The major source of errors in B-ISDN/ATM systems is expected to be buffer overflow during congested conditions, resulting in lost packets. A single lost or errored ATM cell will cause retransmission of the entire packet data unit (PDU) that it belongs to. The performance of the end-to-end system can be made much less sensitive to cell loss by means of forward error correction. In this paper, we present the results of a simulation study for an ATM network where forward error correction is performed at both the cell level and the PDU level. The results indicate that (i) cell losses are highly correlated in time, and analytical models ignoring this fact will not yield accurate results, (ii) the correlation of cell losses is similar to burst errors in digital communication, and similar code interleaving techniques should be used, (iii) coding cells and PDUs separately provides this interleaving effect, and this joint code outperforms coding only at the cell level or only at the PDU level in almost all cases simulated.