Puzzling Carrier Tricks

[Welcome Industry Radar readers!]

This one has me perplexed:

"An insurance company's "reprehensible" decision to rescind a South Carolina man's coverage after he tested positive for HIV warrants a $10 million punitive damage award ... Fortis investigated Mitchell's medical history and rescinded his policy, stating that Mitchell had misrepresented his HIV-positive status."

[ed: Fortis is now Assurant Health]

The court obviously found Fortis at fault here, and I'm not defending them (Lord knows we've documented a few Stupid Carrier Tricks over the years). It's just that I can see someone being HIV positive and not knowing it, and then having a claim, and so on (actually, that's how Magic Johnson found out he had AIDS: it showed up in the blood test when he applied for a new life insurance policy). So the carrier gets the claim, gets the medical records, and sees one of two things:

■ No history of blood issues, let alone HIV, so obviously not pre-ex (since that requires prior knowledge), so pay the claim. Rescission is so over the top that it's just hard to imagine even home office critters being that stupid.

■ The kid knew he had HIV, files the claim, and the rest is history. This would (should) result in a denial and rescission, but then one would think that would have been upheld by the courts. So which is it?

'Tis a poser.

[Hat Tip: Holly Robinson]

UPDATE: Thanks to co-blogger Bill Halper, we learn that Fortis really was that stupid; as Bill notes, "Fortis based the recission on an incorrectly dated note in the doctor's file and declined to correct the error after repeated attempts were made to point it out."