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Supreme Court Quietly Dismisses Certain Emotional Distress Claims

On Behalf of | Oct 3, 2022 | Business Litigation

The Supreme Court’s last session was anything but dull. There was no shortage of news and controversy surrounding the Court’s biggest and most notable decisions. However, the Court also offered other opinions that drew far less attention. These include an opinion provided as an answer to a question from the Fifth Circuit Court of Appeals.

In its response to this question, concerning a case between Jane Cummings and Premier Rehab, the Supreme Court clarified that plaintiffs could not seek recovery for emotional distress through private lawsuits under the Spending Clause. The opinion further clarifies the types of recovery the Spending Clause does allow. Federally funded businesses and insurance companies might appreciate how the opinion limits their liability.

Case Background

Jane Cummings is both deaf and legally blind. She had gone to Premier Rehab for physical therapy and requested a translator who could use American Sign Language with her. Rehab Keller denied the request, and Cummings filed suit. She claimed violations of the Rehabilitation Act of 1973 and the Affordable Care Act.

The District Court dismissed her lawsuit, claiming the only damages Cummings could hope to recover were those for emotional distress. However, the court determined she could not recover those damages through a private action under the cited laws. The Fifth Circuit Court of Appeals upheld this view, and the Supreme Court’s opinion reinforced the appellate court’s decision.

The Rationale

The Court focused largely on the precedent set by Barnes v. Gorman. That precedent holds that actions filed under laws empowered by the Constitution’s Spending Clause rely on the guidelines for contract law, not the government’s authority. This is because the government’s authority to enforce actions under the Spending Clause is contractual.

Schools, healthcare providers and other businesses that receive federal funding must follow the rules that accompany that funding. Specifically, the Court cited four antidiscrimination laws:

  • Title VI of the Civil Rights Act of 1964 bans discrimination based on race, color and national origin
  • Title IX of the Education Amendments of 1972 bans sex-based discrimination
  • The Rehabilitation Act of 1973 bans discrimination based on disability
  • The Affordable Care Act applies to healthcare companies and bans discrimination based on any of the categories listed above, as well as age

These laws all forbid discrimination. The problem is that they say little about what the victims of discrimination may hope to recover. Accordingly, the Court has historically said that people can only win the forms of recovery “generally” available in contract disputes.

Common Remedies Versus General Expectations

Using contract law as a model for lawsuits under these laws, the Court argued that just as a contract defines each party’s obligations, it should also define the potential penalties that parties could face for failing to uphold their end of the bargain. Here, the Court noted that parties could only face liability for a certain type of damage if they understood the contract put them “on notice” for such liability.

Accordingly, at the heart of its opinion, the Court asked if either the Affordable Care Act or Rehabilitation Act had put Rehab Keller “on notice” that it could face liability for emotional distress:

In order to decide whether emotional distress damages are available under the Spending Clause statutes we consider here, we therefore ask a simple question: Would a prospective funding recipient, at the time it “engaged in the process of deciding whether [to] accept” federal dollars, have been aware that it would face [liability for emotional distress]? […] If yes, then emotional distress damages are available; if no, they are not.

Here, the Court found that while emotional distress damages are “common” in contract disputes, they are not “generally” or “typically” available. Instead, the Court noted that only two forms of recovery are “generally” available for breaches of contract:

  • Compensatory damages
  • Injunctions

When Cummings argued that the breach of contract was of a type “particularly likely” to cause emotional disturbance, the Court responded that her argument had two fatal flaws:

  • It required a more “fine-grained” approach to the standards for contracts and Spending Clause disputes than was consistent with Barnes.
  • The reality is that different states do not all hold the same standards for awarding recovery for emotional distress. Some states are more liberal with the damages. Some deny them outright. Most make them available only in niche, idiosyncratic circumstances.

In short, the Court found that the inconsistency surrounding emotional distress damages meant they weren’t “generally” available for breach of contract. Instead, the Court appears to suggest that federally funded businesses must understand they are always on notice for certain types of liability in order to be “generally” liable in private Spending Clause actions.

The Takeaway

Cummings v. Premier Rehab didn’t draw the same headlines as the Court’s more historical decisions. Still, it clarifies two important points for federally funded schools, healthcare providers and other businesses, as well as the insurance companies that back them:

  • The Court reasserted the precedent set by Barnes, arguing that only the forms of recovery that are “generally” available in contract law are available in Spending Clause actions where the statute does not specify the available remedies
  • The Court noted only two forms of recovery “generally” available for breaches of contract, compensatory damages and injunctions

State laws may approach emotional distress differently. However, this opinion offers fresh, clear guidance for private lawsuits under the Affordable Care Act, Rehabilitation Act, Title VI and Title IX.