Circle K Corp., the nation's second-largest operator of convenience stores, retreated Thursday from a controversial policy of denying medical benefits to some employees with AIDS or those with drug and alcohol problems.
The Phoenix company, confronted with nationwide condemnation by gay rights activists, said it suspended the policy to provide time for further review and possible revisions. The review is expected to be completed this month.
Last week, Circle K confirmed that it had revised its self-insurance medical plan. The new policy eliminated coverage from illnesses said to result from "personal life style decisions."
In a letter to employees earlier this year, Circle K said: "Employees who are proven to suffer illnesses and accidents that result from the use of alcohol, drugs, self-inflicted wounds and AIDS proven not to be contracted from blood transfusions, will not be eligible to receive company health-care coverage in those circumstances."
"We believe that these personal life style decisions could seriously impact other participants' health-care cost," the company said.
On Thursday, however, Circle K Chairman and Chief Executive Karl Eller released a prepared statement saying: "A general misunderstanding of the policy has arisen and that needs to be clarified."
Meeting With Activist
"We were and still are extremely concerned about containing costs of medical insurance for employees," he added.
Suspension of the policy came after a meeting Wednesday between company officials and Ed Buck, a Phoenix gay activist who organized a recall campaign against former Arizona Gov. Evan Mecham.
There had been talk of organizing boycotts and picketing Circle K stores around the nation, but Buck said he chose to meet with two company vice presidents first. Buck said he understood their cost concerns, but that the "reality of this policy is that it flies in the face of business practices."
Gay rights activists and employee benefits experts said the policy proposed by Circle K was unprecedented. The trend in business thus far in responding to AIDS has been toward employee education rather than radical policy changes, said Dan Mitchell, director of the Institute of Industrial Relations at UCLA.
Some companies have required that employees pay more of their health-care bills, Mitchell said. But he added that he had not seen a trend toward excluding categories of illnesses. "If a company were excluding AIDS, they wouldn't publicize it," he said.
Pays Bills Itself
Since Circle K pays employee medical bills itself rather than provide coverage through an outside insurance company, its medical plan is governed by federal legislation. A Labor Department spokeswoman said there is nothing in federal law preventing self-insured companies from excluding any illness. However, some sources said Circle K's proposed policy could have prompted legal challenges under state anti-discrimination laws.
The Circle K case has raised eyebrows among congressmen interested in health-care issues, said Robert F. Bray, spokesman for the Human Rights Campaign Fund, the nation's largest lobbying group for the civil rights of homosexuals. "This is a perfect example of why federal (AIDS anti-discrimination) legislation is needed," he said.