Copyright 1993 The New York Times Company  
The New York Times
November 23, 1993, Tuesday, Late Edition - Final
SECTION: Section D; Page 2; Column 5; Financial Desk

LENGTH: 719 words

HEADLINE: Disabilities Act Wins Support in AIDS Case

BYLINE: By MILT FREUDENHEIM

BODY:
A Federal judge in Manhattan has issued the first ruling to uphold the authority of the Americans With Disabilities Act of 1990 over health plans that are accused of discriminating against employees with AIDS.

Judge John E. Sprizzo on Friday dismissed a motion by a benefits fund representing a group of New York construction companies and laborers' unions, which contended that it was exempt from the disabilities act.

The Mason Tenders District Council Welfare Fund has been seeking to block a lawsuit against it after it cut off medical benefits for Terrence P. Donaghey Jr., a Queens construction worker with AIDS-related illnesses, and three other workers with AIDS. The ruling means that the burden of proof is on the fund to show that it was not illegally discriminating against Mr. Donaghey.

The case has attracted national attention. Lawyers for the workers said the decision was an important step toward reversing earlier court rulings that enabled the health plans of self-insured employers to deny coverage to workers with AIDS and other expensive illnesses.
 
Motion Rejected

Judge Sprizzo ruled against a motion by lawyers for the Mason Tenders District Council Welfare Fund, which had contended that the disabilities act could not apply to health plans governed by a widely cited Federal pension law known as Erisa.

Damien Mysak, a lawyer for the welfare fund, said Judge Sprizzo had denied its motion for summary judgment on the ground that actions in denying AIDS coverage "were proper under Erisa," the Employee Retirement Income Security Act, and that the disabilities law did not apply to entities like the fund, Mr. Mysak said.

Friend-of-the-court briefs were filed by the Lambda Legal Defense and Educational Fund, a gay civil rights advocacy group, on behalf of the American Medical Association, American Public Health Association, the American Foundation for AIDS Research and the AIDS Action Council. The American Association of Retired Persons filed a separate brief.

"The briefs were to let the court know that exclusions for people with H.I.V. and AIDS and other chronic diseases are a growing problem," said Michael Isbell, AIDS project director for the Lambda fund. He cited recent similar cases in Washington, Los Angeles, Atlanta, St. Paul and other cities.

The ruling cannot be appealed without the judge's approval, under Federal court rules. Judge Sprizzo said on Friday that he did not intend to certify an appeal. He scheduled a conference in late January to establish a timetable for further arguments and hearings.

The Mason Tenders fund contended that it had acted properly in denying AIDS coverage to conserve its ability to reimburse its 5,000 members and dependents for other illnesses.

The fund lawyers cited a recent ruling by a Federal judge in New Hampshire who held that the disabilities act did not cover an automobile wholesalers trade association's health plan.

Cary Lacheen, a lawyer with the New York Lawyers for the Public Interest, said the fund's claim of financial weakness was unfounded, noting that it had quadrupled salaries of some fund officers in the four years preceding the exclusion of AIDS coverage in 1991.

Arthur S. Leonard, a professor at New York Law School, said that depending on the scope of Judge Sprizzo's written ruling, which has not yet been issued, "this case could produce a precedent that would be of great importance to all employee benefit plans that are subject to the Americans with Disabilities Act."

But he added that if a conflict developed between appellate courts in the Second Circuit in New York and the First Circuit, which includes New Hampshire, the issue could end up in the United States Supreme Court.

Michael O'Brien, a New York trial lawyer with the Federal Equal Employment Opportunity Commission, said he had told Mr. Donaghey of Judge Sprizzo's decision. The names of three other workers in the case have been sealed by the court. One died recently, he said.

Seeking restoration of their health coverage, the commission has filed a lawsuit against the Mason Tenders District Council, its welfare fund, the union's Local 23, the Associated Brick Mason Contractors of Greater New York, the Building Contractors Association and National Surface Cleaning Inc., an employer.