Longform

The Unwanted Ones

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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.

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Kathleen Stanton