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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.”
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FOR
MORE INFORMATION REGARDING THIS ISSUE: CLICK HERE!
AIDS Law Project of Pennsylvania
1211 Chestnut Street, Suite 600
Philadelphia, PA 19107
Phone:
(215)587-9377 Fax: (215)
587-9902
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