Fortis, Assurant & Other Health Insurers Drop Coverage for HIV/AIDS Patients

Published: Thu 18 Mar 2010

Mary Banks

As if outrageous premium hikes weren't enough of an indictment against health insurance companies, a new court case has revealed unseemly details about a health insurer's treatment of HIV-positive policyholders. The records unearthed by the litigation show discriminatory and unethical behavior on the part of the insurer, which underscores the need for health care reform in the United States.

The story begins in May of 2002 when Jerome Mitchell, a 17-year-old South Carolina freshman, found out that he was HIV positive. Mitchell was devastated by the news, but he believed he had one important detail on his side: of his own volition, in preparation for his first year of college, Mitchell had bought his own health insurance.

However, soon after his diagnosis, his health insurer, Fortis, canceled his policy. Doctors told Mitchell that without additional treatment, his HIV would turn into full-blown AIDS in 1-2 years, and he would probably die two years after that.

The Litigation

Wisely, Mitchell hired a lawyer, but not because he wanted to sue the company. On the contrary, the reserved teenager believed that his policy was revoked by accident and would be restored once he brought the matter to the insurer's attention.

Now known as Assurant Health, Fortis did not respond to his lawyer's letters, just as they had previously with questions from a case worker from a local clinic who was assisting Mitchell. So the teenager decided to sue.

In 2004, a Florence County, South Carolina jury ordered Assurant Health, a subsidiary of Assurant Inc., to award Mitchell $15 million for wrongfully canceling his medical insurance policy.

The South Carolina Supreme Court upheld the verdict in September of 2009, but the court lowered the amount due to Mitchell to $10 million.

By winning the case against Fortis, Mitchell not only received justice for himself, but he also exposed misconduct by Fortis that might have consequences for the health insurance industry as a whole.

Damaging Records Revealed

Previously unreleased documents from Mitchell's law suit indicate that Fortis had a despicable company policy of targeting HIV-positive policyholders. An algorithm and computer program targeted each policyholder who had recently received an HIV diagnosis and flagged his/her policy for a fraud investigation, reaching for any pretext that would justify their planned revocation of benefits. As with Mitchell's case, health insurance policies were often revoked on bogus information, for no reason, or on weak evidence, according to the documents released by the court.

Political Repercussions

The news of Fortis' reprehensible treatment of policyholders comes at an opportune time for President Barack Obama, who has escalated his vitriolic rhetoric against health insurers in an attempt to shore up support for his administration's health care reform plan. Later this week, the House of Representatives will vote on a major overhaul of the American health care system, which President Obama has said will eliminate unpopular and unethical health insurance industry practices.

Remember that Fortis/Assurant isn't the only bad guy in the health insurance industry. Other insurers have long practiced "rescission," where they immediately investigate policyholders once they've received life-threatening diagnoses. Lawmakers and investigators say that singling out policyholders with HIV is unprecedented, however.

Considering that the fundamental purpose of health insurance is to provide care in times of serious illness, Fortis' conduct could not be more abhorrent. Not only did Fortis intentionally and wrongfully drop coverage on HIV-positive policyholders, but it also kept the business of rescission committee meetings confidential, withheld critical documents about their capricious revocation decisions, and did not inform policyholders of their right to appeal the decision.

If such an egregious violation of policyholder rights can occur at Assurant, one of the country's largest health insurers, it is undoubtedly occurring at every other major insurer as well. Aside from Mr. Mitchell's eventual vindication, the only good that can come from such unconscionable practices is to foment the American public's anger and catalyze real, effective health care reform.