In a defeat for the Giuliani Administration, the Court of Appeals ruled yesterday that New York City cannot require AIDS victims who seek welfare benefits to submit to the general eligibility review process the City imposes on other welfare applicants.

A 1997 City law sought to streamline the application process for people suffering from AIDS-related illnesses by making the City’s Division of AIDS Services and Income Support responsible for determining their eligibility. The Court said this purpose would be thwarted by requiring AIDS victims to submit to a second investigation by specialists in the City’s Eligibility Verification Review program.

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