Firms Can Cut AIDS Coverage--Court

A federal appeals court has ruled that employers who provide self-insured health plans for their workers have the right to substantially reduce medical benefits to those with AIDS-related illnesses.

The Nov. 4 decision by the U.S. 5th Circuit Court of Appeals could hurt patients with other illnesses, lawyers involved in the issue said in interviews this week.

“If this ruling stands, it’s a question of any illness that an employer decides to exclude from their health plan, not just AIDS,” said Thomas B. Stoddard, executive director of Lambda Legal Defense & Education Fund in New York.

“A self-insured employer could decide leukemia is too expensive, or for that matter any type of cancer or any other illness.”

It was the first federal appeals court ruling of its kind and becomes law in Louisiana, Texas and Mississippi unless overturned by the U.S. Supreme Court. A decision on whether to ask the high court to review the ruling will be made by Dec. 5, Stoddard said.

The ruling, in one of two cases in the federal system, focused on whether employers can legally deny health benefits to a few of their sickest employees in order to continue benefits for the rest of their work force.

Stoddard is one of the attorneys representing John McGann in a lawsuit against a Houston music store that cut his medical benefits after he told his employer that he had acquired immune deficiency syndrome.

McGann’s benefits dropped from $1 million to $5,000.

Supporters said the ruling backs the right of self-insured employers to choose between providing catastrophic care for a few seriously ill workers or providing benefits for all employees by limiting coverage needed by a few.

The statute reviewed by the court is the only federal statute that provides protection against discrimination by companies that self-insure, Stoddard said this week.

If it is ruled to have little or no meaning, he said, companies that self-insure can escape both federal and state regulation.