In a dispute arising from a physical therapy provider's failure to furnish a plaintiff an American Sign Language (ASL) interpreter, the Supreme Court held that emotional distress damages were not recoverable under Section 1557 of the Affordable Care Act (ACA) or Section 504 of the Rehabilitation Act of 1973 (Rehab Act) (Cummings v. Premier Rehab Keller, PLLC, (Apr. 28, 2022)).

The plaintiff in this case, who is deaf, legally blind, and communicates primarily in American Sign Language (ASL), sought physical therapy services from a Texas-based health provider. In doing so, the plaintiff requested an ASL interpreter for her appointments. The provider declined to furnish an interpreter, instead instructing the plaintiff to communicate with the physical therapist using written notes, lip reading, or gesturing. The plaintiff obtained physical therapy from a different provider, but later sued the first provider. The plaintiff claimed that the provider's failure to make available an interpreter was discrimination on the basis of disability in violation of:

The provider received federal financial assistance in the form of Medicare and Medicaid reimbursements, making it subject to Section 1557 and Section 504. The plaintiff sought declaratory relief, an injunction, and damages.

The district court dismissed the lawsuit, concluding that:

The Fifth Circuit affirmed on appeal and the Supreme Court later agreed to review the case.

At issue before the Supreme Court was whether emotional distress damages are available to plaintiffs that bring suit under Section 1557 or Section 504. These provisions, enacted under the Spending Clause, generally prohibit recipients of federal financial assistance from discriminating because of disability. In its majority opinion, the Court observed that although an implied private right of action exists under Section 1557 and Section 504, these provisions do not specify the available remedies. The Court noted that Section 1557 and Section 504:

Citing established Supreme Court precedent, the majority observed that it has used a contract-law analogy in determining the available remedies under Spending Clause statutes (such as Section 1557 or Section 504). The Court's contract law analogy essentially asks whether the recipient of federal funding is on notice that it could be liable for certain kinds of remedies. In Barnes v. Gorman, for example, the Court held that punitive damages were not recoverable under Section 504 (and the Americans with Disabilities Act (ADA)) because punitive damages are generally not available in private breach of contract suits (536 U.S. 181 (2002)). Accordingly, the Court in Barnes reasoned that the recipient did not have notice that it could be subject to punitive damages by accepting federal funds.

Applying Barnes, the Supreme Court held that the plaintiff in the case before it could not recover emotional distress damages under Section 1557 or Section 504. According to the Court, it had to look at the "usual" contract remedies in private breach of contract suits, rather than possible or rare remedies. The Court rejected the plaintiff's argument that traditional contract remedies include emotional distress damages (and therefore emotional distress damages should be included in the scope of available remedies). Whereas the Barnes analysis required consideration of those remedies that are traditionally/normally available for contract action, the Court stated that the plaintiff's argument would require it to consider more context-specific rules (including unusual or rare remedies). Employing such on-point exceptions, the Court reasoned, would not be consistent with the Barnes approach. As a result, the Court held that emotional distress damages are not recoverable under Section 1557 or Section 504.

Under implementing regulations issued by successive administrations, the scope of entities subject to Section 1557 has changed over time. Under June 2020 final regulations addressing Section 1557, for example:

(See Practice Note, June 2020 Final Regulations Under ACA Section 1557: Nondiscrimination in Health Programs and Activities: Health Insurance and ERISA Plans; ACA Exchange Coverage.)

However, the Department of Health and Human Services (HHS) recently indicated that it is planning to issue additional proposed regulations under Section 1557, so it is at least possible that the scope of entities subject to Section 1557 may change once again—making the scope of potential remedies under Section 1557 a concern for a broader set of entities (see Legal Update, Sexual Orientation and Gender Identity (SOGI) Nondiscrimination Proposals Omitted from HHS Final 2023 Benefit and Payment Parameters).

Section 504 of the Rehab Act broadly prohibits disability discrimination in programs or activities that receive federal funds or are conducted by federal agencies. Employer coverage is not limited to only those with a threshold number of employees and covered individuals are "otherwise qualified individuals with a disability," including applicants and former employees. Federal circuit courts are split over whether Section 504 applies to independent contractors and whether federal employees can bring claims under Section 504 or must sue under Section 501. Employers and other entities subject to Section 504 claims are likely to welcome the Court's limitation on available damages. For more information, see Practice Note, Discrimination Under the Rehab Act: Basics.