The Unwanted Ones

Twenty years ago, the parents of a child like Jenna barely flinched when they encountered discrimination. From the moment a sympathetic obstetrician offered to whisk their little tragedy off to an institution, the family of a child born with Down's syndrome learned that all other doors--to schools, workplaces, society itself--would be closed to her.

Things have changed a great deal since then. Vince and Rosemary Palandri have been encouraged to believe in their three-year-old daughter, and caring experts stand ready to help Jenna reach her potential. "I don't think it's right to use the words `disabled' or `handicapped' to describe her," Rosemary Palandri says. "She does face extra challenges, but anyone who knows her knows she's much more normal than not normal."

Such words reflect more than parental pride.
Scampering around in her blanket sleeper--talking, playing and trying (with mixed success) to manipulate her mother--Jenna is like any other cuddly toddler, as irresistible as an elf and equally full of mischief. Even the physical characteristics of Down's syndrome, almond-shaped eyes and short fingers, lose their distinctiveness on this alert, busy baby.

Was there really a time when people called such children "mongoloid idiots" and sanctioned the institutionalized prejudice they faced at every turn? The Palandris certainly had been led to believe they could expect better for Jenna, as have most parents of children with Down's syndrome born in the fifteen years since federal law outlawed most forms of discrimination against the handicapped.

Perhaps that is why the Palandris were surprised to discover that within the multimillion-dollar health insurance industry, both idiocy and prejudice live on.

They never saw what was coming when the nice lady at Blue Cross & Blue Shield of Arizona suggested last year that, instead of paying a past-due premium on their health insurance, they let their policy lapse. They could apply for a new policy, she said. It would save the extra expense of paying the back premium, she added helpfully.

When the Palandris decided not to fight for their existing policy, it gave the giant insurance company the opportunity to dump Jenna from its rolls. "After we did as we'd been advised and reapplied, BCBS told us they'd be happy to issue us a new policy--but not for Jenna," Rosemary Palandri says. "They said she was uninsurable. They also refused to reinstate our old policy."

No amount of arguing would move the company, the largest health insurer in the state, to reconsider. And no other insurance company they contacted felt any differently, says Jenna's mother. "Down's syndrome is an automatic turndown in Arizona," she recalls hearing again and again.

Few insurance companies will admit as much up front. The head of medical affairs for BCBS initially told New Times his company does not automatically reject children with Down's syndrome and reviews each individual's health record before making a decision. And four of nine companies surveyed recently by the state director of insurance, Susan Gallinger, asserted they also do not consider Down's syndrome grounds for automatic denial.

The families of these children hear a very different line, however, and they sometimes hear it in pretty demeaning terms. "When I insisted on knowing why my employer's insurance carrier refused to cover our son, the company president told me `because retarded people aren't worth insuring' and to quit bothering his agents about it," says Nancy Morgan, mother of a nine-year-old boy, Danny, with Down's syndrome. Morgan, as it happens, works for an agency providing support services to the parents of disabled children, but it made no difference to the insurer.

BCBS officials claim they are justified in refusing to insure Jenna because medical statistics show that children with Down's syndrome have a higher incidence of heart defects and other illnesses. "The law only prohibits unfair discrimination," explains Dr. Laurence Linkner, BCBS senior vice president for medical affairs. "All health insurance underwriting is discriminatory by nature because it's based on assessing the increased health risk posed by different groups."

The doctors who treat these children, however, believe the statistics are being misused. "Once you rule out congenital heart defects, which can be done at birth or soon after, the increase in health risk drops off to nearly nothing above normal," says Dr. Harold Magalnick, a north Phoenix pediatrician who currently sees around ten patients with Down's syndrome. "To put these kids at issue with regard to health insurance is ridiculous."

However, BCBS just takes the statistics at face value. Although the company carries an unknown number of children with Down's syndrome under the no-questions-asked policies negotiated by some large employers, it does not examine its own files to determine the actual cost of insuring this group. What's more, BCBS officials refuse to consider the individual health records of such children until the applicants reach the age of ten--when, according to medical literature, the increased incidence of health problems subsides.

The industry's policy towards Down's syndrome children has attracted the attention of Arizona's insurance regulators, civil rights activists and sympathetic legislators alike. "The kids we're talking about don't need special medical help," says Patricia Brown, executive director of the Association for Retarded Citizens of Arizona, Inc. (ARC). "They just need fair treatment."

The Palandris recently obtained health insurance for Jenna from an out-of-state company and consider their troubles resolved. The insurance giant that abandoned their child may find its troubles are just beginning.

VINCE AND ROSEMARY PALANDRI are devout people; as they see it, the children they have are the children God sent them. They don't expect perfection, which helps to explain why they also can reject with gentleness the disparaging labels that even well-meaning people tend to attach to Jenna. Whatever else she may someday be, Jenna will always be an important part of their family and that knowledge is a strong anchor.

"People ask me what treatment Jenna is receiving for her condition and I tell them, `She's at home with us, being a baby,'" Rosemary Palandri says. "She'll probably start school next year, but isn't she entitled to just be a baby for a while?" It would not even be a question with other children, and the Palandris decided a long time ago that Jenna deserved to be treated as much like other children as possible.

She is one of an estimated 250,000 people with Down's syndrome in the United States. Figures are not available on the number in Arizona but the incidence--one in every 800 to 1,100 babies--holds steady across socioeconomic and racial lines, according to the federal Centers for Disease Control in Atlanta.

Down's syndrome is the most common birth defect, or group of defects, known in human beings. Its presence is dictated from the moment of conception, or shortly thereafter, when one of the genetic transmitters called chromosomes emerges in triplicate in the fertilized egg. The condition is not a disease nor is it something a child will outgrow.

The effects, however, vary widely among individuals. One person may be quite limited intellectually while another is merely slower than average in learning to walk, talk and work a computer. To further complicate the stereotype, a sophisticated array of therapies now enable people with Down's syndrome to reach potentials that were undreamed of twenty years ago.

Treatment of the condition has progressed so far in recent years that an increasing number of school-age children with Down's syndrome are achieving at average or above-average levels in regular classrooms, Brown says.

Health problems are not automatic, either. Jenna's only significant medical problem to date was a blockage at the bottom of her stomach which required surgery when she was born in 1985. Called duodenal stenosis, the blockage occurs rarely in children with Down's syndrome, even more rarely in the general population.

The operation was covered under the family's BCBS Execucare policy. Vince Palandri had an individual policy for his family because, as a self-employed contractor, he did not qualify for any group coverage. He had maintained the policy faithfully, he says, often making premium payments in advance. "I get paid by the contract, so whenever a big job finished up, I'd pay several months' worth of premiums at a time," he explains.

The couple recalls receiving a letter from BCBS around the time Jenna was born, saying that if they ever missed a payment, the policy probably would be canceled. They assumed, although the letter did not give a reason, that it was sent because Jenna's birth certificate listed "Down's syndrome." But they had been paying premiums without fail since their marriage in 1981, and the threat of cancellation seemed so remote they soon lost track of the letter.

A year passed, a second daughter was born, and another year passed. Meanwhile, Jenna bloomed. "In fact," says her mother, "Jenna has had fewer illnesses than my other two. She's just a very healthy little girl."

Then, last February, BCBS notified the Palandris they had missed January's premium payment and their policy had been canceled. "I really don't know what happened, whether Vince misfigured payments or what," Rosemary Palandri says.

"I called membership services and asked if our insurance could be reinstated if we made the back payment," she says. "The person I talked to was very sweet. She suggested we just get a new policy instead of paying for coverage over a period that had already elapsed."

What the clerk did not explain--and what she later told the Palandris she did not even know--was that the company's bottom line towards children with Down's syndrome is a hard one. Blue Cross Blue Shield officials say the clerk was just following orders. Company higher-ups have the discretion to reinstate a lapsed policy, they say, but people who miss payments beyond the thirty-day grace period are usually directed to obtain a new policy.

Despite the letter of warning they'd received years before, the Palandris say they had no idea BCBS would reject their daughter automatically. They thought Jenna's excellent health record would speak for itself. Whatever the statistics say about children with Down's syndrome, Jenna had not drained the corporate coffers as company officials claim such children are prone to do.

She was not among the 30 to 40 percent who are born with a malformed heart, the most serious health problem commonly associated with Down's syndrome. She did not experience multiple upper respiratory or ear infections, another area in which statistics show an increased incidence. Was BCBS worried she would develop leukemia, as do about 1 percent of children with Down's syndrome?

"I made it clear to BCBS we'd take a rider on the policy to exclude any problem related to Down's syndrome," Rosemary Palandri says. "They were adamant. One supervisor told me, `You can come and talk to whoever you want, it won't make any difference.'" What was it, then, that made this child uninsurable, and why was her record of good health discounted?

When New Times originally interviewed the company's top executive for medical affairs, prior to learning the Palandris had experience with BCBS, specific questions about the policy toward children with Down's syndrome brought the following responses:

"We do not tell people not to apply if they have a Down's syndrome child," Linkner said. "We will accept an application and we have insured families with Down's syndrome children and they are on our rolls now.

"We never deny coverage or [exclude the family member with Down's syndrome] without getting a medical record," Linkner said. "We always give a specific reason for rejecting an application.

"We're rather confident about what we do in terms of fairness," he added, glancing at his lapel pin commemorating the company's fiftieth anniversary in Arizona. "We're celebrating our fiftieth year this year; we didn't stay in business that long by hurting people."

In letters to the Palandris, however, BCBS was unequivocal in rejecting Jenna and refused to provide a specific health-related reason. "As a matter of corporate policy we do not release underwriting files to the public, but Medical Affairs Underwriting Guidelines preclude acceptance of a Down's syndrome child less than ten years old," wrote Stacy Augustine, a BCBS lawyer, in a September 16 letter to the family.

Nancy Morgan, who once worked for BCBS in Chicago, says she also got the brush-off. "BCBS was the first company I called when we moved out here," she says. "I had good feelings about them, but when they learned Danny had Down's syndrome they told me not to bother applying, they wouldn't even process the application."

Asked to explain the discrepancy between his original assertions and the Palandris' and Morgans' experiences, Linkner says, "You asked about our policy toward children. We in fact do have Down's syndrome children in our contracts, but to me `children' connotes something different than `infants.'"

Jenna Palandri's record of good health was disregarded, he says, "because our guidelines draw the line at age ten; we don't consider individual health records for applicants below the age of ten. Instead, we go by what the medical literature says are the risks."

Initially, the Palandris were mystified by the company's actions. "Usually, professional people are good about Jenna," says her mother. Certainly the health care professionals who treated Jenna all seemed to understand Down's syndrome and to take it in stride.

Not until the Palandris had to go shopping for health insurance, they say, did they confront truly dense ignorance about the condition. Other families, particularly those who pressed uncomfortably close for reasons their children were encountering such arbitrary denial, report similar experiences.

Vicki Stum, whose two-year-old son has Down's syndrome, says she received countless rejections when she attempted to replace coverage lost when her husband's employer folded last year. As with Jenna Palandri and Danny Morgan, the Stum child did not have a history of devastating (and devastatingly expensive) health problems.

"I called between 35 and 50 agents," Stum says. "Some of the agents I talked to thought it was a disease, some thought he'd outgrow it. The amount of ignorance was incredible.

"When I pressed to know why these underwriting policies discriminated against children with Down's syndrome, one agent, sort of groping for an explanation, said, `Well, you wouldn't want to buy a car with a ding in it, would you?'" Stum recalls.

Insurance agent John Moore says he does not recall comparing the Stums' son to a defective automobile, but remembers well his fruitless efforts to find health insurance for the family. "I spent about three weeks looking for a product that would help them," he says. "I finally came up with a package involving three different policies."

The plan, however, contained numerous loopholes and minimal coverage, so the Stums declined it. Moore's own company, Equitable Variable Life Insurance Company, "wouldn't touch [Down's syndrome applicants] because they know a big claim is coming, they just don't know when," he says. "It's like with juvenile diabetes--you know the kidneys will fail at some point, you just don't know when. And when it happens, it's going to be very costly."

ABSOLUTELY WRONG, SAYS Pat Brown, who heads the state's largest organization representing retarded people. "What the physicians who are experts say about these children is that over half are at no additional risk for serious health problems."

Even the incidence of heart defects, the first thing cited by most insurance officials, is not valid grounds to deny all children with Down's syndrome, some treating physicians say. "While heart disease is prevalent, a lot of the defects are so minor they don't require surgery," explains Dr. Ronald Fischler, a Scottsdale pediatrician. Fischler was medical director of the Childhood Evaluation Center of Central Arizona, which diagnoses and treats children with developmental disabilities at St. Joseph's Hospital in Phoenix, for three years before entering private practice recently.

Like Magalnick, Fischler says experience has taught him most children with Down's syndrome are healthy. "The number who develop leukemia or have seizures may be statistically increased, but you're really talking about fractional numbers," he says. "It's really a pretty healthy population. They shouldn't be hard to insure."

Statistics abound to show that these children do have a higher risk for many types of ailments, Linkner argues. "We are constantly reviewing our guidelines to incorporate new research," he says. "If the doctors want us to review our guidelines in line with current medical opinion, then it is certainly a very appropriate thing for us to do. But I've not had a request from any physician to do so."

Insurance officials cite the statistical data over and over in explaining policies that discriminate against children with Down's syndrome. Yet, even though BCBS insures 79 million people nationwide and holds 25 percent of the health insurance policies in Arizona, nowhere in its vast corporate labyrinth is anyone keeping track of how much money is spent on the children with Down's syndrome scattered among its many employer group policies, Linkner admits. "Actuarial information is, of course, very useful but you have to balance it against the cost, administratively, to obtain it," he says.

Brown, of the ARC, says she ran up against a brick wall in trying to obtain actuarial data, even from companies that administer health insurance to children with Down's syndrome in states which require it. (Fifteen states have mandated insurance for so-called "high-risk" categories of people, usually the disabled or chronically ill. Arizona does not require such coverage nor offer it through a state-subsidized "high-risk pool.")

"We feel it's very important that the companies produce information showing their actual losses on people with Down's syndrome if they're going to claim it's legitimate to discriminate against this group," Brown contends. "Otherwise, they're just saying, `Trust us, we're being fair,' and we're not prepared to do that anymore, based on what we're hearing from treating physicians."

The statistics used by BCBS and others come primarily from the thousands of published studies that have subjected Down's syndrome children to microscopic examination. If other groups of children were studied that intensively, doctors say, insurers might be surprised at the results.

An increase in upper respiratory infections, for instance, is one of the frequent reasons cited by insurance officials for the "high-risk" label attached to children with Down's syndrome. But, says Magalnick, "The increase in upper respiratory infections is no greater than for children in a home where both parents smoke, or children whose parents have severe allergies, or children in daycare."

Would anyone, he adds with a touch of rhetoric, consider denying children in these groups health insurance?

SUSAN GALLINGER'S EYES narrow as she listens to the facts of the Palandri case. She is brand-new to the job of state director of insurance, having barely settled into the glass-lined headquarters suite on North Third Street.

But Gallinger is a seasoned hand at watching the insurance industry's machinations. During four years as the agency's legal counsel and then assistant director, interspersed with a year in private practice representing the industry, Gallinger also learned the limits of regulatory law.

And she disagrees with Linkner's assertion that "insurance is one of the most regulated industries in the country." In fact, Gallinger maintains, her agency's authority to question the industry's practices--especially its decision to insure or not to insure--is limited. "There are federal laws prohibiting discrimination based on nationality, sex and race, but otherwise, as long as the basis is health-related, a company can deny coverage to a group," she explains.

In other words, Gallinger admits, BCBS would be in big trouble if it rejected a black applicant on the basis that statistics show blacks have an increased risk of heart disease, but only because federal laws outlaw such sweeping discrimination against blacks.

No such prohibition applies to people with Down's syndrome. The federal anti-discrimination laws passed to help the handicapped get education and employment did not guarantee access to private health insurance. (Many types of handicaps involve high-cost health care, so efforts on behalf of the handicapped have focused on the establishment of high-risk pools or other forms of special financing for those who are hard to insure.)

However, Gallinger adds, "If there are credible data to substantiate that a person with Down's syndrome is no more likely than others to develop health problems, then we probably can prohibit insurance companies from denying coverage under state statute."

So far, she says, no one has brought a test case before the agency. In 1987, Nancy Morgan came close to filing a complaint because her employer's insurer had refused to remove restrictions on her son's coverage despite his record of good health. However, shortly after she sent a copy of her correspondence to the Department of Insurance, the insurer agreed to drop the restrictions and today her son is fully covered.

The Palandri case could well become the test of discrimination against children with Down's syndrome by health insurers, says Mesa lawyer Tom Ryan. A high school friend of Rosemary Palandri, Ryan says he was so outraged when he heard about the actions of BCBS that he agreed to represent the family pro bono (without compensation).

Since learning that the practice of discriminating against children with Down's syndrome is industry-wide, however, Ryan says he believes that amending state law is a better way to attack the problem than filing a lawsuit. "There is no excuse for what they've done to these children with Down's syndrome," he says. "It is a segment of society with no capacity to speak for itself and they've taken advantage of it."

The Palandri case also has attracted the attention of the Arizona Center for Law in the Public Interest, which has successfully litigated several suits over the rights of the mentally retarded and chronically mentally ill in Arizona. Center lawyer Tom Berning of Tucson says he believes the Palandris could win a consumer complaint under existing state law, but adds, "These administrative complaints have a way of dragging on for years, because they can be appealed all the way through the courts."

So the Center, together with Ryan and Brown, are taking their case to the Arizona State Legislature. They have won the backing of an East Valley Republican for a bill that would make it difficult, if not impossible, to do to another child what BCBS did to Jenna Palandri.

The bill would prohibit insurance companies from refusing to process an individual's application or rejecting coverage on the basis of a genetic condition or developmental disability unless the company could produce hard evidence that these conditions would result in excessive health costs. The bill also would require companies to consider the individual health records of people with Down's syndrome or developmental disabilities.

State Representative Bill Mundell, a Chandler Republican, is sponsoring the bill. "I think chances are excellent it will pass this session," Mundell says. "I haven't polled my colleagues, but I'd be interested in hearing the arguments against it. It seems to me like a very fair measure."

Gallinger herself conducted a recent, informal poll of nine companies to determine the prevalence of discriminatory policies against children with Down's syndrome. "Four of the nine said they do not automatically decline to insure these kids," Gallinger says. "In that case, they should have no trouble supporting the proposed change in the law," she adds.

A VINDICTIVE PERSONALITY would be surveying these powerful allies like a field marshal assembling the troops, ready to give Blue Cross Blue Shield the fight of its corporate life. But Rosemary Palandri is struggling not to be swallowed by the meanness of her adversary. "I'm not going to let this make me bitter," she says. "I can't see how that will do Jenna or the rest of us any good."

The family's most pressing problem, after all, was health coverage for their little girl. And that problem was solved through ARC, which put the Palandris in touch with an independent insurance agent who specializes in finding coverage for people with disabilities.

Insurance agent Orion Steen says that after an exhaustive search of companies in Arizona, he finally located an Oregon-based company willing to issue policies to both the Palandris and the Stums. The policies exclude Down's syndrome-related illnesses, he says, but the insurer has agreed to allow the children's doctors to make such determinations.

Ironically, notes ARC's Pat Brown, "While these children are widely viewed as too high-risk by private insurers, they also are not eligible for federal disability insurance because the feds don't consider Down's syndrome, by itself, to be a disability."

"The kids we're talking about don't need special medical help. They just need fair treatment."

What was it, then, that made this child uninsurable, and why was her record of good health discounted?

One agent, sort of groping for an explanation, said, `Well, you wouldn't want to buy a car with a ding in it, would you?'"

"It is a segment of society with no capacity to speak for itself and they've taken advantage of it."

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Kathleen Stanton