Important note: Information in this article was accurate in 2000. The state of the art may have changed since the publication date.
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The San Franciso Examiner - June 20, 2000
Bob Egelko OF THE EXAMINER STAFF
AIDS patients scored a major legal victory over the insurance industry with the state Supreme Court barring insurers from cutting off benefits to people who knew they were HIV-positive when they applied for insurance and have paid premiums for more than two years.
The court ruled unanimously Monday that California law gave insurance companies two years to screen new policy-holders for pre-existing conditions and then entitled them to coverage for disabilities, even if they were sick when they signed up.
The decision overturned lower-court rulings that allowed an insurance company to deny AIDS disability benefits to a five-year policy-holder on the grounds that his undisclosed HIV test showed that the disease had already manifested itself, making him ineligible for coverage under the terms of the policy. The lower-court rulings had alarmed advocates for AIDS and cancer patients and disability-rights groups.
They feared that insurers would use the same reasoning to cut off benefits on the grounds that undisclosed tests years ago had shown a susceptibility to a later disease - high cholesterol or blood sugar, for example, or genetic markers for breast or prostate cancer.
Advocates warned that denying benefits in such cases would discourage people from getting tested.
"The California Supreme Court said once you have an insurance policy for two years in California, you have peace of mind. An insurance company can't go back and scour your medical records to find some excuse not to pay you," said Jon Davidson, supervising attorney for the Lambda Legal Defense and Education Fund in Los Angeles, an attorney for the policy-holder in the case.
"This ruling allows people who are HIV-positive, particularly people who are asymptomatic, to get insurance and to get those insurance benefits paid," said Janis Eggleston, who represented the Bar Association of San Francisco and the AIDS Legal Referral Panel.
Current state law allows insurers to ask applicants about HIV tests, and to deny coverage if a positive antibody test has been confirmed by a second, more accurate test. But Eggleston said such denials, which were not at issue in Monday's case, might violate state and federal laws banning discrimination against the disabled.
The insurer, Paul Revere Life Insurance Co., received supporting arguments in the case from the American Council of Life Insurance, which said requiring benefits for illnesses contracted before a policy was in effect would encourage concealment and fraud.
Insurance lawyers did not return telephone calls about the ruling Monday. The case involved Mark Galanty, 52, a court stenographic reporter from the San Fernando Valley, who applied for a Paul Revere disability policy in 1989. More than a year earlier, he had tested positive for HIV, but had been told by a lay counselor that the results were not conclusive.
He was not asked in his application about the HIV test, an inquiry then banned by state law.
Galanty was diagnosed with AIDS in 1994 and presented a disability claim. The company paid until April 1995, but started a new investigation of his medical records and cut off benefits after learning of the HIV test.
"I was trying to be responsible when I accepted a sales agent's pitch about the policy, and I was shocked when, years later, my claims were rejected," Galanty said Monday in a statement issued by his attorneys.
His suit seeks the withheld benefits and additional damages. A Superior Court judge and an appellate court dismissed the suit, citing language in the insurance policy that denied coverage for diseases that manifest themselves before the policy took effect.
The Supreme Court declined to say whether the HIV test manifested the later diagnosis of AIDS. Instead, the justices said the policy language was trumped by the two-year limit set by state law for an insurer to dispute an applicant's eligibility.
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