ACT UP Demonstration on Wall Street 1988 NYC LGBT Historic Sites Project. Retrieved from NPR.com
By Kelcie Eberharth
Kelcie is a senior pursuing a BA in History. Her primary historical area of interest is the post-colonial period within Africa. Kelcie is also interested in politics and law, with hopes of attending law school after graduation. Outside of the classroom, Kelcie loves reading and listening to true crime podcasts.
INTRODUCTION:
Legal history is a tool used to analyze the nation’s response to social movements. During the 1980’s, the United States was in the throes of the AIDS epidemic. During this time, people who were diagnosed with AIDS were viewed as diseased, and thus undesirable. Those who were HIV positive had a multitude of worries to deal with daily in the workplace- from losing their job due to their diagnosis to losing their health benefits which would be catastrophic for access to treatment. John McGann was one such individual who lost his job after he found out he was HIV positive; he lost all assistance covering his increasing medical bills. While McGann was not the only HIV positive person to experience this, his case can be used to examine the country’s overall response to workers struggling with the disease. Instead of focusing on aiding those who were diagnosed with HIV, workplaces throughout America, like H & H Music Co., changed minute details in company medical coverage to avoid the extra fees that would come from paying for an HIV positive worker’s treatment.
FACTS:
McGann v H & H Music Co. went to court more than once. Thus, examination of this case is more intricate than other similar cases of the time. The first case was tried in the Southern District Court of Texas in 1990, followed by an appeal in 1991. John McGann’s lawsuit claimed that his rights had been violated under section 510 of ERISA, the Employee Retirement Income Security Act.[1] McGann claimed that the defendants, H & H Music Company and General American Life Insurance Company, had changed sections of the music company’s group medical plan to exclude him from coverage (McGann v. H & H MUSIC CO., 742 F. Supp. 392 (S.D. Tex. 1990)).
This case must be viewed in the historical context of the HIV/AIDS epidemic in order to better understand how McGann’s case had implications for all of those suffering from HIV and AIDS. John McGann was employed by H & H Music Company beginning in 1982. Five years later, in December of 1987, McGann was diagnosed with AIDS and immediately relayed the news to his employer. The following summer H & H Music Co. made changes to their medical coverage plan. These changes included a limitation for treatments of AIDS-related illnesses, the only chronic illness that was given new constraints (McGann v. H & H Music Co., 946 F .2d 401 (5th Cir. 1991)). Prior to the changes, employees with AIDS had access to up to $1,000,000 in benefits during their lifetime. After the plan was amended, the benefits were reduced to a maximum of $5,000. In less than two years McGann had already used the entirety of the benefits afforded to him in the new coverage his employer offered. In August of 1989, McGann began the process of suing his employer, Brook Mays (the plan administrator), and General American (the plan insurer) (McGann v. H & H Music Co., 946 F .2d 401 (5th Circ 1991)).
John McGann, Plaintiff
v.
H & H Music Company, et al., Defendant
Civ. A. No. H-89-1995.
United States District Court, S.D. Texas, Houston Division
June 28, 1990
In the 1990 case, defendant H & H Music Co. stated they went through with altering their medical coverage for employees after suffering significant financial losses over previous years. Due to these losses, they either had to make change to or drop the existing plan completely, which the defense used as evidence that H & H Music Co. was not directly discriminating against McGann. The new plan was created and given to employees following requirements set in place by ERISA SPD.[2] The defense referenced a similar case in 1985 where an insurance policy was terminated after a claim had been filed by the plaintiff.
In this case, the court ruled that the plan had been terminated in accordance with the ERISA SPD, and thus did not have to continue paying insurance benefits for the medical treatments.[3] The SPD laid out by the defendant, Travelers Insurance Company, outlined only limited situations in which payments would continue for medical treatments after coverage termination, meaning the coverage was not being provided due to the SPD, not discrimination (Hamilton v. Travelers Ins. Co. 752 F.2d 1350 (8th Cir. 1985)). This was used as further evidence to support the defendants’ ability to alter the plan if in line with SPD- giving them the ability to expand or minimize the benefits available for AIDS patients.
John McGANN, Plaintiff-Appellant,
v.
H & H MUSIC COMPANY, et al., Defendants-Appellees.
No. 90-2672
United States Court of Appeals, Fifth Circuit.
November 4, 1991
The trial at the appellate level went quite similarly; McGann claimed the policy was changed to directly discriminate against him after he began using the benefits entitled to him in the original coverage he had by General American and H & H Music Co. when he had first been hired. The defendants fought this claim by stating that the new coverage would affect any new employee that was diagnosed with AIDS – not just McGann. In this trial, McGann and the prosecution referenced four different cases to support his accusation.[4] Despite countless references to precedents in court on violations of ERISA workplace discrimination, the defense remarked that the change in benefits was not due to anything other than to compensate for past financial losses.
McGann was unable to prove his claim of discrimination. He failed to demonstrate to the court’s satisfaction that the change in plans would similarly affect others with AIDS. Additionally, he was not able to provide evidence of rights he was entitled as laid out in clause two of section 510 of ERISA being violated, due to the information being laid out in the SPD by General American. Within the Termination or Amendment of Plan in the SPD, there was no guarantee that the coverage limit would remain at $1,000,000. McGann’s interpretation would mean that employers would never be able to amend benefits to counter sustained costs, as H & H claimed they did (McGann v. H & H Music Co., 946 F .2d 401 (5th Circ 1991)). McGann countered that the reduction to AIDS treatment benefits was discriminatory, as it was the only catastrophic disease that had incurred the reduction in benefits. In an attempt to support this claim, McGann referenced Vogel v. Independence Federal Savings Bank, et al., to prove a court had previously denied that termination of benefits was not deemed unlawful discrimination under section 510, but the court did not accept this evidence as it did not support discrimination of the beneficiary.[5] The evidence that McGann brought to court did not remedy the termination or amendment plan of the SPD provided by H & H Music Co in order to lay a claim of discrimination under section 510.
RULE OF LAW:
Both court cases brought into question section 510 of the Employee Retirement Income Security Act of 1974.
ISSUE:
A) Did H & H Music Company, Brooks Mays, and General American Insurance Company seek to discriminate against John McGann in their alteration of the medical benefits that were provided upon hiring McGann?
B) How is discrimination defined within section 510 of ERISA?
HOLDING AND REASONING:
A) H & H Music Co. altered the medical coverage granted to employees based on an attempt to compensate for previously incurred losses via health coverage claims. McGann was still afforded medical coverage, albeit lesser coverage, as outlined in the new health plan implemented in 1988. The change in coverage did not directly discriminate against McGann as any other persons diagnosed with AIDS would be met with the same new medical coverage.
B) Section 510 of the Employment Retirement Insurance Security Act states that employers cannot keep beneficiaries from utilizing their benefit plan or their attainment of rights under ERISA (Employment Retirement Insurance Security Act Section 510). This means that discrimination would occur only if there were actions taken by the employer to keep a beneficiary from being able to use any of their coverage, or if they were terminated before being able to begin use of their coverage. In this case, there is not sufficient evidence to support the claim McGann was kept from accessing his coverage, he was just offered lesser maximums than when he was hired due to changes in plan coverage.
LONG TERM EFFECTS:
This case brings into question the history of how workers were treated after they were given a diagnosis of HIV/AIDS. For John McGann, the court ruled the change of policy was allowed under the framework of section 510 of ERISA, but that did not change the impact it had. McGann very quickly became too ill to work and passed away in 1991. This case was just another situation in which people with HIV/AIDS would be subject to discrimination due to laws that needed amending. Shortly after the conclusion of McGann v. H & H Music Co., another Circuit court handed out a decision that echoed the decision reached in McGann’s case. Storehouse Inc. had similarly changed its medical coverage to cap AIDS-related coverage at $25,000 (Spelfogel, 462). Owens, the plaintiff in the case, sued on the grounds of discrimination under section of 510 of ERISA and was met with a near identical outcome to McGann.[6]
In 1992, the American Medical Association stated that the anti-discrimination section of ERISA needed revisions because it was not properly protecting employees (Biskupic, AIDS Case Benefit Cut Let Stand). The discrimination clause did not protect workers from not being discriminated, it created a loophole in which discrimination was allowed for in terms of benefit plans (Dirrim, Unpopular But Not Unfair: The Fifth Circuit Considers the Terms But Ignores the Endearment in McGann v. H & H Music Co., 946 F.2d 410 (5th Cir. 1991), cert. denied, 113 S. Ct. 482 (1992)). ERISA was not protecting workers; it instead was protecting companies’ ability to change plans to protect their profit margins. H & H Music Company paved the way for other businesses to change health insurance policies in order to minimize the losses they would incur if an employee was diagnosed with HIV.
This reality of workplace struggles for HIV/AIDS patients plays into the larger reality of daily discrimination seen in the legal setting directed towards people with HIV. In the housing world, people with HIV were discriminated against regularly, and Mixon v. Grinker (1988) is a prime example of that. Kenneth Mixon, Ralph Hernandez Pagan, Michael Snyder, and Wayne Phillips were all HIV-positive men who believed that the city did not follow its obligation to give access to safe housing to HIV positive people, as the “‘city barrack shelters are notoriously dangerous and unhealthy (Bhaman, Radical History Review, 84).’” The 1980s and 1990s were a time in which the law created a front of supporting people with HIV, while allowing for gaps in the protections they provided.
People with HIV have continually been left vulnerable due to their illness. In terms of medical coverage, approximately 27% of people with AIDS did not have any health insurance and another 45% relied entirely on Medicaid in the mid 1990’s (EL SIDA: La Lucha Contra La Enfermedad y Los Seguros). In order to help those fighting HIV/AIDS, there needs to be comprehensive changes to legislation that allows for them to be undercut from things like medical coverage and safe housing. The country should not be focused on the bottom line for helping patients with AIDS, but instead should help them as if they had any other chronic disease that has not been grossly over-stigmatized by what could be considered propaganda by religious groups and the government. Congress went as far as banning federal funds from being used for AIDS prevention in 1987 (Geiling, The Confusing and at-Times Counterproductive 1980s Response to the AIDS Epidemic). This precedent left room for policies like section 510 of ERISA to be dictated and interpreted by misinformation and biases instead of facts and reality associated with the disease.
CONCLUSION:
The Employee Retirement Income Security Act was finally amended in 1996 to include provisions that allowed for greater protection of coverage for individuals- though there is no specific mention to people with AIDS (Erisa Amendments Overview). The Americans with Disabilities Act of 1990, which took effect in 1992, does not do any better at protecting those with HIV/AIDS, but it does give room for the petition for writ of certiorari filed for McGann v. H & H Music Co., filed under the name Greenberg v. H & H Music Co. (Kilberg, AIDS, employee benefits, and the Americans with Disabilities Act).[7] This means that the case can be reexamined once again, with another chance for the courts to rule on whether the ADA follows the precedents that section 510 of ERISA created in the original rulings.
McGann v H & H Music Co. resulted in the allowance of reduced benefits for workers who were diagnosed with HIV/AIDS. This ruling was one of countless attempts to undermine the validity of existence for those with HIV/AIDS. In the legal setting, the case led to the ability for businesses to alter their coverage to reduce the costs inflicted due to the expensive treatments required for someone with AIDS as long as it fit within the ERISA section 510 framework- a framework that contained loopholes for discrimination based on benefit plans and not direct individual discrimination.
Endnotes
[1] Section 510 of ERISA states that employers are barred from keeping employees from being able to collect benefits. This means employers are not allowed to discriminate against a beneficiary using their rights (employing coverage) under ERISA plans, meddle in the beneficiary’s ability to have rights under ERISA, and punish a beneficiary for using their rights. Most notably, section 510 of ERISA states that employers are prohibited from terminating an employee before they can utilize their rights as laid out by Section 510 (see Employee Retirement Income Security Act Section 510 in bibliography for more).
[2] Summary Plan Descriptions are required under the Employee Retirement Income Security Act for each employee. The SPD must give employees relevant information about what rights, benefits, and responsibilities are available under the plan coverage. Some of this information includes: name and type of plan, description of benefits, whether the plan is covered by termination insurance, and provisions about termination of the plan (Plan Participations- Summary Plan Description, IRS).
[3] In Hamilton v. Travelers Ins. Co., plaintiff Jerd Hamilton alleged he was denied coverage for his son Gregg’s (dependent on the policy) treatment after an injury sustained on September 23, 1979. Gregg was considered a dependent on the policy until his 19th birthday, August 23, 1981. When the plan was canceled by Travelers on October 1, 1981, they began to refuse coverage for any treatments that followed policy termination. Hamilton filed a lawsuit on the grounds that Travelers violated ERISA. The original case, heard by the United States District Court, E.D. Missouri, N.D, ended with the court ruling that Travelers did not need to reimburse Hamilton for medical expenses incurred after October 1, 1981 due to their following of the SPD written. The appellate level trial of this case referenced in McGann v. H & H Music Co. came to the same conclusion.
[4] The referenced court cases are: Kimbro v. Atlantic Richfield Co., 889 F.2d 869, 881 (9th Cir. 1989), Clark v. Resistoflex Co., a Div. of Unidynamics Corp., 854 F.2d 762, 770 (5th Cir.1988), Dister v. Continental Group Co., 859 F.2d 1108, 1111 (2d Cir. 1988), Gavalik v. Continental Can Co. 812 F.2d 834, 851 (3d Cir) (see McGann v. H & H Music Co., 946 F .2d 401 (5th Circ 1991)).
[5] In Vogel V. Independence Federal Sav. Bank, 10 counts were filed against Independence Federal Savings Bank after Leonard Vogel suffered a severe stroke in 1982 that left him in need of near-constant medical attention. Shortly thereafter, the bank took him off their payroll but continued paying his medical premiums. After two years, the premiums charged to Independence Federal rose drastically in response to payments for Vogel’ treatments; the bank adopted a new policy that now excluded Vogel from coverage, leaving Vogel without insurance. Vogel claims that ERISA had been violated in Independence Federal’s actions. In the end, only a few of the claims filed were granted by the court, but those included breach of fiduciary duty by Independence in violation of ERISA, breach of fiduciary duty by Guardian (insurer) in violation with ERISA, and breach of fiduciary duty by Arkin Agency in violation of ERISA (see Vogel v. Independence Federal Savings Bank 728 F. Supp. 1210 (D. Md. 1990).
[6] The original coverage Owens had under Storehouse Inc. granted a maximum of $1,000,000 (as granted to all employees). He was diagnosed with HIV in November of 1988 and began filing his first claim under his insurance. Because of his filing a claim, the insurer was notified Storehouse of their intention to cancel the policy due the medical costs associated with AIDS treatment at the time. Storehouse was able to keep the policy by negotiating terms of coverage for its employees- leading to a cut in coverage by the insurer for AIDS-related illness to $25,000 and a guarantee for only 6 months, but Storehouse was liable to cover the first $75,000 of AIDS related claims. Instead of dealing with this and potential problems with coverage for other employees, they changed insurance companies entirely and allowed for a $25,000 cap on AIDS-related coverage for Owens. See more in Owens v. Storehouse Inc., 984 F.2d 394 (11th Cir. 1993).
[7] A writ of certiorari is a request for the Supreme Court to order a lower court to send the record of a case up to them for review.