Couple can sue insurer for failing to disclose HIV status.
When Gary and Renna Pehle applied for life insurance from the Farm Bureau Life Insurance Co. in 1999, the company took blood samples from them. Shortly after, Farm Bureau sent the couple a letter stating that coverage was denied based on their blood test results. The company did not specify what those results were but offered to send them to the Pehles' doctor if they requested it. The couple chose not to do so.
Two years later, when Renna developed AIDS, the couple obtained their 1999 test results, which showed that both partners were HIV-positive. They sued Farm Bureau and the laboratory that processed the blood tests for failing to tell them that they were HIV-positive. A federal district court granted summary judgment to the defendants, noting that because the insurance company was not a health care provider, it had no duty to report the test results to the Pehles.
The Tenth Circuit reinstated the case against the insurer. "Balancing all the interests as Wyoming law requires, we are compelled to conclude that if an insurance company, through independent investigation by it or a third party for purposes of determining policy eligibility, discovers that an applicant is infected with HIV, the company has a duty to disclose to the applicant information sufficient to cause a reasonable applicant to inquire further," Judge Carlos Lucero wrote for the court.
The court concluded that although neither Farm Bureau nor the lab had a duty to the Pehles under contract law, the insurance company did have a duty under state common law.
"By encouraging the Pehles to purchase life insurance through them, Farm Bureau purported to act with the Pehles' best interest in mind," Lucero wrote. "In submitting to a procedure for extraction and consenting to an examination of their blood, the Pehles demonstrated that Farm Bureau had gained their confidence. We do not think that insurance companies must exist to treat or diagnose HIV in order for a duty to arise that necessitates that applicants be properly put on notice to inquire further."
The Pehles' lawyer, David Lewis of Jackson, Wyoming, said the decision marks the first time in a series of similar cases that a court found in favor of the plaintiff. He noted that courts in Mississippi, Ohio, and New York have accepted the insurers' argument that they have no duty to disclose test results because insurance companies are not health care providers.
"But the companies take your money for two months of premiums when you file the application, and they send a nurse over to do the physical examination. Then they send the samples of blood and urine off to a medical lab and have somebody in a medical organization interpret the results," Lewis said. "So of course they make medical decisions, and then after they make such a decision, they won't tell you that you're really sick. They just say that, like a Good Samaritan, they don't have a duty: It's nice to be a good citizen, but you're not required by law to be one."
Lewis said the decision provides consumers with important protections.
"Insurance companies have to tell applicants of their results in a way proportionate to the danger involved, instead of writing them a form letter saying, 'You failed the exam, so we're going to reject your application. If you'd like to know why, have your physician write us and we'll tell him.' What does that tell somebody who has HIV about the danger they're in?"