Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 10, 1993 TAG: 9306090339
SECTION: NATIONAL/INTERNATIONAL PAGE: A-9 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
It filed the lawsuit one day after issuing a detailed policy statement that warned employers it is illegal in most instances to curtail medical benefits just for workers with a specific disability.
The EEOC's interpretation of the 1990 Americans with Disabilities Act could prevent companies from copying a Houston music store that cut its AIDS benefits from $1 million to $5,000 after a clerk came down with the deadly disease.
But some business experts cautioned that the EEOC's move actually could spur small businesses to drop health insurance entirely for their workers, rather than face the cost of treating catastrophic illnesses.
The Supreme Court ruled last fall in McGann vs. H&H Music Co. that the Houston firm, which was self-insured, acted within its rights under a 1974 federal pension law. The company acted before the disabilities act was passed so it was not covered by that law.
Lawyers for the federal commission filed a lawsuit in New York charging that the Mason Tenders District Council Trust Fund violated the disabilities changing its health insurance plan in July 1991 to exclude coverage of any AIDS-related illness.
A union member, Terrence Donaghey Jr., who was first diagnosed as HIV positive in 1989, complained to the EEOC. The EEOC ruled in January that the welfare fund discriminated against Donaghey. It filed the lawsuit after failing to negotiate an agreement to settle the charges.
Sharon Rennert, an EEOC adviser on the disabilities act, said the agency's policy "covers all employers," whether or not they are self-insured.
The EEOC's guidelines say that employers' health insurance plans can pay different benefits for physical and mental illnesses, and can limit coverage of all medical procedures.
But the plans cannot single out a particular disability such as AIDS or cancer for curtailed coverage, the guidelines say.
The EEOC said that if a worker challenges a disability-based distinction in a health plan, the employer bears the burden of proving that the distinction was not a subterfuge to evade the disabilities act.
A company can justify limited coverage of certain disabilities by demonstrating that unlimited coverage would bankrupt the health plan, the guidelines say.
Rep. William J. Hughes, D-N.J., a sponsor of bills that would outlaw actions like that of the Houston music firm, called the EEOC policy "a welcome development."
James A. Klein, executive director of the Association of Private Pension and Welfare Plans, a trade association representing 400 large employers, insurers and others, said, "These kind of rules certainly diminish employers' desire and commitment to operate [health] plans if they have traditionally done so."
But fear of increased liability for health costs might make employers more willing to embrace health reforms the Clinton administration is working on, he added.
President Clinton has promised universal coverage, possibly with a new payroll tax on employers.
Stuart Brahs, vice president of the Principal Financial Group, a major health insurer, predicted the EEOC guidelines would prompt employers "to reassess their current coverage."
Since no law requires employers to provide health insurance, some, particularly small businesses, may drop it while they can, he said.
by CNB