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An easy out for insurance companies

Allen Green didn't have long to live, but didn't know it, when he purchased a home health care insurance policy seven years ago.

You've got "slow kidneys," his doctor told him. Also a little asthma and bronchitis.

So where the insurance application asked if he "had or had been told" that he suffered from "chronic obstructive lung disease or kidney failure," Green honestly answered no. Nobody had told him any such thing.

Upon that much, both sides agree, in a case argued before the Florida Supreme Court on Wednesday.

As you would suppose, poor Green lost his insurance just as soon as he needed to use it. On checking his claim against the doctor's actual records, the insurer, Life and Health of America, discovered what the true state of his health had been when it issued the policy 13 months before, and rescinded it. The company also returned Green's premiums, which of course amounted to not nearly as much as his claims.

Green sued. Green died. His son took over the suit, which eventually worked its way from the Broward County circuit court, which threw it out, to the 4th District Court of Appeal, which agreed that under Florida law and a 1986 decision of the Florida Supreme Court, the Greens were out of luck. Green's son appealed, noting that another district court had ruled against the insurance industry in a similar case. So the Supreme Court will have to sort things out.

It is, as they say in the legal trade, a "closely watched" case. This means that insurance companies will save millions of dollars if they win. It would secure their right to sell health and life insurance policies without checking to see how healthy the applicants are and to then cancel the policies when it turns out they were sick.

Even if they didn't know it.

The implications could be staggering, especially to people with undiagnosed human immunodeficiency virus infections or unsuspected cancers.

In just such a case, the 11th U.S. Circuit Court of Appeals ruled nine years ago in favor of two Florida policyholders who were afflicted with undiagnosed HIV and cancer when they applied for life insurance.

That ruling, say the lawyers for Life and Health of America, was "a prime example of the truism that difficult cases often produce bad law."

Because the federal court was applying Florida law as it understood it, its precedent could be nullified by a contrary decision in Green's appeal.

The company's argument itself is a prime example of a truism _ that law is not necessarily justice.

Life and Health admitted as much in its brief to the Florida Supreme Court.

"No one can dispute that, in some instances, the statutorily provided right of an insurance company to rescind a policy based on unknowing misstatements of material fact will seem unfair," wrote the company's lawyers. "However, the Florida Legislature . . . has not limited an insurer's ability to exercise that right only to cases where a court believes it to be fair. Rather, as this court recognized . . . the right is available even where exercise of the right may seem unfair."

The case may turn on a bizarre distinction. Green's lawyers say he should win, posthumously, because he had been asked to certify only that his answers were true "to the best of (his) knowledge and belief" _ not whether they were true as an absolute fact.

But the insurance lawyers argue that this language was meant to protect the company, not the customer. It certifies, they say, "that the applicant has seriously, rather than lackadaisically, considered the questions." The "knowledge and belief" clause, it says, "merely serves to emphasize how important it is for the applicant to answer the questions fully and truthfully."

Oh, please.

Dying is difficult enough without such hassles. The company could have spared Green so much grief by checking with his doctor when he applied for the policy or sending him for a physical. But that would have cost money. Better to take Green's money and rely on Florida law to cancel the policy if he turned up sick, of pre-existing causes, within the next two years.

"They could have sent the application to the doctor," Green's lawyer reminded the Supreme Court on Wednesday. "This would have given the knowledge that they wanted. . . . You could also put a burden on (the applicant) to ask a doctor."'

"When the facts are against you," lawyers like to say, "argue the law."

The insurance industry's lawyers argued a lot of law Wednesday. They had precious little to say about justice.