Fighting for life insurance

Excerpt from Howard Chabner’s forthcoming memoir:

I tried to find life insurance but brokers told me I was uninsurable because of my FSHD.  Finally one broker found a company willing to issue a policy, an affiliate of Mutual of Omaha called United of Omaha.  But it quoted a premium nearly double the standard premium for a non-smoking male my age. I was 35. Having no other alternatives, I accepted the policy but wrote to the company asking it to explain the higher premium.  The company replied that FSHD has only a small impact on life expectancy; it estimated mine at 72 years versus 76 years for a normal non-smoking male my age.  It refused, however, to explain the reason for the double premium.  I wrote two more letters seeking an explanation, which went unanswered. 

In 1995 I sued United of Omaha based on a California insurance statute that prohibits life insurance and disability insurance carriers from refusing to insure, or charging a different rate, solely because of a physical or mental impairment unless the refusal or rate differential is based on sound actuarial principles or is related to actual and reasonably anticipated experience.  I also sued under the Unruh Civil Rights Act, California’s broad, catchall disability discrimination law, and the federal Americans with Disabilities Act (ADA).  Because there were no material facts in dispute, the lawsuit didn’t go to trial.  Instead, I was granted summary judgment on all claims.  United appealed, and in 2000 a three-judge panel of the Ninth Circuit Court of Appeals (the federal appellate court with jurisdiction over California) issued a unanimous decision.  Chabner v. United of Omaha Life Insurance Company, 225 F. 3d 1042.   

The Ninth Circuit reversed the lower court ruling on the ADA, holding that the ADA covers discrimination in physical access to an insurance office but not in insurance underwriting practices.  In hindsight I believe this holding is probably correct.  Unfortunately, many disability rights laws and related regulations are written too narrowly, in my view. 

I won on the other issues.  The court held that individuals have a private right of action against an insurer that violates the California insurance statute because such a violation constitutes an unfair business practice under California law, which is actionable.  An individual who has been discriminated against in violation of the insurance statute has a right to sue the insurance company, recover money damages and obtain an order directing the insurance company to reduce the premium.  The statute doesn’t explicitly provide that aggrieved individuals can sue, and United had argued, unsuccessfully, that it was enforceable only by the State of California, through its insurance commissioner, but not by individuals, and that a violation didn’t constitute an unfair business practice.

United was unable to explain why a four-year shorter than normal life expectancy justified charging double the premium, citing vague insurance underwriting manuals and effectively conceding that a double premium corresponded to a much larger disparity in life expectancy.  The Ninth Circuit held that the premium was arbitrarily high and upheld the District Court ruling that United violated the statute because the higher premium wasn’t based on sound actuarial principles or actual and reasonably anticipated experience.  It also upheld the lower court ruling that, in light of these facts, United violated the Unruh Civil Rights Act.  United was ordered to reduce my premium, I was awarded a nominal amount of damages, and my attorneys were awarded the full amount of their fees.

I was represented by Disability Rights Advocates and its cofounder Sid Wolinsky, a tenacious pioneer of disability rights litigation, brilliant strategic thinker, and mentor to a generation of disability rights lawyers.  I helped with the research and in editing the briefs.  The US Department of Justice and California Attorney General filed amicus curiae (friend of the court) briefs on my behalf.  Along with Sid, California Attorney General Bill Lockyer argued on my behalf at oral argument, which was televised on C-SPAN. Dr. Robert Miller and Dr. Rabi Tawil, a leading FSHD clinician and researcher at the University of Rochester, submitted declarations on my behalf.

At the time, the case received a fair amount of publicity in disability rights publications and among the insurance industry.  I haven’t followed whether the decision has affected California insurance industry practices in underwriting disabled people or whether there has been much litigation involving the insurance statute over the years. 

Interestingly, the opinion states that FSHD is a rare form of muscular dystrophy and that I take medication to help control it.  FSHD is a rare disease (as defined in the US Orphan Drug Act) but it’s been known for a while that FSHD is one of the most common, if not the most common, forms of muscular dystrophy affecting primarily adults.  I don’t remember whether the evidence in the case actually indicated that FSHD is a rare form of muscular dystrophy, or whether the evidence was that it’s a rare disease and the court mistakenly stated it’s a rare form of muscular dystrophy.

I have no idea how the statement that I took medication to help control my FSHD found its way into the opinion – I didn’t, there isn’t any medication that controls FSHD now, and there certainly wasn’t back then. 

It’s important to emphasize that neither the lower court opinion nor the appellate one made any findings about the impact of FSHD on life expectancy.  United was stuck with its assertion that my FSHD only decreased my life expectancy by an estimated four years.  My lawyers and doctors submitted exhibits from medical manuals indicating that FSHD doesn’t affect life expectancy.  For the purposes of deciding the case, the courts assumed that an estimated four-year decrease was more accurate than an estimated no impact at all, and concluded that even a four-year decrease didn’t justify double the premium.  At the time the conventional medical wisdom was that FSHD had no or minimal impact on life expectancy, but there was very little hard data. 

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2 responses to “Fighting for life insurance”

  1. Very interesting story! I also tried getting life insurance in my mid-30s despite having FSHD and despite being no longer able to walk at the time. Like Howard Chabner, I was rejected by multiple insurance agents and insurance companies. In my case, though, I was fortunate enough to find an agent that struck me as very pushy, and she found me a policy with a company I had never heard of and whose name I can no longer remember. Moreover, this policy, though rated, was rated at the lowest rating, so my premium was not excessively high compared to an unrated policy. I stayed with that no-name company maybe 2 – 3 years, then I went back to Prudential, one of the companies that had rejected me previously. This time, because someone else had already agreed to insure me, Prudential also agreed to give me a policy at the lowest rating. I have had a life insurance policy with Prudential ever since, some 20+ years now.

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