That sounds illegal under Obamacare
If you fight them and win you can write a letter to Obama thanking him :)
Obama said they wont fine companies for doing this to you for existing policies but it seems like you can sue because its against the law now. Consult with a lawyer.
The original poster said that the friend had tried to "avoid Obamacare" - it's possible this is not an ACA-compliant plan, which may (I'm not sure) allow the insurer to deny based on pre-existing conditions.