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California
Supreme Court Rules in Favor of AIDS Disability Claim
Mutual Benefits Corp. Applauds the
Recent California Supreme Court Ruling Which Further
Supports the Definition of Contestability Periods
and Banishes Any Uncertainty When a Claim is Filed
August
10, 2000, Ft. Lauderdale, FL -- Mutual Benefits Corporation
(MBC), the country's leading viatical and Life Settlement
provider since 1994, feels that the recent California
Supreme Court's unanimous ruling in favor of an individual's
right of insurance coverage once again confirms the
validity of contestability periods in insurance law.
The precedent had already been set for this case by
similar rulings of the Supreme Courts of Delaware,
Hawaii, Maryland, Minnesota and New York, and by lower
courts all across the country. This ruling not only
helps protect any consumer who purchases a life insurance
policy, it makes the process of receiving a claim
easier and clearer.
On
June 18th, the court ruled that California law gives
insurance companies two years to screen new policyholders
for pre-existing conditions and then entitles them
to coverage for disabilities, even if they were ill
when signed up. Specifically, Mark Galanty, 52, of
San Fernando Valley, tested positive for HIV in 1987.
He was told the result was inconclusive unless confirmed
by a second test, which he chose not to take. At the
time, state law banned asking about HIV on insurance
forms. He bought his Paul Revere disability policy
in 1989. In 1994, Galanty was diagnosed with AIDS.
The insurer paid his benefits to April 1995, then
ceased paying benefits once they discovered the HIV
test. The Supreme Court's decision overturned the
lower court's ruling that allowed an insurance company
to deny AIDS disability benefits to a man who had
his policy for five years on the grounds that his
undisclosed HIV test showed that the disease had already
manifested itself, making him ineligible for coverage
under the terms of the policy. The lower court ruling
alarmed advocates of AIDS and terminal illnesses and
disability rights groups. They feared that insurance
companies would use the same reasoning to cut off
benefits on grounds that undisclosed tests done years
earlier had shown a susceptibility to a later disease
such as high cholesterol or blood sugar or genetic
markers for breast and prostate cancer. They also
believed that denying benefits in these cases would
discourage people from getting medical testing.
Vice
President of Mutual Benefits Corp., Steven Steiner
says, "The contestability of every insurance
policy must hold up in court once it has been met.
Insurance companies have at least two years to contest
any policy and we feel this is ample time to investigate
an insured's medical background. Insurers can ask
for any type of testing in their applications. In
this particular case in California, the insurance
company asked for and received Mr. Galanty's medical
records before issuing the policy. The company did
not at that time ask Galanty to submit to any tests
of any kind. How could the Supreme Court of California
not find in favor of Mr. Galanty when it is so clear
he complied with the insurer's requirements? This
is a victory not only for AIDS patients everywhere,
hopefully it will set a precedent when dealing with
collecting benefits for anyone with any disability."
The
NAIC (National Association of Insurance Commissioners)
model statute the California legislation adopted was
understood, according to the Supreme Court's published
opinion, "by its drafters, including the Insurance
Commissioner who urged the law's adoption, as introducing
a new principal…in insurance by guarantying to
the insured, that after the policy has been in force,
no claim will be denied on the basis of misstatements
in the application. Paul Revere was free, before issuing
its policy to Galanty, to examine his medical condition
and to exclude any preexisting condition by name."
.
MBC is licensed in more states than any other viatical
company that funds policies through individual purchasers.
The sale of a life insurance policy by someone who
is terminally ill to a private purchaser who collects
the benefits when the policy matures is known as a
viatical settlement. Most recently, MBC participated,
through its legal counsel, in the additions to Senate
Bill 1956 in Florida which called for additional disclosures
about the specifics of a viatical transaction to be
made available to purchasers and that stronger penalties
were instituted against fraudulent activities. MBC's
policy has always been to protect both the viators
and purchasers by funding only non-contestable policies
from insurance companies rated B+ or better by A.M.
Best. MBC is the largest viatical and life settlement
provider in the U.S. and the face value of insurance
policies viaticated by them totals more than $700
million, to date.
If
you would like to interview Steven Steiner, receive
the full text of this court opinion, or if you require
any further information, please contact Kim Morgan
at Mutual Benefits Corporation, (954) 525-8885 or
at 1-800-896-7990 Fax: (954) 525-8664, e-mail: embc@mutualbenmail.com
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