The Uncertain Legal Intersection of Genetic Tests and Life InsuranceThe growth of direct-to-consumer DNA kits is a big deal with significant ramifications for the life insurance industry. Direct-to-consumer DNA kits, commonly used to track ancestry roots, increasingly allow individuals to assess their potential health risks by predicting genetic illnesses. Now, Google-backed 23andMe and Ancestry.com offer DNA test kits for $99, which can be ordered online with the click of a button. The DNA reports can recognize genetic variants associated with an increased risk of developing certain health conditions, including Alzheimer’s, Parkinson’s, and the BRCA1/BRCA2 genes, which are linked to increased risk of ovarian and breast cancer.

For life insurers, an industry that relies on its ability to manage risk-taking when it comes to health, this new DNA era could mean an information disadvantage compared to the consumer. Making matters more complicated for insurers, almost half of the states have enacted laws regulating how insurers either request genetic tests or ask for genetic information during the underwriting process. The laws are more expansive than the federal Genetic Information Nondiscrimination Act (GINA) enacted in 2008, which prevents genetic discrimination in the health insurance sector. For example, California state law both (1) regulates how an insurer may use genetic information obtained during the underwriting process (Cal. Ins. Code § 10143) and (2) restricts insurers from requiring applicants to undergo genetic testing (Cal. Ins. Code § 10148). Several other states have passed similar laws. These laws were largely enacted in the 1990s and 2000s, and they were formed on the premise of protecting genetic results as a form of private property.

Most regulation regarding genetic information was enacted long before the widespread dissemination of direct-to-consumer DNA kits, which have exploded in popularity in the last year or so. Given such regulation, most, if not all, life insurers have steered clear of the issue by not asking for genetic information or requesting genetic testing regardless of the jurisdiction. With applicants gaining the upper hand, however, insurers may be prompted to take a different approach by asking for available genetic information during the application process. The challenge will be for insurers to appropriately navigate state laws governing use of genetic information during the underwriting process.

In the meantime, there is an argument that the non-disclosure of unrequested genetic information could constitute fraud, giving rise to rescission of a life insurance policy. Life insurers rely on the honesty of applicants. The validity of a policy depends upon the full disclosure of all material information. It would seem manifestly unfair for an applicant to know that she has the BRCA1 gene, which she recently learned of through a 23andMe test, and then not disclose that information on a life insurance application. Although life insurance applicants generally have no duty to disclose unasked-for information, varying types of questions could conceivably be interpreted as seeking genetic information. For example, general questions such as “Are you in good health?” or “Have you ever received advice?” regarding a disease could arguably trigger an obligation to reveal a genetic predisposition. Similarly, questions about “family history” could arguably require disclosure of genetic information. That said, there is sufficient vagueness and ambiguity in this area that would probably undermine a rescission claim. Specifically, vagueness in an application question and its answer creates a difficult situation requiring the reconciliation of two competing standards: (1) the requirement to interpret questions in a light most favorable to the applicant; and (2) the general rule that individuals with knowledge of an omitted condition are more likely to have committed fraud. Given that rescission in most states hinges on “intent” to deceive the insurer, it is unclear whether the non-disclosure of genetic information to a non-specific application question could actually be used to prove intent to deceive. To date, this legal question is untested in the courts.

As genetic information becomes so easily accessible for individuals, the life insurance industry will need to address what is becoming an uneven playing field. Changing underwriting practices and application questions will be challenging given the patchwork of state laws regulating the use of genetic information. Rescission arguments arising from the non-disclosure of genetic information in life insurance applications will also remain murky until these complex legal questions are resolved in the courts, presumably in the near future.

HIV-Preventative Medication and Insurance Underwriting—Regulators Weigh InA gay man is suing Mutual of Omaha in Massachusetts federal court alleging that Mutual unlawfully denied him long-term care insurance because he was taking the HIV-preventative medication Truvada as PrEP. While that lawsuit may challenge the bounds of both insurance and Massachusetts public accommodation laws, it is not the only arena in which disputes related to insurance coverage and PrEP are currently playing out.

State Regulators Weight In

As more gay men come forward with allegations that they have been denied insurance because they take Truvada as PrEP, state insurance regulators have taken notice. The account of Dr. Phillip Cheng, as reported by the New York Times, drew nationwide publicity. Cheng was taking Truvada as PrEP when he applied for a lifetime disability policy. Initially, he was denied lifetime coverage and offered only a five-year policy because of his Truvada usage. After Cheng discontinued taking the drug, he applied with another company and was given the lifetime coverage. The reporting on the seemingly disparate treatment Cheng received–when he was taking Truvada versus when he was not–only served to intensify the debate over insurance practices regarding individuals on PrEP. In response, the New York Department of Financial Services opened an investigation. Superintendent Maria Vullo issued a statement on February 14, 2018, acknowledging reports of persons taking HIV-prevention drugs receiving alleged disparate treatment. She noted the reports raised “serious concerns” for the department because insurers cannot deny coverage based on discriminatory reasons. Vullo stated there is no legal justification for denying or limiting life, disability or long-term care insurance coverage simply because an individual takes PrEP, and she said to do so would be “tantamount to penalizing applicants based on sexual orientation” (N.Y.D.F.S. Statement, Feb. 14, 2018). The department issued a full Insurance Circular Letter on June 22 noting that under New York laws insurers may not “unfairly discriminate in their underwriting or rate setting based on an applicant’s use of HIV prevention strategies, such as PrEP” (N.Y.D.F.S. Circular No. 8, June 2018). While the circular did not state that no consideration could be made of PrEP in underwriting, it did make clear that where HIV prevention strategies, such as PrEP, are at issue, any consideration by the insurer must be based on sound underwriting and actuarial principals reasonably related to actual or anticipated experience.

Following the lead of Superintendent Vullo, on February 15, 2018, California Insurance Commissioner Dave Jones opened a similar investigation and encouraged Californians to report suspected discrimination. Whether other states will join New York and California and whether more litigation or regulatory action will ensue remains unclear. Certainly while the issue of alleged discrimination based on sexual orientation in the context of denials of insurance coverage for PrEP users may have started with Doe’s case against Mutual in Massachusetts, it is not likely to end there.

The Future

There is no clear answer as to whether carriers treat PrEP usage uniformly when deciding to issue or not to issue insurance policies. Media outlets have reported several insurance companies stating on the record that they do not decline coverage based on PrEP alone. But for any carrier that does deny coverage based on PrEP, advocates are poised to fight that carrier’s business decision; the advocates assert that the fight is about more than insurance coverage because Truvada is a drug meant to prevent a horrific, public health condition that has already taken a substantial toll on the gay community.

To date, notwithstanding that the current PrEP case is being fought in only one state, practitioners in states with statutes comparable to Massachusetts’ Public Accommodation Law—California, Colorado, Connecticut, Delaware, New York and others—should keep a keen eye on the outcome of the Massachusetts litigation; it is reasonable to conclude that the progression of the Massachusetts case may open the gate for similar cases in other jurisdictions. Of course, plaintiffs in future cases may not limit their actions to just public accommodation and may instead seek redress under state insurance statues or regulations, unfair trade practices acts, or common law claims.

As with any new or developing medical condition, procedure, or drug, insurers must adapt to make certain that their underwriting decisions regarding PrEP are based on the latest data and science and that any denial of coverage is rooted in solid underwriting principles. The importance of this becomes even more acute when allegations of systemic discrimination are being levied. Diligence is imperative because unfortunately even the appearance of wrongdoing can sometimes be more damning than the wrong itself.

The question of whether Mutual of Omaha discriminated against a gay man (John Doe) when it refused to issue a long-term care insurance policy due to the company’s practice of denying coverage to anyone using the HIV-prevention protocol Truvada, also called PrEP, is set to be decided by a Massachusetts court and may have an impact beyond just the parties in that case.

Two Viewpoints

For Mutual, the lawsuit is a pure insurance case because it asserts its actions are based on legitimate underwriting concerns and not bias against gay men. But for the plaintiff, the case is broader than just himself; he alleges Mutual is engaged in bias-related discrimination that, if proven, could have a disparate impact on all gay men denied insurance coverage because they use Truvada as PrEP. Not wholly unlike the situation existing during the AIDS crisis when gay men believed they were unfairly targeted by actions that insurers maintained were necessary business practices, the viewpoints of the insurer and the insured are starkly different.

Underwriting or Wrong?

The court will decide whether Doe’s claims are cognizable, and if so, whether Mutual’s decision was in violation of Massachusetts public accommodation laws. The parties argued whether jurisdiction exists and whether the specific requirements of Massachusetts public accommodation laws have been triggered. But issues related to the blanket exclusion of all Truvada users for coverage by Mutual and the plaintiff’s assertion that the exclusion is potentially discriminatory to all gay men are particularly of interest for this discussion. The plaintiff claims that Mutual relies on at least two flawed bases for its blanket decision to deny coverage to Truvada users: (1) Truvada as PrEP users are more likely to become HIV infected; and (2) there is insufficient claims experience related to the long-term effects of Truvada as PreP.

Truvada Use and Greater Chance of HIV Infection?

Does Truvada usage indicate someone is at a higher risk of HIV infection thus justifying a blanket exclusion for all Truvada as PreP users? At first glance this reasoning may seem counterintuitive given that PrEP is designed to prevent HIV infection. The concern appears to hinge on whether people taking PrEP will do so as mandated. Health authorities advocate that “people who use PrEP must commit to taking the drug every day.” Failure to do so can leave one vulnerable to HIV infection because only those who are already at high risk of HIV will even be taking Truvada as PrEP. To follow this reasoning further, someone taking Truvada as PrEP, even though not doing so as prescribed, may still feel protected from infection, and therefore, might be lulled into a false sense of security and be more likely to engage in risky behavior. Following the reasoning to conclusion, engaging in risky behavior — such as promiscuous sex or drug use –while not fully protected by PrEP, increases the chances of HIV infection. As a counterargument, Doe asserts that there is no similar blanket exclusion for other drugs requiring daily dosage to maintain their efficacy.

No Long-Term Health Information on Truvada?

Doe also attempts to rebut any assertion that there is insufficient information on long-term use of Truvada as PrEP such that a blanket exclusion is warranted. Although Truvada was first approved by the FDA in 2004, the initial approval was for HIV treatment and not for prevention. Truvada as PrEP, for long-term prevention of HIV, was not approved until 2012. The timeframe at issue in the lawsuit is 2014–2015, when the application for insurance/appeal were denied. Was there sufficient information available in 2014–2015 for Mutual to evaluate the effect that long-term use of PrEP would have on a potential insured? An argument can be made that the short period between FDA approval in 2012 and the application/appeal in 2014–2015 would have been insufficient time to answer that question as it relates to evaluating the underwriting risk. Doe attempts to thwart this argument and posits by way of expert opinion that there is no basis for a blanket exclusion for Truvada users because no scientific data exists showing adverse health risks for those who use Truvada either long-term as HIV treatment (as approved in 2004) or for those who use Truvada long-term for HIV prevention (as approved in 2012). Doe also contends it is improper for Mutual to treat Truvada differently than it does other recently FDA-approved drugs that are also without long-term safety data, such as recently approved diabetes or high blood pressure medications. Finally, Doe argues that Truvada is as safe as or safer than certain drugs that do not mandate a blanket exclusion of coverage, e.g., hormonal contraceptives and drugs used to treat depression and epilepsy. Doe contends that by not treating Truvada in the same manner as other drugs, an insurer would be unlawfully discriminating against and limiting access to public accommodation for gay men.

Regardless of why the decision was made to deny coverage in the lawsuit, the positions taken by the parties highlight the opposite characterizations put on the case by each side. Ultimately, someone will decide: Whose theory of the case is right? Believable? True? Depending on the answers, the lawsuit could be an ordinary insurance case affecting only the named parties, or it could have ramifications that affect many more than just Doe and Mutual.

We will update this blog with developments in the lawsuit and in regard to other issues related to the allegations asserted by Doe.