Archived Press Releases



Contact: Ronda B. Goldfein Esq., Executive Director, AIDS Law Project of Pennsylvania
215-587-9377 (office)

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.”