IT WAS A TERRIFYING MOMENT TWO years ago at the Hockomock Area YMCA pool in North Attleboro, Mass., when aquatics director David Schultz, deaf since birth, noticed a girl in danger of drowning after ingesting a mouthful of water. "The minute I saw the water go into her mouth, I grabbed her and took her out," Schultz says.

Despite such heroics—and a perfect record of poolside vigilance during nearly two years at the Hockomock Y—Schultz, 32, was demoted last summer to program associate, forced to take an $8,000 pay cut and stripped of his Y lifeguard certification because of his disability. According to new rules adopted by the national YMCA in 1994, lifeguards must be able "to hear noises and distress signals."

"You're using all your senses all of the time when you're guarding," explains Gerald DeMers, a San Luis Obispo, Calif., physical-education professor, who helped draft the Y's policy. "If you're looking in one direction and don't hear [a swimmer] yelling for help, they can very quickly slip below the surface of the water." To Schultz those words carry the ring of discrimination rather than truth. Last December he sued YMCA USA and the Hockomock Y for $20 million in a Boston federal court, charging that his safety record was being ignored. "They chose to prejudge my capabilities rather than fairly judge them," said Schultz, who argues that he compensates for his deafness with heightened alertness and has saved up to 20 lives with no deaths since 1979.

Growing up in Deephaven, Minn., Schultz swam competitively at nearby St. Louis Park High School, graduated from the University of Massachusetts and has been married since 1991 to social worker Kristin Johnson, who is also deaf. National Y officials insist their reason for decertifying him is safety. But Ella Mae Hope, 46, whose two children were taught to swim by Schultz at the Hockomock Y, thinks the real issue is vigilance. "I have no fear with David," she says. "I've seen lifeguards talking to pretty girls at the beach and not even paying attention to the water."