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ADA AMONG CASES ON HIGH COURT DOCKET

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WASHINGTON -- Defining the scope of the Americans With Disabilities Act could prove to be one of the central themes of the Supreme Court's 1998-99 term.

The justices opened their new term last week by agreeing to decide if employers can be sued for alleged violations of the Americans With Disabilities Act by former employees even though the claimants already sought full disability benefits under Social Security.

The justices also asked the U.S. solicitor general to comment on two other ADA cases they had yet to accept for review.

In addition, the justices last week denied certiorari, or review, to a class-action case from Illinois that employers and insurers had hoped could restrict how some class-actions are composed. The high court already had agreed to deal with another class-action case, as well as cases involving expert testimony, pension plan administration and the pre-emptive powers of the McCarran-Ferguson Act (BI, Sept. 28).

The addition of the ADA case, Cleveland vs. Policy Management Systems Corp., to the docket bears considerable significance for employers.

The question before the justices in the case is whether workers who claim to be disabled in order to collect Social Security disability payments can also pursue claims against employers under the Americans with Disabilities Act.

"It's a very important question and one that's coming up more and more frequently. It's very important to the employer community to get this issue resolved," said Carol Connor Flowe, a partner at the Washington law firm of Arent Fox Kintner Plotkin & Kahn.

Henry Saveth, an attorney with William M. Mercer Inc. in Washington, said: "If the Supreme Court knocks out the ADA protection for those people who are on disability, that would seem to go a long ways toward resolving the question of whether the person is protected by the ADA. If they're not protected by the ADA, presumably they cannot sue."

The plaintiff, Carolyn Cleveland, suffered a stroke and applied for Social Security benefits. When her doctor told her she could return to work, she notified the Social Security Administration that she no longer needed the disability benefits.

She returned to work but had trouble dealing with her job responsibilities and was fired. She refiled for Social Security disability benefits and, shortly before she received them, sued her former employer under the ADA.

A three-judge panel of the 5th U.S. Circuit Court of Appeals ruled against Ms. Cleveland in 1997, and the full appellate court refused to review that ruling, so Ms. Cleveland appealed.

"This case is very significant because the circuit courts are split on this issue. What's at stake is whether an employee or former employee who has applied for or who has received Social Security benefits can pursue an action against their employer or former employer under the ADA," said Elisabeth Snyder, legal consultant with Hewitt Associates L.L.C. in Lincolnshire, Ill.

"Employees can't have it both ways. . . .In order to bring a claim under the ADA, employees must be qualified individuals with a disability, which means they are able to perform the essential functions of their job with or without accommodation. If they're a qualified individual, then they can't at the same time represent that they're disabled for purposes of Social Security benefits," said Sue Mahallati Kysela, labor and employment counsel with the National Chamber Litigation Center Inc. in Washington.

Hewitt's Ms. Snyder noted that some courts have held that someone who is permanently disabled under Social Security cannot perform a job, while others have held that the two definitions of disability under Social Security and ADA are different, so different standards apply, she said. "There isn't a set standard, and the lower courts have split on the issue."

The justices would provide some guidance for employers no matter which way they rule, Ms. Snyder said.

"These are difficult situations for people to be in, because to claim benefits under one statute, they may be reducing the likelihood of receiving benefits under the other. That's appropriate in most cases to prevent double dipping," said Quentin Riegel, deputy general counsel with the National Assn. of Manufacturers in Washington.

Ms. Flowe noted that the justices' decision in Cleveland may not be their final word on the ADA during the current term. In an unusual move, the Supreme Court asked the U.S. solicitor general for comments on two ADA cases that the justices have neither accepted nor rejected, she said.

Both cases involve exactly how the ADA applies to individuals who -- though suffering from a condition that constitute a disability -- can be treated for that disability so it no longer interferes with their ability to perform a job. One case involves a would-be pilot who wears corrective lenses, the other a would-be delivery man with treatable hypertension. Both had been denied the jobs they sought because their untreated conditions did not meet company guidelines, though when treated, both fell within the guidelines for employment.

Ms. Flowe said the fact that the justices asked for the solicitor general's comments is significant because "it seems to me that more often than not, they end up taking them after asking," she said.

Employers and insurers that hoped the high court would use State Farm Mutual Automobile Insurance Co. vs. the Honorable John Speroni, Tammy Snider and Michael Avery to rein in class-action suits had their hopes dashed when the court declined to review the case.

The case stemmed from a provision in personal automobile insurance policies that allows the insurer to require the use of parts made by non-original equipment manufacturers when adjusting damage claims. Two Illinois citizens sued in state court, holding that the provision violated the state's consumer anti-fraud law. They sought to maintain the suit as a class action on behalf of 5 million State Farm policyholders, even though the majority of those policyholders were not covered by Illinois law. An Illinois judge agreed to apply his state's law to the entire class.

"The denial of the cert. petition is a bit dangerous. It's dangerous for all businesses, because here you have a state court that has basically certified a class of claimants that include millions of claimants from out of state, so you have a state court that is going to render a decision under one particular state law that will impact policyholders around the country. The danger is that you're going to have a state trial court judge who will basically dictate what will happen across the nation," said Stef Zielezienski, senior counsel of the Washington-based American Insurance Assn.

"The denial of cert. in this case is significant to business to the extent that state courts will continue to certify class actions without regard to the laws of other states," said Ms. Kysela.