HIV Patients Targeted for Rescission by Insurer

Shortly after being diagnosed with HIV in May 2002, then 17-year-old Jerome Mitchell had his health insurance revoked by an insurance company whose policy automatically targeted HIV policyholders for rescission

In May 2002, a rural South Carolina 17-year-old college student learned he had contracted HIV. Shortly after being diagnosed, Fortis, his insurance company, reportedly revoked his policy. Jerome Mitchell was devastated by the diagnosis. He was told that without further treatment, his HIV would become full-blown AIDS within a year or two and he would most likely die within two years after that. He believed that because he had purchased his own health insurance that he would be covered. Mitchell was wrong. He expected that his insurance was cancelled by mistake and would be reinstated once he set the company straight so he hired an attorney. Fortis, now known as Assurant Health, ignored his attorney's letters along with earlier inquiries from a case worker at a local clinic that was helping him, so he sued. Insurance Policies Often Cancelled For no Good Reason at All In 2004 a jury in Florence County, South Carolina, ordered Assurant Health, part of Assurant Inc., to pay Mitchell $15 million for wrongly revoking Mitchell's health insurance policy. Five years later, in September 2009, the South Carolina Supreme Court upheld the lower court's verdict, but reduced the amount to be paid to Mitchell to $10 million. Mitchell helped expose wrongdoing on the part of Fortis that could have repercussions for the entire health insurance industry. Previously undisclosed records from Mitchell's case reportedly reveal that Fortis has a company policy of targeting policyholders with HIV. A computer program and algorithm targeted every policyholder that was recently diagnosed with HIV for an automatic fraud investigation -- as the company searched for any pretext to revoke their policy. Court documents and interviews with state and federal investigators revealed that, as with Mitchell's case, insurance policies were often cancelled on erroneous information, the flimsiest of evidence, or for no good reason at all. Rescission has Long Been Practiced by Insurance Companies "Rescission" has long been practiced by insurance companies, whereby they investigate policyholders shortly after they've been diagnosed with life-threatening illnesses, but government regulators and investigators say it is unprecedented for a company to single out people with HIV. Assurant reportedly profited by more than $150 million between 2003 and 2007 from rescission. The judge in the Mitchell case criticized what he referred to as the company's efforts to cover its tracks. Assurant Health said that commenting on individual customer claims is not a matter of policy. Much of Mitchell's trial record is still bound by a confidentiality order and not available to the public, but two orders written by Michael G. Nettles, the presiding State Circuit Judge for the 12th District of South Carolina, of Florence County, describe the case in detail. Judge Nettles wrote the orders in response to Assurant's motion that the jury's verdict be set aside or reduced. In the orders, Judge Nettles strongly denied Fortis' claims and condemned its conduct. Judge Nettles wrote that "There was evidence that Fortis' general counsel insisted years ago that members of the rescission committee not record the identity of the persons present and involved in the process of making a decision to rescind a Fortis health insurance policy." Judge Nettles also noted that there were no minutes of actions, votes, or any business conducted during the rescission committee's meeting. Fortis Destroyed Records to Hide Misconduct and Conceal its Actions In upholding the jury's verdict, the South Carolina Supreme Court agreed with the lower court's finding that Fortis destroyed records to hide the corporation's misconduct and tried to conceal its actions in rescinding Mitchell's policy. The court found Fortis' actions reprehensible. Mitchell's health insurance was cancelled by Fortis due to a single erroneous note from a nurse in his medical records indicating that he might have been diagnosed prior to his obtaining his insurance policy. When Fortis' investigators discovered the note, they stopped reviewing Mitchell's records for evidence to the contrary, including records that contained the doctor's diagnosis. A federal investigator who reviewed Assurant's records says they showed that once a person with HIV was targeted with a fraud investigation, the company made greater efforts than usual to cancel that person's insurance and their medical records and policies were more heavily scrutinized than others. The court found that Fortis wrongfully elevated its concerns for maximizing profits over the rights and interest of its customer. 22 months after being diagnosed with HIV, Mitchell's insurance was reinstated. More information can be found in the Reuters report.