HMO Settles San Francisco AIDS Dispute

Associated Press

A major health maintenance organization has agreed to settle a redlining dispute and will pay $250,000 after allegations that it rejected applicants from San Francisco to avoid costly AIDS cases, city officials announced today.

The city’s district attorney accused HealthAmerica Corp. of California and HealthAmerica Corp. of violating state and local discrimination laws and false advertising statutes by failing to process individual applications to the plan.

“Individuals in San Francisco were being discriminated against and arbitrarily denied coverage . . . on the theory AIDS was prevalent in San Francisco,” said Dist. Atty. Arlo Smith in announcing the settlement.

Smith said he hopes that the settlement, which was reached after a HealthAmerica employee complained to a gay rights organization, will encourage others to protest and prosecute similar violations nationwide.


HealthAmerica will pay $125,000 cash and the remainder in medical services to be provided to city residents via referrals from the health department.

The company was purchased in 1986. The discrimination ended two years ago when HealthAmerica terminated its individual enrollment program, Smith said.