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Discrimination in insurance occurs in a variety of areas. Two of the areas are typified by the cases below dealing with sex and AIDS related discrimination.

In Bartholomew v. Foster, 541 A 2d 393 (Pa. Cmwlth. 1988), an action was brought to prohibit the Insurance Commissioner from enforcing a rate act "permitting auto insurers to base rates in part on sex, if use of such factor is supported by sound actuarial principles." The court held that the regulatory rate act violated Pennsylvania's Equal Rights Amendment.

The insureds were charged a higher rate of premium for their teenage son than they would have been charged for a teenage daughter. Affidavits produced by the insurer evidenced that the rate differences reflected statistically -- proven sex-based differences in losses for insurers. Nonetheless, the insureds argued that this constituted a violation of Pennsylvania's Equal Rights Amendment which states, "[e]quality of rights under the law shall not be denied or abridged because of the sex of the individual." In support of the insureds' position the court cited Pennsylvania Supreme Court decisions which struck down gender-based discrimination. The court rebuffed an argument by the insurer that the Equal Rights Amendment applied only to state action and not to insurance rates charged by private companies. It noted that there is no "state action" requirement under the amendment.

The court did recognize the validity of sex discrimination "reasonably and genuinely based on physical characteristics unique to one sex. However, the court noted that the ability to operate a motor vehicle is not a physical characteristic uniquely related to one's sex.

In another case, an employer employed a secretary and provided a comprehensive medical insurance policy for her. The policy provided benefits for complications of pregnancy, but excluded medical expenses for a normal pregnancy. The employee became pregnant and gave birth. The pregnancy was normal and her claim for reimbursement of expenses was denied by the insurer.

The employee filed charges with the Insurance Commission which resulted in the Commission filing discrimination charges against the employer and insurer. The Commission, adopting a hearing officer's findings, held both the employer and insurer in violation of regulations requiring that pregnancy be treated the same as other disabilities for insurance purposes. The Commissioner also found that Colorado's Equal Rights Amendment required that all health insurance plans treat pregnancy as any other sickness or disability. The Commission ordered the insurer to pay the medical expenses and the employer to adopt a non-discriminatory policy. The Court in Colorado Civil Rights Comm'n v. Travelers Ins. Co., 759 P.2d 1358 (Colo. 1988). upheld the Commission's order.

The insurer was found to be in violation of an anti-discrimination statute as an aider and abettor, even absent intent to discriminate. The Court reasoned that it was sufficient that the insurance company knew the contents of its policy, and of the "normal pregnancy" exclusion.

In Health Ins. Assoc'n v. Corcoran, 531 N.Y.S. 2d 456 (Sup. Ct. 1988), a regulation issued by the Superintendent of Insurance prohibited insurance companies from requiring or considering body fluid tests for evidence of Human Immuno-deficiency Virus (HIV) for insurability determinations. A New York Court held the regulation invalid.

In striking down the regulation the court reasoned that there are significant actuarial risk differences for those that test positive for HIV than for those who do not. To ignore this would result in low risk uninfected policyholders subsidizing policyholders infected with HIV. The court found this to be arbitrary and capricious. No statute exists in New York which affords those infected with HIV, a protected class status, for insurance coverage purposes.

The Massachusetts Commissioner of Insurance, in Life Ins. Assoc'n v. Commissioner, 403 Mass. 410 (Mass. Sup. Jud. Ct. 1988), issued regulations prohibiting or restricting certain underwriting practices with respect to HIV testing and the use of AIDS related information for decision connected with underwriting life and health insurance. As in Corcoran, the court struck down the regulations. It held that there is no statutory authority for the Commissioner to regulate underwriting practices related to insuring persons who may have HIV. And, as in Corcoran, persons having HIV antibodies are not a classification protected against discrimination under state law. The court concluded by noting that the state legislature, not the judiciary, is the appropriate body to determine what power to afford to the Commissioner regarding the regulation of underwriting practices of insurers.
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Title Annotation:sex and AIDS discrimination: cases
Author:Klayman, Elliot I.
Publication:Journal of Risk and Insurance
Date:Mar 1, 1989
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