Court Rejects ADA and ERISA Claims of Employee Allegedly Terminated Due to Daughter’s Disability

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.

EBIA Comment: The ADA is one of several federal nondiscrimination statutes that affect employer-sponsored group health plans. As this case indicates, proving a discriminatory motive can be a challenge for a terminated employee. Proving an ERISA § 510 interference claim can also be an uphill battle for an employee who must show that the employer acted with the specific intent to violate ERISA. Although this decision was favorable for the employer, it is a useful reminder of the potential danger in terminating an employee in similar situations. The employer must be prepared to present evidence demonstrating a nondiscriminatory reason for the employee’s termination. For more information, see EBIA’s Group Health Plan Mandates manual at Section XX.H (“Discrimination Based on Relationship or Association”) and EBIA’s ERISA Compliance manual at Section XXXVI.K (“ERISA § 510 Claims for Interference With Protected Rights”).

Contributing Editors: EBIA Staff.