## Facts

- Eleon Allen represented a class of former patients of St. Elizabeths Hospital (a federal mental-health facility) who, after discharge, were hired to work at the hospital under an agency affirmative-action hiring program.
- The hiring authority used was 5 C.F.R. § 213.3102(h), which allowed discharged patients of federal mental hospitals to be appointed without taking the competitive civil service examination, placing them in the federal “excepted service.”
- Class members worked in positions comparable to competitive service jobs at the hospital: the same skills were required, work was evaluated under the same standards, and pay was the same.
- Despite doing the same work as competitive service employees, the class members’ excepted service status carried significant disadvantages in terms and conditions of employment, including reduced job protections, fewer procedural rights in disciplinary actions, and diminished retirement prospects.
- Unlike some other categories of excepted service workers (including certain physically disabled and mentally retarded workers), the subsection (h) employees had no structured conversion route to competitive status after satisfactory service.
- To obtain competitive status, a subsection (h) employee generally had to apply, take the civil service examination, and compete as a new entrant, receiving no seniority or other credit for prior federal service and on-the-job experience in the excepted position.
- The class sued federal officials, including the Secretary of Health and Human Services and officials at the Office of Personnel Management, alleging the program discriminated against them based on handicap (a history of mental impairment and institutionalization) by keeping them in inferior positions relative to competitive service counterparts.
- The district court granted summary judgment for the class, concluding the plan did not provide adequate advancement-related career treatment for handicapped workers.
- As relief, the district court ordered that subsection (h) employees be converted to competitive status with full benefits and credit within two years, modeling the relief on conversion approaches available to other excepted categories.
- The government appealed, challenging both the finding of discrimination and the scope of the conversion remedy.

## Issues

1. Whether a federal agency’s affirmative-action hiring program that places former mental-hospital patients in excepted service jobs with materially fewer benefits and protections than comparable competitive service positions violates § 501 of the Rehabilitation Act by discriminating on the basis of handicap and failing to provide “adequate” hiring, placement, and advancement treatment.
2. Whether the district court properly ordered across-the-board conversion of all subsection (h) employees to competitive status with full benefits and credit, or whether the remedy exceeded what was appropriate given the civil service framework and the need for a tailored equitable order.

## Decision

- The D.C. Circuit affirmed the district court’s determination that the subsection (h) program, as administered at St. Elizabeths, violated § 501 of the Rehabilitation Act.
- The court reasoned that placing the class in a separate employment track with fewer benefits and protections—despite equal work and equal pay—amounted to unlawful differential treatment tied to their status as former mental patients, which fell within the Act’s definition of handicap (including a history of mental impairment).
- The court rejected the government’s formal argument that the distinctions were merely “status-based” rather than handicap-based, because subsection (h) applied to ex-patients and the disadvantages flowed from that classification.
- The court vacated the district court’s broad, automatic conversion order and remanded for reconsideration of an appropriate remedy.

## Legal Principles

- Section 501 of the Rehabilitation Act requires federal agencies to maintain affirmative-action programs that do more than open the door to employment; they must offer adequate treatment in hiring, placement, and advancement-related career aspects for handicapped individuals.
- “Handicapped” under the Act and implementing regulations can include individuals with a history of mental impairment, including former psychiatric patients who face continuing stigma tied to prior institutionalization.
- Special hiring authorities for handicapped applicants may be permissible at the entry stage, but they do not justify second-tier terms and conditions of employment for employees performing the same work as competitive service counterparts.
- Unequal benefits and job protections for equal work may constitute discrimination under § 501 when the inferior conditions track the employee’s handicap-related classification.
- Equitable relief for a § 501 violation must be aimed at curing the unlawful disparity and should be structured with attention to the civil service scheme and the roles of agencies and OPM in setting appointment and conversion rules.

## Conclusion

In *Allen v. Heckler*, the D.C. Circuit held that St. Elizabeths’ use of 5 C.F.R. § 213.3102(h) to hire former mental-hospital patients into excepted service positions—while leaving them with fewer protections and benefits than competitive service employees doing the same work, and without a meaningful conversion route—violated § 501 of the Rehabilitation Act, but the court vacated the district court’s blanket conversion remedy and remanded for a more carefully framed remedy.


Allen v. Heckler, 780 F.2d 64 (1985)