What’s Who You Love Got to Do with It? Allegations of Sexual-Orientation Discrimination in the Context of Insurance Underwriting—Part 2The issue of HIV prevention, an issue that is seen by many to affect the LGBTQ community disproportionately, more specifically gay men, has found its way into the discussion of civil liberties in the context of insurance by way of the Massachusetts lawsuit regarding PrEP that was the subject of a recent blog post. As a backdrop to any discussion of HIV and insurance, a retrospective on the effect of HIV/AIDS on the insurance industry and the industry’s actions to deal with the onset of the epidemic should be considered.

HIV/AIDS Epidemic:  How did Insurers Respond?

In the 1980s, as HIV/AIDS spread without a cure, what since has been described as “AIDS panic” arose and was mostly directed toward the LGBTQ community because many of the early victims of AIDS were gay men. In fact, AIDS was dubbed the “Gay-related immune deficiency” (GRID) in a 1982 New York Times article; while the term did not take root in scientific literature, the association of the LGBTQ community with the “Gay plague” persisted.

Faced with a new and rapidly growing epidemic, some health insurers feared that their solvency was at risk because of the costs associated with the healthcare for covered AIDS patients (see Judith Berman’s AIDS Antibody Testing and Health Insurance Underwriting: A Paradigmatic Inquiry, 49 Ohio St. L. J. 49 (1989)). In-depth actuarial analyses done at that time indicated that enhanced underwriting could play a vital role in mitigating the risk of the epidemic to life and health carriers (see The Impact of AIDS on Life and Health Insurance Companies: A Guide for Practicing Actuaries, Transactions of Society of Actuaries 1988 Vol. 40. pt. 2). Therefore, as a means of addressing the specter of out-of-control costs, collapsing blocks of business, and future insolvency, many life and health insurers began crafting exclusions to be included in their policies for AIDS and AIDS-based coverage. Some of the same carriers also began using HIV testing as a means of determining insurability (see Karen A. Clifford and Russel P. Iuculano’s AIDS and Insurance: The Rationale for AIDS-Related Testing, 100 Harv. L. Rev. 1806 (1987)).

Seemingly rejecting the assertions by insurers that the exclusions and testing were necessary to allow them to underwrite and price the insurance policies so as to remain financially viable, some states began enacting legislation or enforcing already-existing regulations in such a way as to preclude some of the insurers’ actions. Ultimately some of the restrictions on the insurers that had been enacted were later repealed. The result was a patchwork of ever-changing rules and regulations that were prohibitive to both insurers and HIV/AIDS patients.

As medical research provided a growing understanding of the disease, and as treatment protocols improved, meaning that HIV was no longer an automatic death sentence, the “AIDS panic” began to subside. Likewise, concerns over health insurer insolvency because of HIV/AIDS also faded from discussion, and most group health insurance policies began to provide coverage for HIV treatment that was designed to prevent the onset of full-blown AIDS. But even with the passage of decades, up to the time that the ACA became law in 2010, some HIV-infected persons still faced limited access to health coverage because HIV may have been considered a preexisting condition or because private, individual insurance was cost prohibitive.

HIV/AIDS Response: Did it Sow Seeds of Distrust?

Looking back to the worst days of the AIDS crisis in America, two distinct points of view can be seen. From the insurers’ perspective, many companies feared that HIV/AIDS would affect their ability to price, underwrite and issue policies properly, and accordingly, this would affect their viability. Insurers steadfastly maintained that their decisions related to HIV/AIDS were warranted, were not targeted at just gay men, and were no different than their consideration of any other health condition or disease. As a counterbalance to the insurers’ view, some in the LGBTQ community held the belief that the insurers’ response to the AIDS crisis was further indicia that insurers had a bias against gay men. This belief may have been fueled by the notion, based on anecdotal accounts, that even before the epidemic, single men of a certain age who lived in certain locations or who worked in stereotypically “gay” careers had routinely been denied insurance based on suspected homosexuality. This festering distrust may have played a role in the animosity against insurers that evolved because of what was seen as a discriminatory response to the epidemic. These countervailing perceptions—customary business practices versus perceived discrimination—form an interesting backdrop for litigation today regarding the HIV-prevention protocol and how it relates to the issuance of certain types of insurance policies.

We will continue to update this blog with developments in the Massachusetts lawsuit and with additional discussion on the issues brought up by the allegations in the case.

Ninth Circuit Affirms Denial of Motion to Compel Arbitration of ERISA ActionIn Munro v. Univ. of S. Cal., the Ninth Circuit recently affirmed the district court’s denial of a motion to compel arbitration of an ERISA action brought by current and former employees of the University of Southern California (USC). The employees alleged that USC, as administrator of certain employee retirement plans, had breached its fiduciary duties as plan administrator. They sought equitable and monetary relief against USC with regard to the past and future administration of the plans. USC moved to compel arbitration, arguing that each of the employees had signed arbitration agreements in their employment contracts, which required all disputes, including any alleged violations of federal law, between the employees and USC to be arbitrated. The district court denied the motion to compel, finding that the dispute did not fall within the scope of the arbitration clause.

In affirming the decision of the district court, the Ninth Circuit recognized that arbitration clauses have been interpreted broadly under the Federal Arbitration Act where an arbitration clause exists. Nevertheless, the Ninth Circuit focused on the fact that the action was brought on behalf of the retirement plans (and their participants) and not on behalf of the employees as individuals.  The court compared this particular ERISA action to a qui tam claim, and looked to a prior case (U.S. ex rel. Welch v. My Left Foot Children’s Therapy) in which the Ninth Circuit similarly found that a qui tam claim did not fall within the scope of an arbitration clause. Accordingly, the court held that the arbitration clauses, which required employees to arbitrate their own claims against USC, could not be “stretched” to apply to ERISA claims brought by the employees on behalf of the retirement plans.

Notably, in a concluding footnote, the court stated that USC’s argument that one particular Ninth Circuit case (Amaro v. Cont. Can Co.), concerning the arbitrability of ERISA actions, should be overruled based on intervening Supreme Court case law, had “considerable force.” The court noted, however, that it was unnecessary to opine on the continued viability of Amaro because the “claims asserted in this case fall outside the arbitration clauses in the employee agreements[.]”

Given the court’s holding in this action, employers should revisit their employment contracts and consider broadening the arbitration clauses and class action waivers in them to apply specifically to instances where an employee is asserting claims on behalf of an ERISA plan and its participants, and to apply specifically to breach of fiduciary claims asserted by an employee in any capacity against the employer as a plan administrator.

A Letter from the Editors

Because each state’s laws related to insurance are unique and because federal courts’ application of ERISA to a set of facts can vary from circuit to circuit, there exist myriad nuances in the law as applied to life, health, disability and long-term care insurance. To address this somewhat amorphous area of the law, we are pleased to introduce our new blog—Underwritten— to provide commentary, updates and insight on the developments that could have an impact on insurers as they seek to serve their policyholders and to mitigate risk. Our goal is to make Underwritten a valuable resource for our clients, for insurers and for those who have an interest in the insurance industry.

Bradley’s Insurance team has extensive experience representing life, health, disability and long-term care insurers in actions across the country. Our team will analyze important cases, regulations and developments, will assess their importance, and will work to provide information relevant to you. You can expect to hear from us at least twice a month on topics such as:

  • Significant federal and state cases
  • ERISA updates
  • Regulatory actions of note
  • NAIC activity
  • Cybersecurity issues

You are invited to visit Underwritten to read about significant cases and other topics related to the insurance industry. To make sure you don’t miss updates, subscribe to receive our posts via email.

If you have any questions or suggestions for Underwritten, please contact us.


Gary L. Howard & Jamie L. Moore, Editors