Disability rights advocates had hoped a Washington state discrimination case would open doors to thousands of people with HIV who are denied what many others take for granted – life insurance.
But their hopes have been dashed by a behind-the-scenes ruling in Olympia that a Washington life insurance company did not illegally discriminate against a 49-year-old Kitsap County man when it denied him a policy because he is HIV-positive.
Fallout from the case has led, in part, to the recent dismissal of the state’s human rights director and a lawsuit against the office of state Insurance Commissioner Mike Kreidler.
Insurance regulators initially appeared ready to sanction Farmers New World Life Insurance Co., state documents show, but later backed off. The Human Rights Commission launched its own investigation, triggering a political showdown, an allegation of collusion and an unfavorable state audit of the commission’s involvement in the case.
“There is an entire class of people who are not able to purchase life insurance at any price, and it is entirely and absolutely wrong,” said Marc Brenman, the former executive director of the Human Rights Commission who lost his job this month, partly as a result of his role in this discrimination case.
Citing a pending court case and an open investigation, the offices of the insurance commissioner and the Human Rights Commission declined requests for interviews.
Advocates say the issue of discrimination against people with HIV is nothing new, but the Farmers case illustrates the insurance industry’s failure to recognize that anti-retroviral treatment has greatly increased life expectancies of those who have the virus that causes AIDS.
“The problem with insurance companies,” said disability rights activist Sid Wolinsky, is “they routinely use grossly outdated statistical material.” Furthermore, they rarely keep their own data, relying instead on manuals provided by reinsurance companies. “That is not to say there is not an increased mortality or morbidity risk for somebody with HIV than for somebody without it,” said Wolinsky, of Disability Rights Advocates, a nonprofit legal center in San Francisco. “But the risk is such that it can be covered.”
In Washington, the potential test case grew out of a 2006 coverage denial.
That October, Brenman’s office brought to the attention of the insurance commissioner’s office a complaint filed by Gerald Hebert, of Poulsbo, Wash., who had been denied life insurance by Farmers New World Life Insurance, a subsidiary of Farmers Group.
Brenman said there was reason to believe Farmers routinely denied insurance to people with HIV in violation of state law. Farmers has said that the company applied underwriting guidelines fairly and consistently and that the complaint was without merit.
Insurance Commissioner Mike Kreidler’s office, instead of the Human Rights Commission, was asked to investigate the case to avoid the appearance of conflict of interest. At the time, Hebert, a gay rights advocate, was a member of the Human Rights Commission. He resigned in September 2008 after auditors concluded he had misused a state-issued credit card and rental cars.
By that time, though, the complaint over denied coverage already was under investigation.
From the beginning, the insurance commissioner’s office had difficulty obtaining information from Farmers New World Life showing a statistical difference in the risk of insuring someone with HIV, documents show. An insurance company can only turn someone down for insurance if it has sound actuarial data to show that a person is too risky to insure.
However, in a Swiss study of people with HIV, researchers found that “successfully treated HIV-positive and hepatitis C-negative patients have a short-term mortality as low as or lower than that of patients with cancer who have been successfully treated – a group that is able to obtain life insurance.”
A December 2006 letter from Marcia Stickler, of the insurance commissioner’s legal affairs division, to Brian Kreger, of Farmers, complained about the company’s lack of response to repeated requests for the criteria used to refuse insurance to people with HIV.
Farmers “either has and uses such criteria or it does not,” Stickler wrote. “It is clear that the company simply denies all HIV-positive individuals outright, without any true analysis of actuarial risk.”
In May 2007, Brenman’s staff, having kept close tabs on insurance regulators’ progress in the case, believed the fact-finding stage of the investigation had concluded. Based on the lack of evidence Farmers had produced in its defense up to that point, the Human Rights Commission charged the company with illegal discrimination.
However, the insurance commissioner’s office had reached no such conclusion.
“They were on the verge of making a finding of discrimination, and at the last minute they changed the finding to no discrimination,” Brenman said in a recent interview.
In August 2007, Kreidler’s office determined material eventually provided by Farmers “demonstrated that a bona fide statistical difference in risk or exposure had been substantiated” and therefore the denial of life insurance to Hebert was fair discrimination.
Brenman demanded to see what evidence Farmers had provided after his office had issued its finding, but received only heavily redacted documents from the insurance commissioner’s office. In a December 2007 letter, Kreidler said his office would not turn over the redacted material Brenman’s office sought because it contained Farmers’ “trade secrets” that had to be protected.
Brenman appealed to the Attorney General’s Office, which declined to intervene.
“Because we were not able to examine the data, we were forced to change our finding of discrimination to a finding of ‘under investigation,’ ” Brenman said.
Hebert has since filed a lawsuit in Thurston County Superior Court, seeking the undisclosed portions of the documents under the state Public Disclosure Act.
His Seattle attorney, Jesse Wing, said documents that the insurance commissioner has turned over “strongly suggest” that Farmers did not do an individual determination of the validity of Hebert’s application, or the application of any HIV-positive person, before denying them.
Only after Hebert’s complaint did the company conduct an analysis, Wing said, and “in a collaborative fashion with the Office of Insurance Commissioner.”
“The correspondence shows that rather than holding Farmers to its own analysis, (the insurance commissioner’s office) actually worked with Farmers to determine what standards to use,” Wing alleged. “This is not in my view consistent with the obligation of the insurance commissioner.”
Although the insurance commissioner’s office refused comment on the case, in general, a spokeswoman disputed Wing’s assertion that it had worked with Farmers in establishing legally acceptable criteria.
“We do not believe the correspondence shows that the OIC worked with Farmers to determine what standards to use,” Stephanie Marquis said. “We also do not agree that it was only after Mr. Hebert’s complaint that the company conducted an analysis, and we specifically deny that the company conducted its analysis in a collaborative fashion with our agency.”
In November 2007, a state auditor’s investigation found that Brenman had used his position to expedite and facilitate the investigation into the complaint brought by a human rights commissioner, “contrary to normal agency procedures.” Brenman denies the allegation, which has been referred to the state Ethics Board.
On Jan. 9, Brenman was fired by a unanimous vote of the Human Rights Commission, which cited the audit among other “administrative problems,” according to commission Chairwoman Yvonne Lopez Morton, of Spokane.
Two complaints of HIV discrimination by insurance companies, including Hebert’s, are currently on file with the Human Rights Commission.