Assurant Health said that as a matter of policy it did not comment on individual customer claims.

"We disagree with certain of the court's characterizations of Assurant Health's policies and procedures in the Mitchell case," it said in a statement provided by spokesman Peter Duckler, adding: "The case continues to progress through the appellate process."

"REPREHENSIBLE" CONDUCT

Much of the trial record of the Mitchell case is bound by a confidentiality order and not available to the public. But two orders written by the presiding judge, Michael G. Nettles, a state circuit judge for the 12th Judicial District of South Carolina, of Florence County, describe the case in detail. Judge Nettles wrote the orders in response to motions by Assurant that the jury's verdict be set aside or reduced.

In the motions, Nettles not only strongly denied Fortis' claims but condemned the corporation's conduct.

"There was evidence that Fortis' general counsel insisted years ago that members of the rescission committee not record the identity of the persons present and involved in the process of making a decision to rescind a Fortis health insurance policy," Nettles wrote.

Elsewhere in his order, Nettles noted that there were no "minutes of actions, votes, or any business conducted during the rescission committee's meeting."

The South Carolina Supreme Court, in upholding the jury's verdict in the case in a unanimous 5-0 opinion, said that it agreed with the lower court's finding that Fortis destroyed records to hide the corporation's misconduct. Supreme Court Chief Justice Jean Hoefer Toal wrote: "The lack of written rescission policies, the lack of information available regarding appealing rights or procedures, the separate policies for rescission documents" as well as the "omission" of other records regarding the decision to revoke Mitchell's insurance, constituted "evidence that Fortis tried to conceal the actions it took in rescinding his policy."

In affirming the trial verdict and Nettles' order, Toal was as harsh in her criticism of the company as Judge Nettles had been. "We find ample support in the record that Fortis' conduct was reprehensible," she wrote. "Fortis demonstrated an indifference to Mitchell's life and a reckless disregard to his health and safety."

Fortis canceled Mitchell's health insurance based on a single erroneous note from a nurse in his medical records that indicated that he might have been diagnosed prior to his obtaining his insurance policy. When the company's investigators discovered the note, they ceased further review of Mitchell's records for evidence to the contrary, including the records containing the doctor's diagnosis.

Nettles also suggested that Fortis should have realized the date in the note was incorrect: "Not only did Fortis choose to rely on one false and unreliable snippet of information containing an erroneous date to the exclusion of other information which would have revealed that date to be erroneous, Fortis refused to conduct any further investigation even after it was on notice the evidence which aroused its suspicion to be false," the judge noted.

Fortis "gambled" with Mitchell's life, Nettles wrote.

Their motive, according to the judge, was obvious: "The court finds that Fortis wrongfully elevated its concerns for maximizing profits over the rights and interest of its customer." In upholding Nettles' verdict, the South Carolina Supreme Court similarly ruled that "Fortis was motivated to avoid the losses it would undoubtedly incur in supporting Mitchell's costly medical condition."

While declining to comment on specific cases, Assurant said in the statement: "All insurance companies have processes to review claims to ensure their accuracy, completeness and compliance with policy provisions and we evaluate all claims on an individual basis."

CEO DEFENDED RESCISSION

On June 16, 2009, the House Energy and Commerce Committee, held a hearing on the practice of rescission by health insurance companies, and among the industry executives who testified was Don Hamm, the CEO and President of Assurant Health.

Hamm insisted before the committee that rescission was a necessary tool for Assurant and other health insurance companies to hold the cost of premiums down for other policyholders. Hamm asserted that rescission was "one of many protections supporting the affordability and viability of individual health insurance in the United States under our present system."

He also suggested that those who had their policies rescinded by Assurant had attempted to intentionally mislead his company: "Unfortunately, there are times when we discover that an applicant did not provide complete or accurate medical information when we underwrote the risk," Hamm said.

But state regulators, federal and congressional investigators, and consumer advocates say that in only a tiny percentage of cases of people who have had their health insurance canceled was there a legitimate reason.

A 2007 investigation by a California state regulatory agency, the California Department of Managed Health Care, bore this out. The DMHC randomly selected 90 instances in which Anthem Blue Cross of California, one of WellPoint's largest subsidiaries, canceled the insurance of policy holders after diagnoses with costly or life-threatening illnesses to determine how many were legally justified.

The result: The agency concluded that Anthem Blue Cross lacked legal grounds for canceling policies in every single instance.

"In all 90 files, there was no evidence (that Blue Cross), before rescinding coverage, investigated or established that the applicant's omission/misrepresentation was willful," the DMHC report said.

WRONG DATE

The Fortis underwriter who recommended Mitchell's policy be rescinded had her own doubts that it was correct to do so, according to records the company did produce at trial.

In a reference to the nurse's note with the wrong date, the underwriter wrote to her superiors: "Technically, we do not have the results of the HIV test. This is the only entry in the medical records regarding HIV status. Is this sufficient?"

Relying on the note was dubious, Judge Nettles wrote, because it was included in records from 2002, when Mitchell was in fact diagnosed with HIV, and not in 2001, when he purchased his policy. "The chronological sequence of those records raises an inference that the date on the handwritten note may be erroneous," he wrote.

Moreover, Nettles said, if Mitchell's HIV diagnosis had been a year earlier, as the erroneous note said, Mitchell's medical records would have shown other references to that diagnosis and treatment and he would have sought reimbursement for expenses related to them.

Sallie Phelan, an attorney who represented Mitchell, says her client was bewildered as to why his insurance was canceled -- at first not even contemplating the possibility that there was anything improper going on: "We began representing Jerome when he was still just a boy, really," she said. "He was just this sweet kid with all these drives and ambitions."

Then Mitchell felt betrayed, Phelan says. "He had done everything he was supposed to. He went out and got insurance on his own, at 17. He was a trusting person, perhaps too trustful. And as they kept slamming doors in his face, he thought at first there was some misunderstanding. He couldn't understand what was going on, because he is such an honest person himself. And when they accused him of lying, that was the most harmful to him. He didn't understand why they were accusing them. He didn't understand why people weren't listening to him."

Like other major health insurance companies, Fortis has a "rescission committee" that reviews recommendations to cancel a policyholder's insurance. But in the case of Fortis, Nettles wrote, the committee rarely did more than "rubber stamp" already flawed recommendations.

"There were no rules, no minutes, no notes, and, in accordance with instructions from general counsel not even a record of who was present," the judge wrote about the committee.

During the meeting in which Mitchell's insurance was rescinded, "there were more than 40 other customers, whose cases appeared before the rescission committee for review in no more than one and one half to two hours, representing an average of three minutes or less per customer," he wrote.

According to Nettles, Fortis concealed information through its document retention practice. The company's "stated policy for the last nine years has been to microfilm and destroy all documents," the judge said. "There was also evidence that documents and/or records regarding (Mitchell's) policy were deleted; and that telephone logs and recordings contained key omissions." Fortis also "shredded" documents, he said.

Regarding another piece of key evidence, the judge concluded that "a jury could easily infer that Fortis destroyed and/or concealed" crucial evidence.

Overall, Nettles asserted, a "pattern of secrecy and concealment by Fortis in this case ... supports a high award of punitive damages."

After his insurance was canceled, a case worker with a social agency who works with HIV patients named Mary Wiggins worked tirelessly for Mitchell to find him medical care and to have Fortis reinstate his insurance. Despite deluging Fortis with records and information that should have led to a reversal of the decision, the insurance company simply ignored her. Wiggins found a local clinic that agreed to provide care for Mitchell, in the process very likely saving his life.