The Fight of Their Lives : For Some AIDS Patients It’s the Last Thing They Need: a Battle Over Health Insurance Claims

Last September, celebrity yoga instructor Billy Porter of West Hollywood felt so sick that he checked into Century City Hospital. Sixteen days later, diagnosed with AIDS, Porter went home, his $39,000 hospital bill on its way to his insurer.

His health insurance company, Mutual Life Insurance Co. of New York, didn’t pay the bills immediately. Instead it began evaluating his claim.

MONY was “sending around asking for my medical records. All this time it was in ‘evaluation,’ ” recalled Porter, 30, a soft-spoken man with a ‘50s flattop haircut who counts Raquel Welch and Jamie Lee Curtis among his many movie star clients.

Last month, MONY finished its evaluation, and Porter received a letter saying his policy was rescinded. The company wrote Porter that it would not have insured him had he disclosed on his Feb. 6, 1987, application that he had had hepatitis in 1977 and 1979 and had had swollen glands when he got the flu four years ago.

‘Fully Research’ Claims

MONY declined to discuss Porter’s case with The Times, but did say in a written statement that, in general, “we fully research anyone’s medical history if there are unusually high or otherwise significant claims within two years after issuance of coverage. It does not matter who the individual is, or what is the nature of the claim.”

The company sent Porter a check for his premiums plus interest, about $900, and gave Porter until today to appeal its decision rescinding the policy.

In his sparse apartment over the garage of a Hollywood Hills home, surrounded by books about healthy living and coping with dying, Porter said he did not try to hide anything from the insurance company.

He said he has a plan to avoid being turned over to collection agencies seeking the more than $80,000 he owes Century City Hospital and the doctors who treated him there. For as long as he can, Porter said, he will try to send the hospital and every doctor who treated him $25 or $50 monthly. His current doctors, he said, are willing to treat him for free.

In the meantime, he has retained a lawyer for his appeal.

Porter’s plight is far from unique.

Across the country, hundreds of AIDS patients and those with AIDS-related diseases are spending the last months of their lives battling health and disability insurance companies.

“Many young men will spend the last six months of their lives keeping phone logs and diaries of their efforts to get their insurance company to respond, sending photocopies to everyone in a desperate, impotent attempt to get their bills paid,” said Stephen R. Blum, a San Francisco bioethics consultant and adjunct faculty member at UC San Francisco Medical School who has been studying the ethics of the issue.

“Whether these actions are taken with malice or are the result of ‘computer errors’ or a tacit policy of delay is in some sense a fine distinction which is irrelevant to the dying person,” Blum said. “All they know is they are uncovered and thus rendered less and less in control of the major issues in their life and in their dying.”

Problems for AIDS patients with insurance carriers are not limited to health coverage, according to officials of AIDS charities, lawyers and gay rights activists. They say AIDS patients and men whose address, marital status and occupation suggest that they might be homosexual have also encountered problems getting life and disability insurance, as well as getting carriers to pay benefits for such coverage.

Unlike the 49 other states, California prohibits requiring health or life insurance applicants to take a test for the HIV antibody--which indicates exposure to the AIDS virus--to determine whether an individual has or will develop acquired immune deficiency syndrome. Indeed, in California disclosure of HIV test results without the tested individual’s permission is a misdemeanor if it causes the individual economic or other harm.

But attorneys active in AIDS-related litigation and AIDS activists say that insurers have found ways around this limitation. Applicants whose marital status, address or occupation suggests they might be homosexual may be required to take a T-cell test, a measure of the efficacy of the body’s immune system.

One insurance industry study found such tests 81% accurate in identifying those who are HIV positive, according to Peter Groom, senior staff counsel for the state insurance department.

MONY’s application forms for the California Medical Assn.-sponsored group excess major medical plan, which covers physicians, their families and employees, specifically asks whether “any person to be insured” has in the past five years had any of six medical conditions, including “HIV infection.”

MONY spokeswoman Sarah C. Mullen initially expressed surprise that the question appears on the application, which is dated February, 1988, saying neither she nor MONY executives she queried could explain how it got on the form.

However, in writing, MONY later said that “the manner in which we posed the question was in compliance with the state law.”

But Groom, the state Insurance Department attorney, said he has never seen such a question on an insurance form and doubts it is proper.

“I don’t care for that question,” he said. “It is not absolutely illegal per se because they haven’t said have you had an HIV test.” But Groom said he intends to formally review the question and speak to MONY officials.

The fine print of health insurance policies generally grants the insurer broad permission to examine past medical records and to require extensive documentation of past medical treatment. Companies can, for example, ask for the name and address of every physician visited in the past decade.

The problem in being required to make such lengthy disclosures is illustrated by what happened to Porter at Century City Hospital.

“There must have been 15 doctors on my case,” he said. “I didn’t even know some of them.”

Porter is not the only one who stands to lose from MONY’s action. A spokeswoman for Century City Hospital said that the hospital business office had telephoned MONY when Porter was admitted and received “verification of eligibility” in Porter’s case.

“That means he is eligible for coverage, but doesn’t mean they promise to pay,” hospital spokeswoman Deborah Ettinger said. “In the end the insurance company can deny payment and that’s what happened in this case. It’s a real dilemma for hospitals and patients.”

Century City Hospital was never notified in writing that Porter’s claim had been denied, she added.

“We began calling MONY about every 15 days and initially they asked for more information. We sent it, and had no written communication from MONY. When we kept calling they kept saying it’s pending, it’s being reviewed. We heard from Porter that they weren’t going to pay.”

Ettinger, who estimated that Porter’s hospital care bill is between $40,000 and $50,000, said similar situations happen more often than hospital officials would like to see, and talked about horror stories AIDS patients tell.

“My fear is that it will happen more frequently with AIDS patients as we start to treat more and more of them. We’ll see more and more claims denied,” she added.

Industry Response Criticized

Four California lawyers who specialize in bad-faith litigation said anyone who is diagnosed with AIDS is at risk that their insurance carrier will investigate them in hopes of finding a reason to rescind their coverage, put their file into never-ending review or nit-pick their claims. They say this is especially true for anyone who is diagnosed with AIDS within two years after they switch health or life insurance companies.

“On the whole, the insurance industry’s response to AIDS has been horrible,” said Ben Schatz of San Francisco, director of the National Gay Rights Advocates’ AIDS Civil Rights Project and a member of the National Assn. of Insurance Commissioners AIDS Advisory Committee.

“This problem is snowballing. It’s the new big problem, and it has been escalating since the first of the year. The industry is trying to exclude or eliminate (AIDS) coverage. It’s effectively washing its hands of it,” he charged.

“The insurance companies are hoping that people with AIDS will be too ill or too poor to fight. There’s no question that they’re discriminating mainly because they don’t like the people who get AIDS. They do not have the right to decide which disease they like or don’t like,” Schatz said.

‘Very Sensitive to This’

A spokeswoman for the Health Insurance Assn. of America said that the insurance industry does not discriminate against individuals with AIDS or homosexuals.

“We pay every claim without regard to the illness,” said Jeannette Hartman, a spokeswoman for Blue Cross of California, the state’s largest health insurer with 2.9 million clients.

“We are very sensitive to this sensitive subject,” said Mullen, the spokeswoman for MONY. But Brent Nance, insurance coordinator for AIDS Project Los Angeles, said he has handled more than 3,000 complaints about insurance matters in the past 4 1/2 years. Nance said he has found that intensive investigation of AIDS patients is common.

“Most individually issued health, life or disability policies and small group plans all contain a contestable clause that allows a carrier, during the first two or three years a policy is in force, to void retroactively a policy if it can prove the the applicant withheld important and material medical history, “ said Nance.

Clause Being Heavily Used

In 17 years of being in the insurance business, he said he “had never see such a reliance by the insurance industry upon this clause as it is being used against persons affected with HIV.”

Alice Philipson, a Berkeley lawyer who specializes in AIDS-related litigation, argues that a variety of tactics used against her 200 clients show that “what some insurance companies are doing is not just unethical, but illegal.”

She said insurance companies for some of her clients “review cases to death,” declining either to approve or reject a claim while the patient moves closer to death.

“Once the patient dies there’s usually no one pushing the claim and they don’t have to pay it,” she charged.

Fought Blue Cross

James Litzenberger of San Francisco spent most of the last year of his life fighting Blue Cross. For nearly a year, Blue Cross acknowledged he was insured, but its claims department would not acknowledge his existence, Philipson said.

Finally, Litzenberger turned to Philipson, who said she wrote to Blue Cross. She said her letters went unanswered so she filed a suit in San Francisco Superior Court seeking $5 million for fraud.

The lawsuit made the Bay Area newspapers and television. The next day Larry Rodriggs, a Blue Cross spokesman, said the insurer had never refused to pay a claim but that “some things slip through the cracks.” The day after that, Philipson said, Blue Cross began paying Litzenberger’s bills.

Last week the National Gay Rights Advocates filed insurance discrimination complaints with insurance departments in 48 states, including California, charging that two insurance firms, Reserve Life Insurance Co. of Dallas and Pennsylvania’s Providers Fidelity Life Insurance, limit AIDS medical coverage to a lifetime maximum of $10,000, while paying $250,000 more for cancer and other life-threatening illnesses.

Called Illegal Bias

The complaints contend this is illegal discrimination and asks that AIDS be treated like cancer or any other serious disease.

Schatz and others say they are especially distressed by intensive inquiries into the medical histories of AIDS patients.

James M. Hodges, a Long Beach bad-faith plaintiff attorney, contends that insurance carriers sometimes stretch the idea of needing further information to “nit-picking” and cited the case of his client, Dennis Creamer. Hodges said Creamer was “put through hell before he died” in February.

Creamer was laid off by a Melrose Avenue interior design firm after being disabled by AIDS. As required by law, his health benefits were continued for one year, but only for AIDS, the cause of his disability.

Joanne Slater of Hodges’ office said after Blue Cross ignored Creamer’s repeated requests for action on his claims, she called Blue Cross. Slater said she asked why Creamer’s claim for treatment of an opportunistic infection known as “post inflammatory pulmonary fibrosis” had not been paid.

Slater said the Blue Cross claims representative told her the claim would not be processed unless it was resubmitted and the physician wrote “AIDS” on it.

A Blue Cross spokesman, Jeannette Hartman, declined comment on the Creamer case because it is in court. But she said Blue Cross policy is that “a diagnosis of opportunistic infection is sufficient” to get payment on any AIDS-related coverage.

Hodges said Creamer was so furious at Blue Cross that he wrote a will instructing the executor of his tiny estate to pursue his lawsuit to get the claims paid by the giant nonprofit insurer.

Usually, Hodges and other lawyers said, such cases die with the patient. But because of Creamer’s refusal to let the matter die with him, the bills are now slowly being paid, Hodges said.

AIDS patients and others also contend that the insurance industry has devised two powerful ways to cut its losses on people with AIDS by shifting costs onto persons with the disease, techniques the insurance companies contend are legal and nondiscriminatory.

One way is to market group health insurance through a trust rather than directly. The trust insulates the insurance company from some legal requirements that it offer continuing individual coverage if group coverage is terminated.

Trust Can Fold

An individual who has such group coverage through a trust is left without insurance if the trust folds. If the individual has been diagnosed with AIDS (or any other major illness, such as cancer or multiple sclerosis), the person’s medical history then makes him or her uninsurable.

The second technique is to radically reduce benefits for an entire class of individuals.

Reduced Benefits

That’s what Blue Cross of California did last fall when it drastically reduced benefits for 70,000 individuals because it said the plan was experiencing massive losses, but then sent additional information to those with minimal loss claims advising them that they had “been prequalified” for a special new policy offering only a minor reduction in benefits.

Attorneys Philipson and Blake see the Blue Cross action as discriminatory. Nance, the insurance case manager for AIDS Project Los Angeles, said that at best Blue Cross “skirted the law.”

But Mark Weinberg, Blue Cross senior vice president for individual services, said the state insurance department approved the changes in advance.

Weinberg said the changes were designed to benefit the nonprofit firm’s customers.

“We anguished over what to do,” he said.

He said Blue Cross was experiencing huge losses on the 70,000 people covered in its individual policy group, so it scaled back benefits significantly.

Other Bad Options

He said the other options were to double premiums--which would drive out healthy individuals who could buy better insurance for less elsewhere--or to quit the business of insuring individuals in California. He characterized the first option as bad business and the second as unthinkable.

The issue of whether this might discriminate against people with AIDS “never came up” in discussions among Blue Cross officials, he said, or with the state insurance department.

“Our goal is to deal with AIDS in same way we deal with any other medical condition,” he said.

Instead, he said, Blue Cross tried to determine from actuarial data how many people would suffer under different options. He said a tiny fraction of those affected had annual medical bills in excess of $10,000.

And what about those people with such enormous bills who, because of illness, AIDS in particular, cannot earn the money to pay them?

“That’s a real tough question,” Weinberg said, “and it’s not just with this group of people who have AIDS. It applies to anyone with a serious and chronic medical ailment.”