This morning, the Supreme Court ruled 6-3 that private
actions brought against private entities under the Rehabilitation Act of 1973
and the Affordable Care Act are limited to recovering damages which are available
generally in breach of contract actions between private parties. Cummings v. Premier
Rehab Keller PLLC, No. 20-219
(4-28-22). In that case, a legally
blind and deaf patient requested that a physical therapy practice provide an
ASL interpreter for her sessions. The practice refused and offered
alternative accommodations. The patient sought treatment elsewhere
and brought suit against the practice -- not under the ADA’s public
accommodation provisions -- but under the Rehab Act and ACA, which apply to the
defendant practice because it receives reimbursement from the federal
government through Medicare and Medicaid. The Supreme Court had
previously held such actions are governed by the Constitution’s Spending Clause
and can only support damages that are generally available for breach of
contract actions, which do not include punitive damages. In this case,
the plaintiff only sought recovery for emotional distress, which is also not
generally available in breach of contract actions.
As Justice Roberts explained:
Congress has broad power under the Spending Clause of the Constitution to set the terms on which it disburses federal funds. “[L]egislation enacted pursuant to the spending power is much in the nature of a contract: in return for federal funds, the [recipients] agree to comply with federally imposed conditions.” . . . .. Exercising this authority, Congress has passed a number of statutes prohibiting recipients of federal financial assistance from discriminating based on certain protected characteristics. We have held that these statutes may be enforced through implied rights of action, and that private plaintiffs may secure injunctive or monetary relief in such suits. . . . Punitive damages, on the other hand, are not available. . . . . The question presented in this case is whether another special form of damages—damages for emotional distress—may be recovered.
. . .
Unlike ordinary legislation, which “imposes congressional policy” on regulated parties “involuntarily,” Spending Clause legislation operates based on consent: “in return for federal funds, the [recipients] agree to comply with federally imposed conditions.” . . . For that reason, the “legitimacy of Congress’ power” to enact Spending Clause legislation rests not on its sovereign authority to enact binding laws, but on “whether the [recipient] voluntarily and knowingly accepts the terms of th[at] ‘contract.’”
. . . Recipients cannot “knowingly accept” the deal with the Federal Government unless they “would clearly understand . . . the obligations” that would come along with doing so. . . .
. .. After all, when considering whether to accept federal funds, a prospective recipient would surely wonder not only what rules it must follow, but also what sort of penalties might be on the table. . . . A particular remedy is thus “appropriate relief ” in a private Spending Clause action “only if the funding recipient is on notice that, by accepting federal funding, it exposes itself to liability of that nature.” . . . Only then can we be confident that the recipient “exercise[d its] choice knowingly, cognizant of the consequences of [its] participation” in the federal program. . . .
. . .
Because the statutes at issue are silent as to available remedies, it is not obvious how to decide whether funding recipients would have had the requisite “clear notice regarding the liability at issue in this case.”
. . ..As one commentator concluded after “[s]urveying all of the cases dealing with emotional distress recovery in contract actions” over a decade after the Restatement’s publication, “a majority rule does not exist” on the question. D. Whaley, Paying for the Agony: The Recovery of Emotional Distress Damages in Contract Actions, 26 Suffolk U. L. Rev. 935, 946 (1992) . . . . [Editor’s Note: happy to see the Supreme Court cite to an article by one of my favorite OSU law professors].
The Court concluded that emotional distress damages may not
be recovered for the same reasons it had ruled that punitive damages are not
available.
Affirmative Action employers would be interested in this
decision because they are subject to affirmative action obligations through the
Rehabilitation Act.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
