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Compiled by GayToday
The 7-0 decision in Galanty v. The Paul Revere Life Insurance Company ordered the insurer to honor a disability insurance policy issued to Mark Galanty, a 52-year-old Studio City man represented by Lambda. The case has been closely watched by the state Insurance Commissioner and disability rights, women's, consumer, legal, AIDS and other civil rights groups, all of whom had warned against allowing insurers to flout state insurance law.
He added, "People with HIV who have disability policies now will have peace-of-mind, knowing that they will receive benefits when they need them instead of being forced into poverty. The Court wisely put an end to the same sort of post-claim underwriting practices novelist John Grisham exposed in The Rainmaker." Galanty said, "I was trying to be responsible when I accepted a sales agent's pitch about this policy, and I was shocked when years later, my claims were rejected. This ruling comes as a great relief to me today." Galanty was HIV-positive when Paul Revere sold him a disability insurance policy in 1989, and he diligently paid premiums for the next several years, continuing to work without illness. The policy's "incontestability" clause stated that claims made for disabilities occurring more than two years after the start of a policy could not be denied. Five years after his policy was issued, Galanty was diagnosed with AIDS; at that time, pain in his hands and other medical complications forced him to stop working as a court reporter. But Paul Revere refused to pay; it claimed that Galanty's AIDS diagnosis was "manifest" before the policy took effect. In its ruling, California's highest court reversed two lower courts which had sided with the insurer. Ruling that under the law, incontestability clauses prevent insurers from denying disability claims after the policy has been in effect two years, the Court said in its 30-page decision, "In short, the incontestability clause controls." Writing for the majority, Justice Kathryn M. Werdegar said that historically, "Such clauses were intended to promote the sale of policies to a public generally distrustful of insurers, and to address the perception that insurers tended to avoid paying benefits because of minor misstatements in applications for insurance." The Court sent Galanty's claims for bad faith and emotional distress back to the Court of Appeals since they were not considered in previous rulings. Once voluntary, incontestability clauses now are required in insurance policies by most states, including California. Similar efforts by other insurers to evade those laws also have failed. Last year, for example, New York's highest court rejected attempts by New England Mutual Life to confuse an HIV-test result with an AIDS diagnosis and ordered the company to pay the benefits it owed to a policyholder. Galanty v. The Paul Revere Life Insurance Company, No.B113007 |
California Supreme Court Chief Justice Ronald W. George 