New England Mutual Must Pay Disability Benefits to Policyholder with HIV

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Lambda helps secure resounding victory in New York's highest court
March 30, 1999

(NEW YORK, March 30, 1999) -- New York's highest court Tuesday upheld a lower court ruling against a major insurance company that sought to circumvent state law and avoid paying benefits to a policyholder disabled by AIDS. Lambda Legal Defense and Education Fund, which worked closely with the policyholder's attorney, Mark Scherzer, applauded the decision.

Said Scherzer, "The court cut right through the insurance company's coy semantic arguments and implemented the clear intent of New York law. This decision settles an important matter correctly -- insurance companies that sell incontestable policies must ask their questions and do their investigation within the first two years. Pre-existing conditions cannot be dredged up to deny claims after that time."

Lambda Legal Director Beatrice Dohrn said, "The ruling sends a powerful message to insurance companies: they cannot take payments from policyholders for years, and then try to avoid obligations to pay benefits when the claims are made." She added, "People with HIV have the same legal protections as any insurance policyholder."

A Rockland County resident identified in court papers only as "John Doe" paid premiums for over five years before filing an AIDS-related disability claim in March 1996. New York, like most states, requires that insurance policies contain an "pre-existing condition limitation" that forbids insurers from denying disability claims based on conditions that existed prior to the policy, if the disability develops more than two years after the policy is issued.

The unanimous ruling by the state Court of Appeals in New England Mutual Life Insurance Company v. John Doe affirms a lower court's rejection of the company's effort to use HIV status as grounds for denying an AIDS-related claim made years after the start of a disability policy. Lambda submitted a friend- of-the-court brief in Doe's support.

In a strategy mirrored by other insurers around the country, New England Mutual had argued that, because Doe was HIV-positive at the time the policy was issued, his AIDS disability was "manifest" before the policy went into effect and thus was never covered by the policy.

Writing for the court, Judge Albert M. Rosenblatt rejected that argument, saying, "The carrier's proposed interpretation would undermine the predictability that the statute was designed to engender....Carriers may not write definitions that trump provisions required by law."

In California, Lambda is fighting a similar attempt by the Paul Revere Life Insurance Company to deny disability benefits to another policyholder with HIV. That case, Galanty v. Paul Revere, is pending before the state's highest court.

Lambda's amicus brief in New England Mutual was authored by Lambda AIDS Project Director Catherine Hanssens. Scherzer was assisted by his associate A. Christopher Wieber. Lambda is the nation's oldest and largest legal organization serving lesbians, gay men, and people with HIV/AIDS.

(New England Mutual Life Insurance Company v. John Doe, No. 39)

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