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You're HIV Positive. And We're Cancelling Your Coverage.

Imagine this: Not long after getting word that you are HIV positive, you receive a letter from your insurance carrier. They're revoking your coverage because, upon examining your medical records, they've decided you knew about your condition and hid it from them. You have no idea what they are talking about; you bought this policy before the diagnosis. But when you inform them of this, and even provide some evidence that their investigation is in error, they ignore you. Meanwhile, you're on the hook for unimaginable medical bills, since you're uninsured and there's not a carrier in the world that will take you now.

Jerome Mitchell didn't have to imagine. It happened to him. According to a new story by investigative reporter Murry Waas, Mitchell in 2002 bought an individual policy as he prepared to begin college. A few months later, he learned he was HIV positive. That's when Fortis insurance, which is now part of Assurant, informed him they were canceling his coverage. Apparently a Fortis reviewer went through his medical file and found a nurse's note, dated from 2001, referencing his HIV status. The memo happened to be in a pile of records from 2002, suggesting it may simply have been mis-dated; even the reviewer who found it asked whether that one piece of paper was sufficient grounds for revoking coverage.

With the help of a social agency that works with HIV patients, Mitchell supplied Fortis with evidence of the actual diagnosis date and begged them to reconsider. Eventually he sued--and won. A South Carolina Jury awarded him $15 million. But it wasn't simply because of what Fortis had done in this one case. It was also because Mitchell's story was emblematic of how the company conducts business. Relying upon court records and interviews, Waas explains:

Previously undisclosed records from Mitchell's case reveal that Fortis had a company policy of targeting policyholders with HIV. 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.
Like other major health insurance companies, Fortis has a "rescission committee" that reviews recommendations to cancel a policyholder's insurance. But in the case of Fortis [Presiding Judge Michael Nettles wrote] the committee rarely did more than "rubber stamp" already flawed recommendations.
"There were no rules, no minutes, no notes, and, in accordance with instructions from general counsel not even a record of who was present," the judge wrote about the committee.
During the meeting in which Mitchell's insurance was rescinded, "there were more than 40 other customers, whose cases appeared before the rescission committee for review in no more than one and one half to two hours, representing an average of three minutes or less per customer," he wrote. ...
"Not only did Fortis choose to rely on one false and unreliable snippet of information containing an erroneous date to the exclusion of other information which would have revealed that date to be erroneous, Fortis refused to conduct any further investigation even after it was on notice the evidence which aroused its suspicion to be false," the judge noted. ...
"In addition to these acts towards (Mitchell) there was evidence that Fortis has for some time been making recommendations for rescission, and acting on those recommendations, without good-faith investigation conducted fairly and objectively ... Fortis pre-programmed its computer to recognize the billing codes for expensive health conditions, which triggers an automatic fraud investigation by its "Cost Containment" division whenever such a code is recognized."

I don't know any more about the case than what I've read in Waas's article. But if you're skeptical, consider that the case eventually went to the South Carolina Supreme Court, which upheld the verdict. And although the high court reduced the award to $10 million, the Chief Justice reached the same conclusion as the trial judge: "We find ample support in the record that Fortis' conduct was reprehensible. Fortis demonstrated an indifference to Mitchell's life and a reckless disregard to his health and safety."

In a prepared statement, Assurant said that "We disagree with certain of the court's characterizations of Assurant Health's policies and procedures in the Mitchell case." Then, after noting that the case is still in some sort of appeals--I'm not sure what kind, since the Supreme Court already ruled on the main case--it added that "All insurance companies have processes to review claims to ensure their accuracy, completeness and compliance with policy provisions and we evaluate all claims on an individual basis."

That last part is entirely accurate. And insurance company executives, including Assurant's, have frequently defended this practice--known as "rescission"--as necessary to catch people who deliberately lie about their medical records. That sort of thing happens, of course. There are lots of dishonest people out there. But stories of insurers canceling policies of people who appeared to be acting in good faith are legendary. And, as Waas notes, the effect does not seem to be entirely accidental:

A federal investigator who has reviewed Assurant's remaining records says that they showed that once a person with HIV was targeted with a fraud investigation, the company made a greater effort than usual to cancel the person's insurance. Policies and medical records were scrutinized to a greater extent than others being scrutinized, he said.
The investigator, who spoke on condition of anonymity, said that the motive for focusing on people with HIV was simply the high cost of treating the illness: "We are talking a lifetime of therapy, a lifetime of care ... a lot of bills. Nowadays someone with HIV can live a normal life for decades. This was about money."
No evidence has emerged that any other major American company purged policyholders simply because they had HIV. But an investigation this summer by the House Energy and Commerce Committee as well as earlier ones by state regulators in California, New York and Connecticut, found that thousands of vulnerable and seriously ill policyholders have had their coverage canceled by many of the nation's largest insurance companies without any legal basis. The congressional committee found that three insurance companies alone saved at least $300 million over five years from rescission. One of those three companies was Assurant.
The committee estimated that Assurant alone profited by more than $150 million between 2003 and 2007 from rescission.

By the way, if you feel like this isn't the first time you heard a story like this about somebody with coverage from Assurant, that's because it isn't.