Insurer went on campaign to drop HIV-positive clients

Krugman: Situations like this will 'get much worse' without health care reform

Health insurance companies have become notorious for dropping coverage of clients with pre-existing conditions or those whose health problems become costly. But rarely has an insurer been accused of systematically targeting an entire class of people suffering from a particular condition.

But that is exactly what Assurant Health stands accused of, after recently released court documents reportedly show the company used complex computer algorithms to single out HIV patients and deny them health coverage.

Government regulators call the company's behavior "unprecedented."

A report from Reuters news service states that recently released court documents from a 2004 lawsuit by an HIV-positive college student reveal that Assurant, at the time known as Fortis, "had a company policy of targeting policyholders with HIV."

Reuters reports:

A computer program and algorithm targeted every policyholder recently diagnosed with HIV for an automatic fraud investigation, as the company searched for any pretext to revoke their policy. As was the case with Mitchell, their insurance policies often were canceled on erroneous information, the flimsiest of evidence, or for no good reason at all, according to the court documents and interviews with state and federal investigators.

The news comes as the long-running health care reform debate edges closer to resolution. President Barack Obama, who has been campaigning in Washington and around the country to pass a health care reform package, has recently taken to strongly criticizing health insurers.

Writing in the New York Times, Nobel-winning economist Paul Krugman argues that Fortis' policy on HIV highlights the crucial issues at stake in the health care reform debate.

The crucial thing to understand is that depending on how a few Democrats vote sometime soon, stories like this will either cease happening — or continue, and get much worse. The proposed health care reform would end discrimination based on pre-existing conditions, and therefore end the threat of rescission as well.

The court case that revealed the insurer's HIV policy involves Jerome Mitchell, who as a 17-year-old college student in 2002 contracted the HIV virus, and was soon informed by Fortis that his policy had been canceled. He sued, and in 2004 won a $15-million judgment that was later reduced to $10 million.

The court documents involved in his lawsuit against Fortis were sealed by a judge, but Reuters obtained several opinions from appellate judges overseeing the insurer's appeal of the verdict.

"We find ample support in the record that Fortis' conduct was reprehensible," wrote South Carolina Supreme Court Chief Justice Jean Toal, as quoted at Reuters. "Fortis demonstrated an indifference to Mitchell's life and a reckless disregard to his health and safety."

Michael G. Nettles, a state circuit judge for the 12th Judicial District of South Carolina, wrote that Fortis "gambled" with Mitchell's life.

"The court finds that Fortis wrongfully elevated its concerns for maximizing profits over the rights and interest of its customer," the judge wrote in his decision.