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Patient's survival bad for business

By Deborah Feyerick
CNN

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M. Smith, who asked CNN to shield her identity, tells Deborah Feyerick about the battle over her insurance premiums.

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PHILADELPHIA, Pennsylvania (CNN) -- When M. Smith learned she had AIDS in the early 1990's, she figured it was a death sentence. "It was mind-numbing," Smith says.

She was 35, healthy, and never suspected that an ex-boyfriend, who died years earlier of AIDS related complications, had infected her.

Smith, who also had cancer at the time, says her prognosis gave her less than two years to live. So, she started to get her affairs in order.

One day, flipping through a magazine for HIV-positive people, Smith, who asked we shield her identity, saw an ad offering to buy her $150,000 life insurance policy. Smith had no children and no husband.

According to the contract she signed, the company, Life Partners, would pay her $90,000 up front, and cover her combined life and health insurance premiums if she lived longer than two years. When she died, the company would collect the full value of the policy, potentially a windfall profit of more than 60 percent, depending on when Smith died.

That was 12 years ago. Smith is still alive, and the company has paid out $100,000 in premiums, according to Smith's attorneys. But Smith and her lawyers also claim that over the years, Life Partners has been trying to get out of its contract, claiming Smith should pay her own health premiums and at one point sending a letter saying, "The investors ... are no longer willing to support the cost of your health insurance."

In a letter to Smith this past August, the day her premium was due, Life Partners demanded she pay the money herself. Because Smith just turned 50, her health premiums jumped to $29,000 a year, money the self-employed woman does not have. Without that insurance, she says she will not be able to afford the pricey AIDS medicines keeping her alive.

Smith's lawyer, Jacob Cohn says, what Life Partners is trying to do is "the moral equivalent of trying to tie her to the railroad tracks." He is fighting to force the company to guarantee annual payment, or to put aside a lump sum so she can pay the premiums herself.

Life Partners would not speak to CNN, referring us to court documents. The company president recently signed an affidavit saying the company would pay Smith's health insurance premiums, admitting there was a "contractual obligation" to do so.

Smith's lawyer says he's wary because in the past Life Partners has threatened to abandon the contract and let the policy lapse. Smith says those threats jeopardize her piece of mind and undermine her efforts to stay healthy.

Although she was treated for AIDS-related cancer more than a dozen years ago, she has not had any other opportunistic infections or been hospitalized because of her condition.

While there is no cure for AIDS, the new medications are extremely effective at staving off disease. Ronda Goldfein of the AIDS Law Project in Pennsylvania said companies like Life Partners never considered the possibility AIDS might not be a sure bet.

"In the early '90's people were dying. They'd get diagnosed, there wasn't any good treatment and they would die. And all of a sudden in the midst of all that ... there's this revolution in AIDS care and people are living longer."

According to court filings, Life Partners is starting to pay out hundreds of thousands of dollars on contracts they negotiated prior to 1998, money that's likely to cut into investor profits.

As for M. Smith, the man who infected her died 20 years ago. She's still going strong. And what if she lives to 70? "It's a great thing," she says, "a great thing."

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