Federal Court to Decide Whether Health Insurers can Discriminate by Disability

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Lambda and ALCC defend landmark ruling that Mutual of Omaha illegally caps HIV care at hearing on Monday, April 5
April 2, 1999

(CHICAGO, April 2, 1999) -- A federal appeals court in Chicago is set to examine the legality of setting drastic limits on health benefits for policyholders with a particular health problem -- HIV infection.

Lambda Legal Defense and Education Fund and AIDS Legal Council of Chicago (ALCC) have already won in district court on behalf of two Chicago men suing Mutual of Omaha Insurance Company for restricting their lifetime HIV-related coverage to a small fraction of that allowed for other medical conditions.

In applying a landmark disabilities rights law to the health insurance industry, the district court found Mutual in violation of the Americans with Disability Act for discriminating against policyholders with HIV. The court also said the insurer has no financial justification for the limits.

On Monday, April 5, the United States Court of Appeals for the Seventh Circuit will hear arguments in Doe v. Mutual of Omaha, as the insurer appeals that ruling. Lambda Staff Attorney Heather C. Sawyer will argue on behalf of the policyholders.

Lambda and ALCC filed the lawsuit on behalf of "John Doe" and "Richard Smith." The insurance giant had put a lifetime ceiling for HIV-related coverage in the two men's health insurance policies at $100,000 and $25,000, respectively, but extends coverage for heart disease, cancer, and most other serious illnesses up to $1 million. Mutual also permits more coverage for other conditions if the policyholder makes no new claims after two years.

Said Sawyer prior to the hearing, "Mutual of Omaha has admitted that its AIDS caps are arbitrary and violate the law. But the company would rather jeopardize the health of policyholders because they think they can get away with discriminating against people who have HIV or any other disability."

ALCC Executive Director Ann Fisher said, "Other insurance companies are watching this case because they would like the freedom to impose coverage caps regardless of whether or not they had any sound basis for those caps. Mutual of Omaha cannot have a special license to discriminate against policyholders who have a disfavored disability."

On December 2, U.S. District Judge Suzanne B. Conlon entered a judgment in which Mutual itself conceded that the caps were unnecessary because medical care for HIV and AIDS was not more expensive than that for other serious medical conditions. Should Mutual fail in its appeal, under the terms of the judgment the company must remove the HIV-specific restrictions in all of its health insurance policies.

Lambda Cooperating Attorney Stuart Graff, a partner at the Chicago law firm Schiff Hardin & Waite and a member of the ALCC Board of Directors, assisted in the case. Lambda is the nation's oldest and largest legal organization serving lesbians, gay men, and people with HIV and AIDS. ALCC is a not-for-profit organization that promotes and protects the legal rights of men, women, and children affected by HIV and AIDS in the Chicago area.

WHO: Lambda Staff Attorney Heather C. Sawyer argues for policyholders WHAT: Appeal in Doe v. Mutual of Omaha, a case involving arbitrary HIV-related caps on health insurance WHERE: U.S. Court of Appeals for the Seventh Circuit, 219 South Dearborn Street, Chicago, 27th Floor WHEN: Monday, April 5, 9:30 a.m. CT

(Doe v. Mutual of Omaha, No. 98 C 325)


Contact: Heather Sawyer, 312-663-4413, ext. 22; Peg Byron 212-809-8585, 888-987-1984; Ann Fisher 312-427-8990


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Related Issues: HIV