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Guardian Life Insurance, a New York-based insurance company, has begun canceling lines of coverage and specific policies in entire states in order to avoid paying high-cost claims; they are canceling coverage in entire states, such as Colorado, and certain policies in states such as New York, New Jersey and South Carolina because they are barred from discriminating specifically against policyholders that file large claims each month. The company only took aim at the plans whose claims were the highest.

For example Guardian discontinued its coverage of Ian Pearl, a muscular dystrophy victim, because his medical care costs about $1 million a year. In an e-mail, a Guardian Life executive called such high-cost patients “dogs” that the company could get rid of. A federal court has deemed this action legal, so unless the federal Department of Health and Human Services decides to intervene, Pearl and many like him will lose their coverage on December 1. A Guardian spokesman claims the policy Pearl had, which offered unlimited home nursing, became too expensive for new small-business customers to buy so the demand was diminished and a new plan was instated; the spokesman went further to state that neither Medicaid nor Medicare offer twenty-four hour home nursing. As a last resort, Ian can be admitted to the hospital under Medicaid, however his parents feel this is a death sentence since Ian needs one-on-one medical care.

Ian’s father claims Guardian Life Insurance have been trying to find a way out of paying Ian’s medical costs for years, sending private investigators to his workplace and to the family’s home to try to catch them in a lie. Guardian Life Insurance, which is a 150-year-old mutual company, reported profits of $437 million last year, a 50 percent increase over its $292 million profit in 2007. According to its annual report, it paid dividends of $723 million to policyholders and had $4.3 billion in capital reserves. The company’s investment income totaled $1.5 billion that year, a small increase from the year earlier.

In July, Judge William Pauley, of the U.S. District Court for the Southern District of New York, ruled in Guardian’s favor saying the move by the insurance company was meant to increase its competitive position by reducing what it paid out in claims; this would help lower the overall rates and allow them to compete for more business. The judge also found that the Health Insurance Portability and Accountability Act (HIPAA) could only be enforced by the Department of Health and Human Services and private citizens cannot sue under it, as the Pearl family was attempting to do.

Guardian executives claimed they were no longer offering the plan Ian Pearl was under because it was too expensive and small businesses were not willing to purchase it. As a result, they were forced to offer different plans. The Pearl family is continuing to pursue a trial in order to get Ian’s policy reinstated.

In a recent flip-flop, probably because of media pressure and the public outcry, Guardian reversed its position and stated that it would restore Ian’s policy. Guardian also apologized to Ian and his family for what occurred, and also for calling the policy a "dog" in internal emails.

One question remains for this writer: what about the others that have had their policies canceled because of Guardian’s internal policies? Will Guardian only restore the policy for which a public outcry is made?

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