Copyright 1993 The New York Times Company  
The New York Times
June 1, 1993, Tuesday, Late Edition - Final
SECTION: Section A; Page 1; Column 6; Financial Desk

LENGTH: 1544 words

HEADLINE: PATIENTS CITE BIAS IN AIDS COVERAGE BY HEALTH PLANS

BYLINE: By MILT FREUDENHEIM

BODY:
Faced with the loss of medical benefits that keep them alive, an increasing number of people with AIDS are accusing their health insurance plans of discrimination forbidden under the Americans With Disabilities Act of 1990.

Several dozen cases involving health insurance plans that have eliminated or limited coverage for AIDS patients have been filed with the United States Equal Employment Opportunity Commission. The law's insurance provisions, which took effect last July, say that insurers may restrict their policies to avoid risk, but not as a subterfuge for discrimination.

The cases come in reaction to moves by many health insurance plans to take advantage of Federal court rulings that have allowed some groups to deny or limit coverage for expensive diseases.
 
Benefits Cut Off Two Years Ago

Terrence P. Donaghey Jr., a 34-year-old Queens construction worker with AIDS-related stomach and visual disorders, is among those bringing a challenge under the disabilities law.

His union plan, the Mason Tenders District Council Welfare Fund, cut off benefits for people with AIDS nearly two years ago. As a result, he said, he could not buy all the medicine he needed.

"But they pay for other illnesses that cost twice as much as mine," Mr. Donaghey said. "My disease is not a popular disease within the union. My union is literally killing me."

Many self-insured employers and unions contend that they are legally entitled to limit or deny AIDS coverage because earlier court decisions said they could. Their health plans could not afford to provide health coverage to their other employees if they had to provide coverage to AIDS patients, said Roger M. Levin, a New York lawyer for the Mason Tenders fund.
 
Union Health Plan Sued

"We are writing on a blank slate so every single case is setting a precedent," said William Rubenstein, director of the national AIDS project of the American Civil Liberties Union. Several cases have been taken to the Federal courts and lawyers on both sides expect the issues will eventually reach the Supreme Court.

In one, the estate of Mark Kadinger, a 36-year-old Minnesota construction worker who died in November, and the University of Minnesota Hospital and Clinics are suing the health plan of the International Brotherhood of Electrical Workers, Local 110, in United States District Court in St. Paul.

Keith Halleland, a lawyer for the estate, said Mr. Kadinger had become impoverished and had to go on Medicaid because the St. Paul Electrical Construction Medical Reimbursement Plan had refused to pay bills of more than $100,000. The plan had set a $50,000 limit on payments for AIDS-related cases, he said, although it provided up to $500,000 for other illnesses.

In United States District Court in Columbia, S.C., the American Civil Liberties Union is suing the state insurance pool, which covers people who are unable to get insurance but excludes those with AIDS, Mr. Rubenstein said.

"They cannot get into the risk pool even for automobile insurance," he said of AIDS patients.

The Bush Administration pointed to the potential for this fresh round of legal action last fall while making a recommendation to the Supreme Court. Acting on the recommendation, the Court declined to hear an appeal involving a Houston retail chain's cutoff of benefits to John W. McGann, an employee with AIDS, who later died.
 
Future Possibility Noted

While the McGann case was under appeal, Bush Administration officials suggested to reporters that the disabilities law would apply to future cases. But it did not follow through on this possibility in its recommendation to the Court.

Before the McGann case reached the Supreme Court, lower courts had ruled that the employer, the H & H Music Company, had been entitled to place a $5,000 ceiling on AIDS benefits after Mr. McGann became ill. H & H, which had replaced its group health insurance company with self-insurance, said it could not afford to cover AIDS.

The courts ruled that self-insured employers were exempt from state regulation under a 1974 pension law, the Employee Retirement Income Security Act.

After those rulings, many employer health plans reduced or eliminated AIDS coverage, consultants and lawyers for people with AIDS said.

Referring to Mr. Donaghey's legal challenge, Harry Graham, a lawyer with the Wyatt Company, a benefits consulting firm, said, "There are lots of Mason Tender cases out there."

Bill Clinton, as a Presidential candidate, criticized the Bush Administration for siding with the employer in the McGann case, saying the case showed the need for sweeping changes that would guarantee access to health care for all Americans.
 
Unwilling to Delay Action

Still, lawyers for AIDS patients said they would try to win their cases under the Americans With Disabilities Act, without waiting for any Clinton proposals to make their way through Congress.

Legislation has been introduced to overturn the court interpretations of the 1974 pension law's provisions on health insurance, but these measures face strong opposition from employers and unions, who say that any change might lead to weakening legal safeguards for employee pensions.

Under the disabilities act, the Equal Employment Opportunity Commission is supposed to hear insurance-discrimination complaints from employees. But civil rights lawyers said the commission had been virtually paralyzed for months, waiting for Mr. Clinton to appoint a chairman. The White House press office did not respond to repeated requests for information about the vacancy.

In his complaint to the commission in November, Mr. Donaghey accused the Mason Tenders Welfare Fund, which covers 5,000 construction laborers and their dependents, of discriminating against him "because of my disability, in violation of the Americans With Disabilities Act of 1990."

In a preliminary victory for Mr. Donaghey, Spencer H. Lewis Jr., a commission district director, ruled in April that the union fund had "engaged in this discriminatory practice out of bias toward this particular disability." But the commission, which lacks enforcement power, has not followed up by seeking court action.

Delays can obviously be crucial for people with AIDS. Adults with the disease have an average life expectancy of 18 months to two years after diagnosis, the Federal Centers for Disease Control and Prevention says.

A few patients have negotiated private settlements with employers, who resumed payments to avoid embarrassing publicity. Others have filed suits without waiting for the commission, seeking payments and damages that they said would probably benefit only their heirs.

Gerald Vining, a computer engineer in Long Beach, Calif., is pressing his former employer, I.I.S. Intelligent Information Services Ltd., to lift a $100,000 lifetime ceiling on reimbursement for AIDS. He said the company had notified him of the ceiling in December.

Mr. Vining said that I.I.S., a rapidly growing computer hardware and software concern with $45 million in sales last year, cut off his benefits in April after paying a total of $186,000 since he stopped working in May 1991.

Intravenous treatments with the drug ganciclovir for AIDS-related retinitis are costing $10,000 a month, he said, adding, "Without my medicine I would be blind within a couple of months."

Aaron Einhorn, a lawyer for I.I.S., said that the company, whose headquarters are near Haifa, Israel, had reduced its American health coverage because it "was faced with astronomical costs." He said I.I.S. had also limited neonatal care to $500,000, and mental-health, alcohol and drug-abuse treatment to $25,000.
 
Timing, Lawyer Argues

Mr. Einhorn said that the company, like other employers, had used the Federal pension law in arguing that it was not required to pay for Mr. Vining's treatments. Mr. Einhorn's view is that "any claim of discrimination" occurred before the Americans With Disabilities Act took effect, so the law would not apply.

Employer health plans accused of discrimination often cite the pension law, which they say insulates them from discrimination charges. Mr. Levin said the Mason Tenders Welfare Fund had "the unfettered right" to limit coverage of specific ailments under the law.

But Jacques Chambers, a benefits manager at AIDS Project Los Angeles, an advocacy group, insisted that the limits were discriminatory. "You don't see them limiting payments for premature babies," he said.

In the case of Mr. Donaghey, the Queens construction worker, the health insurance fund filed its own suit on April 30 in United States District Court in Manhattan, asking Judge John E. Sprizzo to rule that the Americans With Disabilities Act did not require it to reinstate coverage for AIDS-related illnesses.

The fund said it had eliminated AIDS coverage to safeguard its finances because its reserves had dropped sharply in the New York construction slump. It also argued that the disability law was not in effect when it eliminated AIDS coverage.

The Equal Employment Opportunity Commission said it had received 153 complaints under the disability law, contending discrimination of all kinds against people with AIDS, of which 34 involved health benefits.


GRAPHIC: Photo: "My disease is not a popular disease within the union," said Terrence P. Donaghey Jr., who has AIDS-related disorders. "My union is literally killing me." He is among those accusing their health insurance plans of discrimination forbidden under the Americans With Disabilities Act of 1990. (Rebecca Cooney for The New York Times) (pg. D2)