Supreme Court refuses Assurant’s appeal of $10 million award in HIV case [Milwaukee Journal Sentinel]

Mar. 23--The U.S. Supreme Court on Monday rejected Assurant Health's appeal of a lower court ruling that awarded $10 million to a South Carolina customer whose health insurance was improperly canceled after he tested positive for HIV.

The lawsuit had exposed Assurant Health's policy of using a computer program and algorithm to identify policy-holders with HIV for fraud investigations that could provide grounds for canceling their coverage.

The policy and the lawsuit were the subject of an investigative story by Thomson Reuters news service last week that has drawn national attention.

Assurant Health, which employs about 1,600 people in Milwaukee, focuses on individual, small business and short-term health insurance policies. The company is a unit of Assurant Inc., which is based in New York.

The Supreme Court's decision not to hear Assurant's appeal comes less than two months after a Colorado jury awarded a woman $37 million after the company canceled her policy and refused to pay her medical bills when she was hit by a car in 2005.

Assurant is appealing that decision but said in a recent conference call with investors that it had increased its litigation reserve by $24 million.

The company has been criticized in the past for improperly rescinding policies, including a settlement in 2008 with the Connecticut Department of Insurance in which the company agreed to pay $1 million in restitution to Assurant policy-holders wrongly denied coverage and $2.1 million in penalties to the state.

Assurant also was among the health insurers -- along with WellPoint Inc. and Golden Rule, a unit of UnitedHealth Group Inc. -- criticized in an investigation by the Energy and Commerce Committee hearing on rescissions last summer.

The Reuters story by Murray Waas provided the most detailed account to date on Assurant's practices regarding rescissions.

The story stemmed from a lawsuit filed by Jerome Mitchell, a 17-year-old college freshman at the time, whose policy was revoked shortly after he was diagnosed with HIV.

In 2004, a jury in South Carolina ordered Assurant Health to pay Mitchell $15 million for wrongly canceling his policy. Last year, the South Carolina Supreme Court ruled 5-0 to uphold the lower court's verdict but reduced the award to $10 million.

Drawing on a previously undisclosed court ruling, Waas reported that Michael G. Nettles, a state circuit judge for the 12th Judicial District of South Carolina, condemned Assurant's policies, writing, "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 South Carolina Supreme Court, in its unanimous decision to uphold the jury's verdict, also criticized Assurant's lack of written rescission policies and information on appealing rights or procedures, as well as the omission of other records on its decision to revoke Mitchell's insurance, according to the Reuters story.

"We find ample support in the record that Fortis' conduct was reprehensible," South Carolina Supreme Court Chief Justice Jean Hoefer Toal reportedly wrote. "Fortis (Assurant Health) demonstrated an indifference to Mitchell's life and a reckless disregard to his health and safety."

In a statement Monday, Asssurant said: "We disagree with certain of the South Carolina court's characterizations of Assurant Health's policies and procedures in the Mitchell case.

"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. Assurant Health is committed to fulfilling the policy requirements for all of our customers.

"Regardless of the customer's diagnosis, we are committed to operating in compliance with all applicable state and federal guidelines and requirements."

In the past 10 years, the company added, it has paid $87 million in medical claims for customers who have been diagnosed with HIV or AIDS.

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