Impaired Drivers?

[AOEforme]

A woman in our chapter was recently diagnosed with MS. She has debiliatating spasms (where for minutes at a time she'll flip back into her chair and rub her arms and legs in pain). She has other people sign documents for her and take notes because her hands don't work well. She is currently using a cane to walk. She is excused from many mandatory events, due to medical appointments and flare-ups of her condition.

This woman was also listed as an approved driver for our chapter. (As a state school, approved student organizations with approved drivers have access to state vehicles.) She was driving a vehicle to a philanthropy recently where she proclaimed to the occupants of the car that she couldn't feel her legs or hands while driving.

We removed her from our approved driver list accordingly because she is a liability and our insurance policy says that "no driver may be impaired". We considered this an impairment.

She flipped a lid and said this was illegal and discrimination and is threatening to sue us. She also now says she never had MS, only "pre-MS".

Were we wrong in removing her? Has anyone else dealt with this situation?