Are they correct - illegal application?

That lawyer might have a point. A chemical addiction is recognized under the ADA as a medical disease and a disability, and he's saying that you can't legally ask people about any disabilities on the initial job application. This doesn't mean you have to give the guy the job, as he can still be disqualified after submitting the application if he fails the medical examination later on. It's just that any questions related to drug addiction properly belong in the medical examination (which of course, is conducted in private by a properly licensed physician), not the job application (which non-medical staff would end up seeing). Medical problems are considered personal and confidential, if I'm not mistaken, and you're not supposed to ask job applicants to share them with anybody other than a doctor. But it's probably best to just contact a lawyer who specializes in disability and labor law who can accurately interpret all this legalese.