Lambda Helps Secure Benefits for HIV-Positive Policy Holders

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New York court unanimously upholds dismissal of insurance company's attempt to deny benefits
April 13, 1998

(NEW YORK, Monday, April 13, 1998) -- Lambda Legal Defense and Education Fund lauded a New York State appeals court decision last Friday upholding the dismissal of a case brought by New England Mutual Life Insurance Company. The company sought to avoid payment of AIDS-related disability benefits to a long-time policy holder in Rockland County on the basis of his HIV-status at the time he purchased the policy.

"This unanimous ruling sends a powerful message to insurance companies that they cannot maneuver around their obligations to policy holders, who have paid premiums for years and then become disabled by AIDS, just because they were HIV positive at the time they bought their policy," said Catherine Hanssens, AIDS project director and co-author of Lambda's friend-of-the-court brief in the case.

State law requires disability insurance policies to identify at the outset conditions they intend to exclude from coverage, and bars denial of coverage based on conditions which existed prior to the policy if the disability develops more than two years after the policy is issued.

In a strategy mirrored by other insurers around the country, New England Mutual Life attempted to defend its refusal to pay the policy holder, identified as "John Doe," for his AIDS-related disability claim after collecting premiums from him for five years. In an effort to get around the two-year rule governing "contestability," New England Mutual Life argued that, because he was HIV positive at the time he bought the policy, Doe's disabling AIDS-related condition had already "manifested" itself prior to the issuance of the policy.

"This ruling also will support persons with other conditions, since New England Mutual Life could have used the same reasoning to deny claims to those with other early indicators of susceptibility to disease, such as genetic testing indicating predispositions to certain illnesses," noted Hanssens.

Lambda argued in its brief that it is neither medically nor legally justified to deny coverage for an AIDS-related disability after years of premiums have been paid. The brief noted the two-year period in which New England Mutual Life is allowed to investigate the policy holder's medical history and urged that the courts should not permit the company to forego investigation only to escape liability after years of accepting payments. It also noted that people with HIV can remain active and working for decades without becoming incapacitated by AIDS, and allowing them access to disability coverage is increasingly viable and important.

John Doe is represented by New York Attorney Mark Scherzer. Lambda's friend-of-the-court brief was authored by Hanssens and attorney Barry Burland, an associate with Milbank, Tweed, Hadley and McCloy.

(New England Mutual Life Insurance Company v. John Doe, No. 97-2684)


Contact: Kathy Strieder 212-809-8585, 888-987-1984 pager; Catherine Hanssens, 212-809-8585


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