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COMPANY TO
PAY WOMAN WITH AIDS $250,000
FOR
BREACHING CONTRACT TO PAY HER HEALTH INSURANCE
FOR IMMEDIATE RELEASE
Contact:
Ronda B. Goldfein Esq., Executive Director, AIDS
Law Project of Pennsylvania
215-587-9377 (office); 215-680-1305 (cell);
goldfein@aidslawpa.org
PHILADELPHIA, PA (June 2, 2009) – In a case that has
attracted international attention, a company that broke its promise to
pay the health-insurance premiums for a woman with AIDS has settled the
case for $250,000.
The settlement
stems from a lawsuit filed in
November 2005 in New Jersey Superior Court in Camden County, on behalf
of the woman – identified as M. Smith – against
Life Partners Inc. (LPI),
a publicly traded viatical
company based in Waco, Texas. Viatical companies buy life insurance
polices from the terminally ill at a percentage of the death benefit
depending on the health of the seller. Smith is represented by
Philadelphia-based attorneys Jacob C. Cohn of Cozen O’Connor and Ronda
B. Goldfein of the nonprofit AIDS Law Project of Pennsylvania.
In September 2006,
a Camden County judge ordered LPI to
place $837,357 in trust as security for payment of future insurance
premiums. LPI appealed
the judge’s ruling, and in October 2007 the New Jersey appellate court
affirmed the breach of contract ruling but returned the case to the
trial court for a hearing on the amount of damages. Today’s settlement
was reached days before the damage hearing was to have been held.
The case has drawn widespread news coverage, including
lengthy reports in 2005 and 2006 by CNN’s primetime “Paula Zahn Now”,
the Canadian Broadcasting Corp., the Philadelphia Inquirer and numerous
blogs.
In 1992 when she was 36, Smith, now 53, was diagnosed
with cancer and AIDS and given a two-year life expectancy. She
contacted LPI after seeing a magazine advertisement in which the company
offered to buy life-insurance policies for a percentage on the dollar.
With no dependents, Smith thought that selling the policy seemed a
sensible way to gain financial security for her final days. She
agreed to sell her $150,000 policy in exchange for about $90,000 and
LPI’s signed contract promising to pay her life- and health-insurance
premiums for the rest of her life.
Happily for Smith, her prospects for survival improved
dramatically with the introduction of a new generation of AIDS drug
therapy in 1996. LPI was not as happy with its agreement to pay
Smith’s health premiums, however. By March 1998, LPI wrote to
Smith claiming that the investors who had purchased her policy were “no
longer willing to support the costs of your health insurance.” In
response to a letter from Smith’s then lawyer, LPI agreed to continue
paying the premiums.
But on
Aug. 15, 2005, the very day on which the premiums were due, LPI again
sent Smith a letter saying the company would no longer pay her
health-insurance premiums.
With no
money to hire a lawyer and nowhere else to turn, Smith contacted the
AIDS Law Project of Pennsylvania, which recruited Cozen O’Connor for
pro bono
assistance.
The settlement provides for a lump sum payment to M.
Smith, allowing her to make her own health insurance arrangements and
freeing her from reliance upon a company that has already broken its
promises.
“We knew all along that the defendants had no defensible
position in refusing to comply with their own contract .” said Jacob C.
Cohn, Esq., trial attorney at the law firm of Cozen O’Connor. “With this
settlement, our client will be able to ensure that she continues to
receive needed life-sustaining medicines without the stress and
uncertainty of not knowing whether or when LPI might stop paying her
insurance premiums.”
“As we are happily seeing people with AIDS living longer,
healthier lives, we never expected that survival would be the basis of a
lawsuit,” said Ronda B. Goldfein, Esq., executive director of the AIDS
Law Project of Pennsylvania. “Today’s settlement brings Ms. Smith some
long overdue peace of mind. She no longer has to fear LPI lurking over
her shoulder, waiting for her demise to reap their profits.”
AIDS Law Project of Pennsylvania
1211 Chestnut Street, Suite 600 •
Philadelphia, PA 19107
Phone:
(215) 587-9377 • Fax: (215)
587-9902
Intake Hours: 9:30
am-1:00 pm
Se Habla Español
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