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DENIAL OF AIDS COVERAGE IN HEALTH POLICY DOES NOT VIOLATE AGE DISCRIMINATION ACT,- MCCARRAN-FERGUSON ACT FURTHER PRECLUDES POLICYHOLDER'S CLAIM
Doe v. Mutual of Omaha, 179 F.3d 557 (7th Cir. June 2, 1999), rehearing en banc denied, 1999 U.S. App. LEXIS 18360 (Aug. 3,1999).
The AIDS crisis unleashed in the 1980s prompted many insurers to consider AIDS risk in underwriting and to refuse to provide coverage for AIDS-related disease in health and disability policies. The Americans with Disabilities Act (ADA), U.S.C. 12182(a), et seq., was passed in 1990 to address the problem of disability discrimination. Since passage of the ADA, there has been debate over whether the statute requires health insurance coverage of AIDS or AIDS-related illnesses, with courts dividing on the issue. The United States Court of Appeals for the Seventh Circuit (covering the states of Illinois, Indiana, and Wisconsin) recently found no ADA bar to such insurance restrictions.
Plaintiffs Doe and Smith (pseudonyms to protect their privacy) purchased individual health insurance policies from Mutual of Omaha. The policies place significant limits on the amount of benefits available to individuals suffering from AIDS or AIDSrelated conditions (ARC) by capping the amount of coverage available at a $25,000 lifetime maximum for Smith and a $100,000 lifetime maximum for Doe. The policies' overall limit was $1 million. Plaintiffs contended this was disability discrimination in violation of the ADA. The federal trial court in Chicago found this to be a violation of the ADA. On appeal, the appellate court rejected the contention and found no ADA violation in the insurer's establishment of disease-specific limits on coverage. Mutual of Omaha sold health insurance policies to the applicants that provided for up to $1 million in coverage for health problems other than AIDS or ARCs, which had a lifetime benefit limit of $25,000 and $100,000, respectively. The Insurer stipulated that AIDS was a disability covered under the ADA and that it cannot show that its AIDS caps were "consistent with sound actuarial principles, actual or reasonably anticipated experience, bona fide risk classification, or state law." Mutual of Omaha defended solely on the basis of its argument that the ADA does not regulate the substantive coverage of insurance policies.
The ADA states that "no individual shall be discriminated against on...