Seventh Circuit Reviews ADA Association Discrimination and ERISA Retaliation

April 15, 2008

The United States Seventh Circuit Court of Appeals, which includes Wisconsin, recently addressed a case in which an employee whose spouse had high medical costs claimed, among other things, that she was terminated because of these costs. Dewitt v. Proctor 2008 U.S. App. LEXIS 4157 (7th Cir. 2008). The employer claimed that the employee was terminated for insubordination, but the Seventh Circuit found that enough evidence existed for the case to go to trial for claims under the Americans with Disabilities Act (“ADA”) association discrimination and for Employee Retirement Income Security Act (“ERISA”) retaliation.
Facts of Case: The Seventh Circuit case involved the termination of an employee whose employer, Proctor Hospital, self-insured the first $250,000 of an employee’s medical bills and was incurring substantial expenses because of the husband’s cancer treatment. The employee’s supervisor inquired about the husband’s condition twice, mentioned that the hospital was reviewing his unusually high medical expenses, and suggested that the employee consider a cheaper alternative for her husband’s care. Three months after a meeting in which this same supervisor informed the managers that the hospital was experiencing financial troubles and required creative efforts to cut costs, the supervisor terminated the employee for insubordination and designated her as ineligible for rehire.
On summary judgment, the trial court dismissed the employee’s claims for age, gender, and ADA association discrimination. On appeal, the Seventh Circuit held that facts existed that would allow a jury to find ADA association discrimination and also allowed the employee to add a claim for ERISA retaliation.
What Wisconsin Employers Need to Know: ADA association discrimination is a claim that has been infrequently litigated. Under the ADA, an employee may have a cause of action against an employer that discriminates against an employee because of an association or relationship with a disabled individual. Association discrimination falls into three categories: (1) expense, (2) disability by association, and (3) distraction. An employee who is terminated because of a spouse with a costly disability would fall into the “expense” category. An employer must be careful when terminating an employee who may fall into this category to ensure that medical costs did not lead to the termination.

In addition, the employer needs to ensure that no actions are taken which could be interpreted as retaliation against an employee for utilizing employer provided benefits protected by ERISA. As in the case against Proctor Hospital, an employer may not discharge an employee or beneficiary for exercising any right to which he or she is entitled under the provisions of an employee benefit plan.
If you have questions regarding the above, please contact Mary Ellen Schill, the author of this article, or any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

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