‘any individual’ who opposes a discriminatory act.”  The use of different language, the Court explained, strongly suggests that Congress intended the two provisions to work differently.The Court rejected the plaintiff / petitioner’s arguments, but it qualified that others may be able to make out certain claims that she had forfeited.  The Court reviewed the complaint and allegations to stress there are generally three points that someone could make out a claim for discrimination in these cases: 1) when the defendant adopts a discriminatory policy or practice; 2) when an individual is affected by the application of the policy or practice; or 3) when the person becomes subject to the practice.  Though it rejected each of these for Ms. Stanley, in each case, it underscored somebody else might be able to make such a case.

In Ms. Stanley’s case, in 2003 when the new policy was enacted, she was not discriminated against because she was not injured by that policy (nor was she disabled at that time).  The second option is when someone is affected by a discriminatory practice, which in Ms. Stanley’s case, happened in 2020 when her health subsidy ran out.  But again, she was not a qualified individual at this point as she had been retired for two years and could not satisfy the requirements of her job with or without a reasonable accommodation.  The last option is when someone becomes subject to a discriminatory practice. The federal government (who supported Ms. Stanley as an amicus) argued that during the two years after she was diagnosed with Parkinson’s but before she retired on disability leave, she was a qualified individual subject to the discriminatory policy and she should therefore be allowed to proceed with her suit.  The Court called this argument “promising” for Ms. Stanley, but then rejected it because of the procedural posture of the case and the allegations she made in her complaint.  Specifically, the case was before the Court on a motion to dismiss and she did not allege these facts in her complaint (they came to light later in discovery after her ADA claims were dismissed).  Further, the Eleventh Circuit held that she had disavowed this theory.  Thus, while Ms. Stanley could not make out a claim under these circumstances, the Court emphasized that a possible future plaintiff may be able to do so.

Local Government Legal Center (joined by NACo, NLC, IMLA, ICMA, and GFOA) filed an amicus brief underscoring the implications of a decision in favor of the retiree in this case.   The brief argued that the petitioner’s reading of the statute would contravene the ADA’s text, history, and purpose, and result in significant financial hardships for local governments.   The Supreme Court majority cited to the LGLC amicus brief in its opinion, which discusses other possible remedies beyond Title I of the ADA.

To read the decision, click here.

To read the LGLC’s amicus brief, click here.