Fighting for life insurance

Excerpt from Howard Chabner‘s forthcoming FSHD Autobiography:

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, and 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; they 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 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.  Parts of the disability rights laws and regulations are written too narrowly, in my view.  This is an example.

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, and this type of unfair practice 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 insurance 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, 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, which amounted to over four hundred thousand dollars.

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 generations 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 supporting my case.  Along with Sid, California Attorney General Bill Lockyer argued on my behalf at oral argument, which was televised on C-SPAN.  Dr. 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 in subsequent 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 (the US Orphan Drug Act defines a rare disease as one that affects fewer than 200,000 Americans), 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 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 information from medical manuals indicating that FSHD doesn’t affect life expectancy.  For the purpose of deciding the case by summary judgment, 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.  The conventional medical wisdom at that time was that FSHD had no or minimal effect on life expectancy, but there was little, if any, hard data.