A Texas company has settled for $250,000 a lawsuit brought by a Pennsylvania woman with AIDS who alleged that the firm broke its promise to pay her health-insurance premiums.

The settlement check was received Monday and the plaintiff, identified as M. Smith in the lawsuit, will get the entire sum and use it to arrange for her own health insurance, said Ronda B. Goldfein, executive director of the nonprofit AIDS Law Project of Pennsylvania. The settlement was reached last week, Goldfein said.

The Texas company, Waco-based Life Partners Inc., did not respond to a request for comment yesterday.

Smith was diagnosed with AIDS and cancer in 1992, and told that her life expectancy was two years.

In 1994, Life Partners purchased the woman's $150,000 life-insurance policy for $90,000, and signed a contract agreeing to pay her health- and life-insurance premiums for the rest of her life. Had Smith died quickly, Life Partners would have made a profit. Smith is now 53, and the company has lost money on the contract.

In 2005, after the company had twice threatened to stop paying for her health insurance, Smith sued.

Smith, who was living in New Jersey when she signed the contract, has been represented by the AIDS Law Project and Jacob C. Cohn, a lawyer at Cozen O'Connor, who took on the case pro bono.

"With this settlement, our client will be able to ensure that she continues to receive needed life-sustaining medicines without the stress and uncertainty of not knowing whether or when LPI might stop paying her insurance premiums," Cohn said in a statement.

In 2006, a Camden County judge ordered the company to place more than $800,000 in trust as security for payment of future insurance premiums. The company appealed and the case was returned to the trial court for a hearing on the amount of damages.

Goldfein said the woman, who wants to remain anonymous, now lives in Southeastern Pennsylvania.

Contact staff writer Robert Moran at 215-854-5983 or bmoran@phillynews.com.