Recent Development by T.J. Dorsey
John McGann was diagnosed with Acquired Immune Deficiency Syndrome (“AIDS”) in December of 1987. McGann subsequently began filing claims for reimbursement under his employer's medical insurance plan. On July 28, 1988, his employer, H & H Music Company (“H & H”), informed its employees of its decision to change the medical insurance plan effective August 1, 1988. The major amendment to the plan lowered the ceiling on the maximum lifetime benefits payable for all AIDS-related claims from one million to five thousand dollars. McGann sued H & H, Brook Mays Music Company, and General American Life Insurance, alleging that the alteration of the medical insurance plan constituted discrimination in violation of section 510 of the Employee Retirement Income Security Act (“ERISA”).
The United States District Court for the Southern District of Texas granted defendants' motion for summary judgment, believing that the defendants could freely modify the plan, regardless of intent. The Fifth Circuit Court of Appeals affirmed, holding that the reduction in benefits did not constitute discrimination under section 510 of ERISA. In reaching this conclusion the court noted that: (i) the reduction applied equally to all members of the plan and legitimately sought to reduce the overall costs associated with the plan, and (ii) the one million dollar maximum benefit limit under the group medical insurance plan did not constitute a right to which McGann could have become entitled. McGann v. H & H Music Co., 946 F.2d 401 (5th Cir. 1991), cert. granted sub nom. Greenberg v. H & H Music Co., 112 S.Ct. 1556 (U.S. filed Feb. 3, 1992).
About the Author
T.J. Dorsey.
Citation
67 Tul. L. Rev. 305 (1992)