OGC Opinion No. 04-02-29: Long Term Care Insurance, Discrimination Because of Breast Cancer

OGC Op. No. 04-02-29

The Office of General Counsel issued the following opinion on February 27, 2004, representing the position of the New York State Insurance Department.

Re: Long Term Care Insurance, Discrimination Because of Breast Cancer

Question Presented:

May an insurer refuse to issue a policy of long term care insurance solely because the applicant has a history of breast cancer?

Conclusion:

No, such an action would be contrary to the New York Insurance Law (McKinney 2000 and 2003 Supplement).

Facts:

Some 8 years ago, Mrs. A had bilateral breast cancer and underwent a mastectomy with immediate reconstruction. At the time of the surgery, the pathology report indicated that there had been no lymph node involvement. Subsequent to the surgery, Mrs. A underwent chemotherapy as an adjuvant to the mastectomy.

Recently, Mrs. A applied for a policy of long term care insurance and were denied coverage by the insurer because of her history of breast cancer. Mrs. A believes that, because she no longer has breast tissue that would serve as a nidus for that type of cancer, the insurers actions are improper.

Analysis:

Long term care insurance is authorized by New York Insurance Law § 1117 (McKinney 2000 and 2003 Supplement). Because, in accordance with New York Insurance Law § 1117(a) it may only be written by insurers that may issue accident and health insurance policies, it is considered a form of health insurance.

New York Insurance Law § 3234 (McKinney 2000) currently provides:

(a) No insurer shall refuse to issue any policy of . . . non-cancelable disability insurance, or cancel or decline to renew such policy because an individual has had breast cancer, provided that the initial diagnosis of such disease has occurred at least three years prior to the date of application and that a physician has certified that the disease has not reoccurred in the applicant or the individual proposed for such insurance.

(b) The prohibition of subsection (a) of this section shall not preclude an insurer from establishing selection criteria where the insurer can prove that its decision was based on sound underwriting and actuarial principles reasonably related to actual or anticipated loss experience. In such case the selection criteria used must be based on such principles. The insurer shall notify the applicant or proposed insured of its specific reason or reasons for such decision.

In the last session of the Legislature, last year, 2003 N.Y. Laws 599 was enacted, to become effective on March 28, 2004. This enactment repeals New York Insurance Law § 3234 and substitutes New York Insurance Law § 2613:

(a) Unless its action is based upon sound actuarial principles or is related to actual or reasonably anticipated experience, no insurer shall refuse to issue any policy of . . . non-cancelable disability insurance, or cancel or decline to renew such policy because an individual has had any type of cancer, provided that the initial diagnosis of such disease has occurred at least three years prior to the date of application and that a physician has certified that the disease has not reoccurred in the applicant or the individual proposed for such insurance

(b) In the case of an adverse underwriting decision, the insurer shall notify the applicant or proposed insured of its specific reason or reasons for such decision.

Disability income insurance is needed during working years and replaces lost income. Long term care insurance is usually to provide for expenses attendant upon disability occasioned after withdrawal from the work force. Since long term care insurance is not a sub-set of disability insurance, applicants for long term care insurance would not be protected by either New York Insurance Law §§ 3234 or 2613.

However, New York Insurance Law § 4224(b) (McKinney 2000 and 2003 Supplement) provides:

No insurer doing in this state the business of accident and health insurance . . . shall: . . . (2) refuse to insure . . . solely because of the physical or mental disability, impairment or disease, or prior history thereof, of the insured or potential insured, except where the refusal, limitation or rate differential is permitted by law or regulation and is based on sound actuarial principles or is related to actual or reasonably anticipated experience . . . . . . .

It is the position of the Department that, based upon New York Insurance Law § 4224(b), an insurer may not refuse to issue a long term care insurance policy solely because of a history of breast cancer. While an individual who has undergone a mastectomy no longer has breast tissue to serve as a nidus for that type of cancer, he or she could be vulnerable to other types of cancer or reoccurrence of a cancer, other than breast cancer, or some other disease. However, unless the insurer has valid actuarial evidence that a history of breast cancer increases the risk of disease, it may not utilize the previous history as a basis to deny issuance of a long term care policy. In addition, the insurer would have to utilize the same data for similarly situated applicants for that type of insurance.