SEVENTH CIRCUIT DECISION SHEDS LIGHT ON "ASSOCIATION DISCRIMINATION" SECTION OF THE ADA

The Americans with Disabilities Act (“ADA”) is a relative newcomer to the world of discrimination statutes.  However, the ADA is quickly becoming one of the more hotly litigated statutes as case law develops. 

Pursuant to the ADA, an employer is prohibited from discriminating against an employee who (1) has a physical or mental impairment that substantially limits one or more major life activities; (2) has a record of such an impairment; (3) is regarded as having such an impairment; or (4) has a relationship or association with an individual who has such an impairment.  Many employers have experience addressing claims regarding the existence of an alleged past or current disability or whether certain “reasonable” accommodations are required.  However, a Seventh Circuit decision handed down on February 27, 2008 highlights a section of the ADA that is litigated with far less frequency – association discrimination.

Case Background

In Dewitt v. Proctor, Phillis Dewitt was hired as an “as needed” nurse at Proctor Hospital in Peoria, Illinois in September 2001.  In the next month, Ms. Dewitt was promoted to the permanent position of second-shift clinical manager.  In this position, Ms. Dewitt supervised nurses and other Proctor staff members.  Over the next three years, Ms. Dewitt also filled several other positions at Proctor.

While Ms. Dewitt enjoyed many successes at Proctor, her husband Anthony battled prostate cancer at home.  Throughout Ms. Dewitt’s employment with Proctor, Ms. Dewitt and her husband were covered under Proctor’s health insurance plan.  Over the course of his fight with cancer, Mr. Dewitt accumulated expensive medical bills that were paid by Proctor, who was partially self-insured.  Proctor paid for members’ covered expenses up to $250,000 per year.  Anything above this “stop-loss” figure was covered by an insurance carrier.

Due to Proctor’s partial self-insured status, it took a particular interest in the medical claims submitted by its employees.  In fact, the administrator of Proctor’s plan provided a “stop-loss” analysis for a Proctor vice-president each quarter.  The “stop-loss” report identified all employees who recently submitted medical claims that exceeded $25,000.

In September 2004, after Ms. Proctor appeared on several “stop-loss” reports, Mary Jane Davis, Ms. Proctor’s supervisor, confronted Ms. Dewitt about Mr. Dewitt’s high medical claims.  Initially, Ms. Davis inquired about Mr. Dewitt’s treatment.  When Ms. Dewitt responded that her husband was undergoing chemotherapy and radiation, Ms. Davis asked if Ms. Dewitt had considered less expensive hospice care.  Ms. Dewitt informed Ms. Davis that Mr. Dewitt’s doctors thought hospice care was premature.  Ms. Davis then told Ms. Dewitt that a committee was reviewing Mr. Dewitt’s expenses because they were “unusually high.” 

In February 2005, Ms. Davis again inquired about Mr. Dewitt’s health.  This inquiry was followed by a meeting in May 2005, during which Ms. Davis informed Proctor employees that Proctor faced financial troubles that required a “creative” effort to cut costs.  Three months later, Proctor fired Ms. Dewitt and, without explanation, designated her as “ineligible to be rehired in the future” despite her previous positive evaluations.  Upon her termination, Ms. Dewitt paid for the maximum 18 months of COBRA coverage for herself and husband.  Approximately one year after Ms. Dewitt’s termination, Anthony Dewitt died from cancer.

The Court’s Analysis

Ms. Dewitt’s claims for age and gender discrimination were dismissed by the District Court, and the Seventh Circuit subsequently affirmed the District Court’s ruling on those claims.  Ms. Dewitt, however, also appealed the District Court’s ruling on the dismissal of her “association discrimination” claim under the ADA.  Here she had more success.

In its February 2008 ruling, the Seventh Circuit reversed and remanded the “association discrimination” claim to the District Court for further action.  In so doing, Judge Terence Evans discussed the analysis of an “association discrimination” claim at length and noted that using the standard McDonnell Douglas burden shifting test for “association discrimination” claims is “a bit like a mean stepsister trying to push her big foot into one of Cinderella’s tiny glass slippers.”  Having said this, the Court held that:

• Pursuant to the ADA, employers are prohibited from discriminating against an employee as a result of “the known disability of an individual with whom [the employee] is known to have a relationship or association.”
  
  
• A plaintiff without direct evidence of association discrimination can establish a case by providing evidence that: (1) she was qualified for the job at the time of the adverse employment action; (2) she was subjected to an adverse employment action; (3) she was known by her employer at the time to have a relative or associate with a disability; and (4) her case falls into one of the three relevant categories.
  
  
• The “relevant categories” noted by Judge Evans are “association discrimination” claims that involve employers who terminate employees who have relationships with disabled individuals, where the employer rightly or wrongly believes the employee will be: (1) costly to the employer, (2) distracted from his or her work, or (3) a possible threat for spreading the disabling condition to other workers.

However, Judge Evans then ultimately set the “tweaked” McDonnell Douglas test aside and decided Ms. Dewitt presented sufficient circumstantial evidence to allow her case to be viewed as one relying on direct evidence.

Judge Posner concurred with the decision, but noted that an attempt to clone the McDonnell Douglas test for use in an association case would enable a plaintiff to establish a prima facie case merely by showing that the employer, knowing of a qualified employee’s relationship with a disabled person, took an adverse employment action against the employee and replaced the employee with an employee without such a relationship.  Judge Posner then went on to state that if cost was the employer’s only motive for the action, the employer is not guilty of disability discrimination.  Essentially, if the employer would have terminated an employee whose family member incurred the same high medical bills due to a condition that did not meet the statutory definition of disability, no violation of the ADA would have occurred.   However, in the case at hand, Proctor simply failed to argue that the disability did not factor into the decision to terminate Ms. Dewitt.

The Takeaway

While this decision may be hailed as a major victory for employees with family members who have serious medical conditions, all is not lost for employers.  Several gaffes by Proctor may have shaped the outcome of the case and should not be repeated. 

• First, Proctor’s repeated inquiries about Mr. Dewitt’s health and treatment emphasized Proctor’s financial interest in Mr. Dewitt’s expenses and his disabled condition in particular.  This point is underscored by Proctor’s status as a partially self-insured employer.  As Judge Posner noted, however, Proctor would not have violated the ADA by inquiring and deciding solely on the expenses.  However, since a lot of conditions that warrant expensive medical procedures are aimed at treating conditions which meet the statutory definition of disability, this is a very dangerous approach.
  
  
• Second, Proctor personnel should have refrained from suggesting that Ms. Dewitt pursue cheaper care for her husband’s cancer.  This type of suggestion implicitly includes an analysis of the condition and not just the expense.  From a tactical viewpoint, the suggestion that she pursue hospice care for her husband might have been troubling for Proctor if this case went to trial. Additionally, terminating Ms. Dewitt only a few months after inquiring about her husband’s condition and treatment suggests that Mr. Dewitt’s future expenses factored into Proctor’s decision.
  
  
• Finally, Proctor dropped the ball by litigating the lawsuit as framed by the plaintiff.  A rejection of the plaintiff’s proffered reason for the termination and the insertion of a legitimate, non-discriminatory reason for the termination may have won the case for Proctor.  A not-so-close reading of Judge Posner’s concurrence tells Proctor to do just that on remand.

Conclusion

This decision could provide plaintiffs with an additional roadmap for litigating disability discrimination claims.  “Association discrimination” claims based on expense to the employer potentially subject employers to a court’s review of the employer’s financial status and open the door for plaintiffs to allege an improper financial motive in disability discrimination claims. However, Judge Posner’s concurrence reminds us that a violation of the ADA ultimately requires the disability to play a role in the employer’s decision.  Employers should not forget this key requirement when developing their defense of such claims.

	>	Ryan Buchanan
		Employer Services Group Helms Mulliss & Wicker, PLLC Ryan.Buchanan@hmw.com