STATE SUPREME COURT: Rules in Favor of AIDS Patient Denied Disability Benefits
The California Supreme Court unanimously ruled yesterday that an insurance company may not deny disability benefits to a policyholder who did not disclose a positive HIV test in his original application, the Los Angeles Times reports. State law requires that disability policies include an "incontestability clause" that grants a two-year period during which an insurer may challenge a policyholder's right to receive benefits. The court ruled that once the period expires, the insurer cannot deny benefits simply because it discovered a pre-existing condition, such as HIV. "People who become disabled ... need no longer worry that an insurance company will dig through their medical files in an attempt to find a previous lab result, genetic test or medical condition to use as an excuse for refusing payment," Jon Davidson, a lawyer for the Lambda Legal Defense and Education Fund, said. The case involved Mark Galanty, who tested positive for HIV in 1987 but was told that the result could be erroneous and needed to be confirmed with another test, which he did not take. Galanty purchased disability insurance from Paul Revere Life Insurance Company in 1988 and did not disclose his HIV test result. After reviewing his medical records, which contained the notation "viral syndrome," the insurance company issued Galanty a policy. In 1994, more than five years after purchasing the insurance policy, Galanty filed claims for disability caused by AIDS and a related neurological condition. The company initially paid his claims but then revoked the coverage, asserting that Galanty's disability stemmed from a pre-existing condition. In the court's ruling, Justice Kathryn Werdegar said that the two-year incontestability clause in Galanty's policy took precedence over other language in the policy. "In short, the incontestability clause rules," Werdegar wrote. If the policy had contained a specific exception for fraud, the insurer could have denied benefits. The policy issued to Galanty contained no such exception, and the court ruled that Paul Revere must pay his disability benefits. Gay-rights lawyers hailed the decision, claiming that AIDS patients frequently are denied disability coverage several years after purchasing insurance policies (Dolan, 6/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.