Two Cents Short, Company Tried to Cancel COBRA Benefits

[babylonsister]

http://www.propublica.org/article/two-cents-short-company-tried-to-cancel-cobra-benefits-0104

Two Cents Short, Company Tried to Cancel COBRA Benefits
by Christopher Flavelle, ProPublica - January 4, 2010 3:39 pm EST


This is one of our editors’ picks from our ongoing roundup of Investigations Elsewhere <1>.

As the recession pushes more Americans to rely on COBRA, the federal program that lets laid-off workers pay to keep their employer-provided health insurance for up to 18 months, The Miami Herald’s John Dorschner looks at how well the program works <2> through one particularly trying case.

The stimulus included an initial $24.7 billion <3> to subsidize the cost of premiums paid by laid-off workers for their COBRA benefits. But Dorschner found that above and beyond the cost of premiums, people eligible for the COBRA program can struggle to keep their benefits.

Exhibit A is Stan Rosen.

Rosen enrolled in COBRA after he lost his job at a hotel in Miami Beach. He needed an operation, and his wife was pregnant. But in November, he mistakenly underpaid his health insurance bill by two cents, and the company that administers his insurance, Ceridian, responded by cancelling his COBRA policy—even though he paid the outstanding two cents as soon as the balance showed up on his next bill.

Rosen eventually had his coverage reinstated, but only after he and his dad called the company "about 100 times" and the Herald got involved, Dorschner writes. The article quotes a Ceridian spokesman, Joe Brown, as saying that the company was required to follow the letter of the law "or the company would be held liable."

"The normal person would have given up long before I did," Rosen’s father told Dorschner. Added Stan Rosen, "It’s just a crazy system."

[gateley]

1. Key: "...and the Herald got involved." It seems to take the light of the media

to get the wrongs righted these days. But it works!

[Liberal_in_LA]

4. light of the media or light of the internet.

[MercutioATC]

2. M'kay. Let's take a vacation from Lollipopland and come back to reality for a moment.

Bills are bills. If one fails to pay a bill (depending on the specifics of the contract) a service provider is free to stop providing services.

Whether it was 2 cents or 2 dollars or $2000, this person failed to pay their bill. Whether it was intentional or accidental, whether it was due to a lack of financial resources or not, this person failed to pay their bill.


We KNOW that insurers will seek to terminate coverage in many cases. We KNOW that they'll occasionally use technicalities to do this. We KNOW that they usually do this within legal confines.

...and we KNOW that Mr. Rosen failed to pay his premium in full, resulting in the cancellation of his coverage. Accidental or not, and regardless of the amount of underpayment, Ceridian was within its rights to terminate his coverage.

[LeftyMom]

5. Customers make small errors in the amounts of their payments all the time.

A reasonable company will make a phone call or send a letter to correct the matter, not cancel the customer's policy. Ceridian was looking for an excuse to cancel this man's health insurance policy because he and his wife had the nerve to actually need health care. The two cent typo was the opening they needed and they went for it. Had he not needed surgery and had a pregnant wife they would have moved the balance to the next bill and continued to collect his money.

[MercutioATC]

8. Righto!

Thanks for illustrating my point.


Companies are "reasonable" at their discretion. Why in the hell would ANY sane person expect a company to be "reasonable" at the expense of its bottom line?

[gateley]

6. A lot of suppliers would have contacted the customer to correct the mistake

before taking harsh action. But you have a point about insurers. I still think it's wrong.

[MercutioATC]

11. Kinda depends on your perspective.

Since Ceridian is a public company, their sole fiduciary duty (and ethical duty) is to protect the interests of their shareholders. By legally terminating coverage to somebody that was about to incur large medical expenses, Ceridian acted both responsibly and ethically.

It may not have worked out for "the little guy", but this was all above-board.

[gateley]

22. I understand that they are charged to produce a profit for their shareholders

(I think it's a law), and I'm sure it was above-board, but it's still heartless. Do they not feel any remorse when they go home at night knowing they've denied a person who was relying on them for help? Or do they not care because they did the right thing for the bottom line? That's what bugs me.

Anyway, this is why we need a true health care system, as opposed to for-profit corporations deciding our medical fate.

[Little Star]

7. They may have been within their rights but

not every service provider would have decided to cancel over a two cent mistake. They are just brazen ass-holes.

[MercutioATC]

9. Maybe you missed the "All Aboard!" call for the train out of Lollipopland...

Grow the fuck up.

Ceridian is a business. They were handed a legal means to avoid losing money. ANY company's sole fiduciary duty is to protect the interests of its shareholders. Ceridian made the correct ethic choice in this case.

Yes, It sucked for Mr. Rosen (even though they eventually agreed to reinstate his coverage) but Ceridian didn't do anything wrong.

[change_notfinetuning]

10. Are you a lawyer? If not, you missed your calling. n/t

[MercutioATC]

12. That's supposed to be an insult?

Yes, I am able to move beyond the "internet plea for help" e-mails and look at the realities of a situation.


That's a skill I think we should all have.

[Warpy]

14. This is why these bastards have to be removed from health care

because this is how they are killing us.

Killing.

Us.

I can't believe you're defending them.

[MercutioATC]

17. I'm "defending" the legal compact by which we have agreed to be bound.

If one doesn't pay their health insurance premium, the provider has the option of terminating said insurance coverage.

It's really that simple.

[Warpy]

18. You're defending violating the spirit of the law

by rigid adherence to its letter. Paying 99.9% of a bill should be considered as paying the bill.

To do otherwise is to cheat the client.

Banker?

[MercutioATC]

21. You seem to be suffering from the same ailment as Gormy Cuss (downthread).

Paying less than 100% of an amount due is NOT NOT NOT "paying the bill". It never has been and it never should be (legally).

Despite what the gumdrops dancing in your head tell you, there ARE legal standards. They have existed for quite some time and I don't think many of them are unreasonable (like paying the amount due when you get a bill).

[Gormy Cuss]

24. You seem to be suffering from reading comprehension skills --

either that or obtuseness.

[unc70]

25. You need to take or retake contract law

One of the underlying assumptions with a contract is that the goal and intention of each party is to perform their obligations under the contract. This leads to a lot of law involving resolving disputes, remedying material breachs, and otherwise imposing constraints on the use of non-material deficiencies to realize disproportinate financial or other advantage.

When one of the parties has much more power, the law has generally imposed a much higher standard for performance upon that party in order to avoid exactly these types of abuses. Banks and insurance companies have some of the highest performance requirements traditionally for exactly such reasons (often codified by the States) because of past abuses. Mechanic's liens are another example of the law providing an avenue for relief when a party refuses to perform -- in this case, to pay for repairs after the work has been done and can not otherwise be recovered.

[unc70]

26. It is not a company's sole fiduciary duty

Health insurance companies have many obligations, including the state-level requlations and licensing requirements. Nearly all of these have specific consumer protection and rights that in most states would most certainly make what Ceridian did quite "wrong", likely illegal, and if widespread, grounds for pulling their license to do business in the state.

[ShamelessHussy]

13. welcome to the jungle, eh? beatings will continue until moral improves

Now, back in the REAL world... hopefully Ceridian has felt enough pain to learn a lesson from their ridiculous behavior.

whackos, feel free to cary on, in your minority gala

[laughingliberal]

19. +1000

[Gormy Cuss]

16. M'kay.

Ceridian was well within its contract rights, and that is why we need to lock out insurance companies from basic health care payers.

Any company that jumps at the chance to play "gotcha" over pennies is probably using every trick in the book to deny coverage too.

[MercutioATC]

20. This is why we don't let YOU make laws.

Any company that jumps at the chance to play "gotcha" over pennies is probably using every trick in the book to deny coverage too."

What you're essentially stating is that if a company (or individual) exercises their legal rights, that is proof that they are willing to break the law to protect their interests.

You want to know what the REAL problem with our society is? It's the inability to think critically. Want a bad guy? Look in the mirror.

[Gormy Cuss]

23. No, what I'm saying is the game is rigged.

I said nothing about Ceridian breaking the law. In all likelihood they have a phalanx of attorneys who do nothing but assure that they follow the letter of the law while denying service.

I not only know how to think critically, I know how the corporate "gotcha" game is played.

[glitch]

3. Perfect example of the pettiness exhibited by the letter of the law types when faced with spirit of

the law argument. Glad to see the good guys won this one.

[w8liftinglady]

15. I will be on COBRA soon...this is my biggest fear.