DISNEY SETTLES BENEFITS DISPUTE; PLAN ENDS 5-YEAR EMPLOYEE FIGHT.

Byline: Dave McNary Staff Writer

The Walt Disney Co., averting a potentially embarrassing legal spat with 3,800 long-time employees, has agreed to settle a dispute over medical benefits.

The proposal ends a five-year fight that began when the entertainment giant decided to change its policy that gave 20-year employees free medical coverage for life once they reached the age of 62. In March, a federal judge in Los Angeles gave class-action status to a lawsuit accusing Disney of illegally charging for health benefits.

``We think this is a very good settlement, especially considering that many other companies are eliminating these kinds of benefits,'' plaintiff's attorney William T. Payne said Monday. ``We had a meeting of plaintiffs in Florida this morning and people seemed to be very happy about it.''

Payne said lawyers for both sides expect to file a joint settlement motion next month in federal court. ``The judgment could be effective in February if everything goes smoothly,'' he added.

The suit was sparked by a 1994 decision by Disney to boost the age eligibility for free coverage to 65; in 1995, it began charging premiums unless the employees and retirees joined a health maintenance organization. Payne said changes in the medical plans led to a typical couple paying $1,023 in annual premiums.

Disney contended its contracts allowed it to impose charges when the costs of coverage increased, but the employees insisted Disney managers had been explicit in their pledge of free coverage for any employee meeting three conditions - 62 years of age, 20 years of service and 30,000 hours of work.

Disney and the plaintiffs reached a tentative settlement on the suit in late 1997 but that deal collapsed amid accusations Disney had planned to make additional changes not specified in the settlement.

Payne said the new settlement calls for reducing the annual premium for a typical couple to $102 and returning premiums paid since the plans were changed. Maximum out-of-pocket expense for a family was boosted from $1,500 to $2,100 per year.

The settlement also covers employees who had worked for 20 years for Disney but had not retired when the changes were made. That group will be paid $4,500 each and have company-paid Medicare supplemental insurance for five years.