Assurant's version of health-care reform: Dump HIV patients

Assurant Health, the country's oldest provider of individual health insurance policies, has had a few public relations problems lately.

In addition to the debate over such companies making hundreds of millions in profits by canceling or rescinding health coverage for sick people and the grilling of CEO Don Hamm by Congress last summer, there was also the staggering $37 million bad-faith verdict against Assurant that Boulder jurors awarded in January to Jennifer Latham, a Lafayette woman who suffered a devastating car wreck, then had her insurance rescinded because of alleged "misrepresentations" in her application unrelated to her claim. That case is explored in detail in my feature "You're in Bad Hands."

Now, more troubles for the company: As efforts heat up in Washington to pass a package of health-care reforms directed at the insurance industry, this Reuters report indicates that Assurant's practice of rescinding policies in the wake of potentially costly claims is more systematic and more widespread than the Latham jury thought -- and that among those targeted for cancellation are clients who test positive for HIV.

The Reuters piece is based on recently obtained documents from the case of Jerome Mitchell, a South Carolina teenager whose health-care coverage was dropped by Fortis (one of Assurant Health's other names) after he discovered he had contracted HIV. The company's denial of coverage was based on one nurse's notation that erroneously indicated Mitchell knew he had the virus before obtaining insurance, when the opposite was true. The shoddy investigation, rush to rescind and apparent destruction of records resulted in a $10 million punitive verdict against the company.

Records in that lawsuit indicate the Mitchell and Latham cases are not anomalies but part of a company policy to avoid paying huge claims by any pretext possible. Reporter Murray Waas writes that Assurant developed a computer program, triggered by billing codes for expensive health conditions, that would flag "every policyholder recently diagnosed with HIV for an automatic fraud investigation... their insurance policies often were canceled on erroneous information, the flimsiest of evidence, or for no good reason at all."

Although many records of the Mitchell case are sealed under a confidentiality agreement, Waas quotes rulings by trial judge Michael Nettles blasting the company for its "reprehensible" conduct: "Fortis has for some time been making recommendations for rescission, and acting on those recommendations, without good-faith investigation conducted fairly and objectively."

Last summer, Assurant CEO Don Hamm told Congress that his company's process was fair and thorough. But the numbers tell a different story. Mitchell's jury learned that the company's rescission panel reviewed more than forty other cases in less than two hours -- an average of three minutes or less for each decision to take away someone's health insurance.

Latham's jury heard that, more recently, Assurant has done more than a hundred rescissions in two hours. That's 68 seconds each.

True efficiency will finally be achieved, no doubt, when that number can be dropped to under sixty seconds per customer. In the current health insurance arena, only healthy customers need apply.

And God help you if you don't stay that way.