Intersection between ERISA and the Americans with Disabilities Act

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In the case of Rider v. Bluegrass Oxygen, Inc., 2019 WL 4934187 (E.D. Ky. 2019), the Court examined how the Americans with Disabilities Act and ERISA plans fit together.

An employee covered by his employer’s medical plan was terminated four years after the birth of his daughter who was diagnosed with cystic fibrosis and prescribed a medication costing $300,000 per year. The employee sued his employer under the Americans with Disabilities Act (ADA) for discrimination based on association with a person with a disability, arguing that the termination was due to his daughter’s condition. He also claimed the employer violated ERISA § 510 by retaliating against him for filing large health plan claims. The employer asserted that the employee’s termination was due to his poor performance as a branch manager, presenting evidence of a significant decrease in the branch’s profitability, declining income, the loss of a competitive government bid, and increased inventory losses, among other things. For three years, the employer had allegedly conducted monthly discussions with the employee regarding his performance issues, which the employee disputed.

Despite evidence of legitimate business-related reasons for termination, an employee can still prevail on an ADA claim by establishing that the reasons given were mere pretext by showing that those reasons have no basis in fact, did not actually motivate the termination, or were insufficient to warrant the termination. To prove the increase in medical claim costs motivated his termination, the employee cited a discussion with the human resources manager about whether there was a lower-cost option for his daughter’s medication and an email exchange between that manager and an insurance broker who said the employee’s daughter “jacked up [the plan’s] claims through the ceiling.” Because these individuals were not decisionmakers regarding his employment, however, and the instances cited occurred years prior to his termination, the court held that the employee failed to prove a discriminatory motive on the part of the employer. Regarding the ERISA claim, the court held the employee failed to demonstrate that the employer terminated him to interfere with his benefit rights. The employer’s motion for judgment without trial was granted, and the case dismissed.

So, we can see in this case that an employee can’t be fired for a reason that violates the ADA, and firing a person because they have a family member whose medical costs are going to be very expensive and thus increase the costs of the ERISA plan would be discriminatory. However, the employee has the burden of proving that the firing was because of the increased costs of the plan and not for other, legitimate business reasons.