A U.S. appeals court ruled that health insurers can be sued under the Americans with Disabilities Act, a decision that could make it harder for insurers to limit coverage of some illnesses.

Lawyers say the ruling by the First U.S. Circuit Court of Appeals makes it possible for employees to sue and insurer for discriminating if its medical plan restricts benefits for conditions such as AIDS, alcoholism, repetitive-stress injuries or infertility. The case could also open the door to lawsuits by employees who are denied benefits because of pre-existing medical condition.

The decision "is an open invitation to plaintiffs; lawyers to not only sue the employer on these issues but to sue the insurance carrier," said Christopher Bell, a Washington labor lawyer.

The Americans with Disabilities Act technically prevents discrimination only by employers and public facilities, and the Boston appeals court stopped short of ruling that it automatically applies to health insures. But the court said the plaintiff in the case deserved a chance to prove that, by administering employee benefits, the health insurer had taken on an employer's functions and therefor should be subject to the ADA.

The case involved Ronal Senter, a wholesale auto-parts distributor who was diagnosed in 1986 as carrying the virus that causes AIDS. Four years later, Mr. Senter's health insurer amended the terms of its plan to limit benefits for AIDS-related illnesses to $25,000. The plan continued to provide lifetime coverage of $1 million for other illnesses.

Mr. Senter sued the insurer, Automotive Wholesalers Association of New England Inc., contending that it discriminated against him by changing the plan in response to his illness. Mr. Senter died last year, but his family and former company, which he owned, have continued the case.

A district judge in New Hampshire dismissed the case, saying the health insurer was neither Mr. Senter's employer nor a public facility. But the appeals court disagreed, advancing a broader reading of the disabilities act. "It's not what most people thought about when they looked" at the ADA, Mr. Bell said.

The decision could allow plaintiffs to get around limits that other courts have put on employees' efforts to challenge restrictions on their health benefits, according to Marc Elovitz, staff attorney for the American Civil Liberties Union's national AIDS project, which filed a brief on behalf of Mr. Senter. Other courts, including a New Orleans federal appeals court, have ruled that the federal Employee Retirement Income Security Act, or Elrisa, gives employers broad discretion to alter the terms of medical coverage.

James Schulte, a lawyer for the Automotive Wholesalers Association, said his client probably wouldn't appeal the ruling. The case now will be sent back to the district court for trial.