In the case of United States Department of Transportation v. Paralyzed Veterans of America (1985), the Supreme Court ruled that private airlines were not "programmes or activities receiving federal financial assistance" and thus, they were not subject to section 504 of the Rehabilitation Act which prohibits discrimination against disabled individuals by federally funded programs. The Paralyzed Veterans argued that because these airlines received indirect federal aid through airport construction grants and tax benefits, they should be considered as recipients under this law. However, in a unanimous decision led by Justice Thurgood Marshall, it was determined that such indirect benefits did not constitute these companies as direct beneficiaries or recipients of federal funding within the meaning intended by Congress when drafting Section 504. Therefore, private airlines could not be held accountable for failing to provide accommodations for disabled passengers under this particular legislation.

In the dissenting opinion for the case between United States Department of Transportation and Paralyzed Veterans of America, it was argued that Section 504 of the Rehabilitation Act should be interpreted to include airlines. The dissenting justices believed that Congress intended to protect disabled individuals from discrimination in all federally funded programs or activities, including those indirectly receiving federal financial assistance like commercial airlines. They pointed out that excluding such entities would significantly limit the scope and effectiveness of Section 504. Furthermore, they disagreed with majority's interpretation which suggested a narrow reading of "program or activity". Instead, they advocated for a broader understanding encompassing any operation conducted by an entity receiving federal aid irrespective if only part receives this aid. Lastly, they criticized majority’s reliance on legislative history arguing it was not conclusive enough to support their restrictive interpretation.