Mutual of Omaha Cos. has dropped coverage limits for the treatment of HIV- or AIDS-related conditions, three months after the insurer won a federal court challenge to the caps, company officials said. The company's decision to lift the caps was hailed as a breakthrough by advocates for policyholders with the disease.

As of May 1, 2000, Mutual of Omaha will offer the same coverage for the treatment of AIDS or HIV, the virus that causes the disease, as it does for other ailments. Two Chicago men who sued the insurer in 1998 received coverage for AIDS-related care with limits of $25,000 and $100,000, compared to $1 million for most other health conditions.

Mutual of Omaha is notifying policyholders affected by the change.

Chicago-based Lambda Legal Defense and Education Fund represented the two men, who challenged Mutual of Omaha's capping of their lifetime HIV coverage. "They certainly no longer have to face the real risk that they're going to be prematurely cut off from coverage," Lambda staff attorney Heather Sawyer says.

In a statement, Lambda and the AIDS Legal Council of Chicago call the decision "a vital breakthrough for all policyholders with HIV and AIDS who may now be able to afford potentially life-saving treatments and therapies that were out of reach due to Mutual's coverage limits."

According to a statement released by the insurer, Mutual of Omaha was reviewing the AIDS cap in 1998 when the company was named as a defendant in the lawsuit. The lawsuit charged that Mutual of Omaha's caps for AIDS-related treatment violated the federal Americans with Disabilities Act (ADA). The insurer delayed lifting the limits until the lawsuit was concluded.

What happened in the courts

The ADA law protects the disabled against discrimination in many areas, including jobs and public accommodations. The Supreme Court ruled in 1998 that people who carry the HIV virus that causes AIDS are covered by the ADA law even if they have no visible symptoms of the disease.

A federal judge ruled for the two men in 1998, but the 7th U.S. Circuit Court of Appeals reversed that ruling. The appeals court's decision held that most health insurance policies contain coverage caps. Ruling for the two men would ban coverage caps for diseases classified as disabilities but allow limits on coverage for other illnesses, such as heart disease, the lower court concluded.

In a decision that effectively upheld the caps, the U.S. Supreme Court in 2000 refused to reconsider the lower court's decision on the case.

Mutual of Omaha said the court decision affected the entire industry by affirming that the ADA does not control terms of insurance policies, according to its statement.

The court decision affected the entire industry by affirming that the ADA does not control terms of insurance policies.

The insurer decided to remove the coverage limits, which were in place in about half of the states it conducts business. The company said the insurance industry has limited benefits for AIDS-related conditions since the 1980s, when the ultimate costs associated with the treatment of the disease were unknown and the insurance risk was unclear. Today, increased medical knowledge and established treatment methods make it easier for insurers to understand and manage financial risk associated with AIDS-related claims, according to Mutual of Omaha's statement.

Jim Nolan, a spokesperson for Mutual of Omaha, says his company was notifying policyholders affected by the change. He did not know how many people would be affected by the new policy.

Sawyer, meantime, says she considered arguing to state insurance departments that the caps were illegal, but Mutual's decision eliminated the need for such action. She says she is unaware of any other insurance companies with limits on AIDS-related coverage.

One of the men who sued Mutual of Omaha says he believes the company changed the policy only under pressure from the lawsuit. "Lifting the caps will make all the difference for the health care and peace of mind of people like me," he says in a statement.