I couldn’t have been happier to see the headline on the January 8 Forbes story: “Does CIGNA Deserve All the Blame?” Reporter David Whelan, an influential reporter whom I had allowed to interview Hanway several weeks earlier at CIGNA’s Investor Day in New York, included the Kang quotes I had hoped he would use. He also left out a quote I was praying he would not use.
“CIGNA’s medical director, Jeffrey Kang, a physician who used to be a high-ranking official with the Centers for Medicare and Medicaid Services, says there is no way that CIGNA can stop doctors from performing a liver transplant,” Whelan wrote. “A national organization called the United Network for Organ Sharing manages the waiting lists. One of UNOS’s principles is that patients should get transplants regardless of their financial means. ‘Some people have said we denied a liver,’ Kang says. ‘But the reality is we only denied paying for it.’ ”
During the telephone interview (I was also on the line, as I was on all interviews with CIGNA’s top executives), Whelan pressed Kang, who was in his office in Connecticut, on whether CIGNA had had any financial incentives to deny the transplant. Staying on message, Kang said that because Grigor Sarkisyan’s plan was a self-insured account, it would have been the employer’s money—not CIGNA’s—that would have been used to pay for the transplant.
“You must have some financial incentives to keep costs down, right?” Whelan followed up. “The short answer is no,” Kang replied.
Then, to my astonishment, he kept going: “I have to be honest, though. If we have a three-year contract with an employer, if that employer is looking to rebid that contract, they’ll say, ‘Let’s look at what CIGNA’s track record was overall and see what we can get from a competitor.’ ” In other words, Kang was acknowledging that to keep accounts like Mercedes-Benz, an insurer had to demonstrate that it did a good job of holding down medical expenses.
I breathed a sign of relief when Whelan moved on to another question. If he hadn’t, I would have been prepared to butt in and tell Whelan that Kang had only a few minutes left before he had to run off to a meeting. That would have been my signal to Kang that he had to wrap up the interview as soon as possible.
I breathed another sigh of relief when I read Whelan’s story. It made no mention of that exchange.
We also got lucky with the WSJ story, co-written by Laura Meckler and Vanessa Fuhrmans, another influential reporter I had worked especially hard to cultivate a good relationship with.
The first paragraph of the story, which appeared on the front page on January 7, was close to perfect from our point of view: “John Edwards has been bashing big health insurers in recent days with the story of a girl who died waiting for a liver transplant. But the details of the case suggest the Democratic presidential candidate may be oversimplifying the tale.”
The Journal reporters also reached out to AHIP’s Ignagni, who told them that AHIP planned to work with medical societies on how to finance or cover experimental treatments. “We’re not taking a PR approach to this but a policy approach,” she said. “People want us to solve the problem, not just discuss it.”
One of APCO’s biggest successes came on January 11 when the WSJ ran an op-ed by Scott Gottlieb, a resident fellow at the American Enterprise Institute. Using John Edwards as his foil, Gottlieb opened with a glaring misrepresentation of Edwards’s health care reform proposal and managed to work in a reference to Edwards’s former career as a plaintiff’s attorney, sure to raise the hackles of the WSJ’s conservative readers.
“Campaigning in the primaries,” Gottlieb wrote, “former Sen. John Edwards is leveraging the tragic story of Nataline Sarkisyan—the 17-year-old California woman who recently died awaiting a liver transplant—to press his political attack on insurance companies and argue for European-style, single-payer health care. But the former trial lawyer, accustomed to using anecdotes of human suffering to frame his rhetoric, is twisting the facts.”
Calling Edwards a single-payer supporter was such a stretch of the candidate’s position that Gottlieb and the Journal’s op-ed page editors surely knew better. Edwards’s platform—which was easy to find on his campaign Web site—actually called for more competition among private insurance companies, not their abolition under a government-run single-payer system.
The WSJ also gave Gottlieb ample space to include every key message CIGNA and AHIP could have wished for in the op-ed. It was a perfect example of how PR uses friendly pundits to shift the focus of news coverage away from a company under attack and toward a broader issue, and to create a new villain.
The real bad actor in this sad story, according to Gottlieb, was not CIGNA but someone of a type that a majority of the people who read the WSJ’s editorial pages loved to hate. In this case, it was—as characterized by Gottlieb—liberal, Europe-loving trial lawyer John Edwards.
THIS TIME, I SPIN MYSELF
Seeing the result of APCO’s work was what finally got me to do what I knew I had to do but, until then, hadn’t had the courage or will to do: quit my job.
It became clearer to me than ever that I was part of an industry that would do whatever it took to perpetuate its extraordinarily profitable existence.
I was dismayed with what I read and disgusted with myself. It finally dawned on me that, in my own quest for money and prestige, I had sold my soul. I had become the antithesis of what I had once tried to be as a journalist many years before. “Who are you?” I remember asking myself that day. “How did you get here? How did this happen to you?”
I had started hating my job before then, but never enough to walk away from it. I knew now I had had enough.
A few weeks earlier, I’d happened to be watching CBS’s Sunday Morning when it aired a story about people who had left corporate jobs late in their careers to do something that paid less but gave them a greater sense that they were engaging in “right livelihood,” as the Buddha would say. One of the people interviewed was Margie Maxwell, a CIGNA colleague who, I learned to my surprise, had left her high-paying job as vice president of sales in the Carolinas to become the director of development at a clinic that provided free health care to the poor.
Maxwell flashed back to mind after I read Gottlieb’s op-ed, so I tracked her down to find out how things were working out for her. She told me she was making a fraction of what she had made at CIGNA, but she had never been happier. I confided to her that I wanted to leave CIGNA, too, but I didn’t have the guts to do it—and I didn’t have any idea how I would earn a living if I did.
“Well, Wendell,” she said. “You’re just going to have to leap and trust that the net will appear—because it will.”
Hokey as it sounds, I decided the universe was telling me what I needed to hear through Maxwell, so I made up my mind that day. I was going to go into a new line of work. I just didn’t know what it would be.
There’s a reason I couldn’t get Maxwell’s advice out of my head: I was stone sober. In previous years, I would have been consuming enough alcohol to stay sufficiently anesthetized. But I had quit drinking—on October 17, 2006, to be exact—after coming to the conclusion that I was slowly committing suicide by drinking at least a six-pack of beer almost every single night to keep from thinking and feeling. Even when I was buzzed, though, I couldn’t get out of my head the nagging belief that I was put on this earth to do something much more important than what I had been doing for the last twenty years. I didn’t have a clue what it might be, but I decided that I would never find out if I kept destroying my own liver.
I’m confident that if I had not quit drinking, I would not have been affected by Sicko the way I had been, and I probably would not even have thought about going to the RAM expedition in the first place. I also doubt that I would have allowed myself to get so emotionally involved in the life and death of Nataline Sarkisyan.
A few days after talking to Maxwell and after many conversations with my family—and with their support—I asked my department’s HR director if she could come to my office to discuss a p
ersonnel matter. I was going to take the leap.
My boss was not shocked when the HR director told her that I wanted to leave. A few weeks earlier, during one of our one-on-one meetings, Petren had seemed exasperated that I was not contributing as much as she thought I should.
“Wendell, you don’t seem to be engaged,” she said to me.
I made an effort to assure her that I was, indeed, engaged—but she and I both knew the truth.
Not only was I no longer “engaged” in my responsibilities as chief flack for the company, but I also didn’t see eye to eye with her or Hanway on health care reform, and I had simply had it with trying to “protect, defend and enhance” the company’s reputation. I didn’t have it in me to handle any more horror stories. Nataline Sarkisyan’s life and death had affected me profoundly.
Petren accepted my decision to leave but asked me to stay on for several more weeks. She needed time to determine who would assume my responsibilities, and she wanted me to stay long enough to help with the company’s annual meeting of shareholders, which would be held in April, and the first-quarter earnings report, which would be released on May 1.
I agreed.
My last day as a CIGNA employee was May 2, 2008, the day after we announced that we had earned $265 million, or ninety-four cents a share, on revenues of $4.6 billion during the first three months of the year. The stock price closed that afternoon on the New York Stock Exchange at $42.26, up 3.5 percent from the day before.
CIGNA had had a very good day on Wall Street. Investors were happy because CIGNA had exceeded their expectations. CIGNA executives on the lead team, all of whom had stock options—me included—were richer financially.
But I was richer in every way thinkable.
C H A P T E R I X
ERISA Stymies the Sarkisyans, and Us
WHILE CIGNA rightfully worried about the public relations black eye it might get as a result of the Sarkisyan case, the company’s lawyers had no such concern that the Sarkisyan family’s lawyer, Mark Geragos, could bring successful criminal or civil charges against the company.
Brian Benjet (who headed litigation for CIGNA) hired attorney Debra Yang out of an abundance of caution. He wanted to have a well-known L.A. attorney with a high-powered law firm ready to rumble in the unlikely event that her successor in the U.S. Attorney’s Office charged CIGNA with murder. He knew, though, that she would probably never be needed, at least not in a courtroom. There was no reason to spend much time worrying that Ed Hanway would go to jail—or that the company would ever have to pay the Sarkisyans a dime.
The reason was that CIGNA had federal law on its side—as the unintended consequence of something that most attorneys and patients know little about. And the reason that so few people know about it is because, as important as it is, most reporters haven’t figured out how to write about it in ways that their readers—or even their editors—can understand. I know because whenever I tried to explain the law to reporters—or anyone else, for that matter—I couldn’t do it well enough to keep eyes from glazing over. It defies being reduced to a sound bite. Trust me, though: It’s something that very likely pertains to you—and could be a factor in whether you have success in the courts if you ever think you have good reason to sue your employer or insurer over a coverage decision. So please stay with me.
In the early 1970s, an alarming number of retiring workers were getting the often-devastating news that they would not be receiving the retirement benefits promised by their employers. To protect employees’ pensions, Congress passed the Employee Retirement Income Security Act of 1974, better known by its acronym, ERISA. Under ERISA, employers must fund pension plans sufficiently so they will be able to pay out promised benefits when their employees retire, and they must keep the pension money separate from other company funds and held in a trust. By doing this, the funds will be protected even if a company declares bankruptcy.
As North Carolina attorney and ERISA expert Brent Adams wrote in a blog post soon after Nataline died, members of Congress had good intentions when they passed the law, believing that beneficiaries of the law would be workers, not employers. “The legislation … [was] a well-intentioned law that Congress passed in large part to address the theft of employee retirement benefits by corporations in the Rust Belt which were going broke,” Adams wrote. “Executives of these corporations were stealing money from employee pension plans, and longtime dedicated employees reached their retirement age only to find that their hard-earned pension benefits had been stolen by the corporate bosses.”
While the motivation of Congress was to protect employer-sponsored pension plans, federal courts over the years have interpreted the law to apply to all employee benefits, including health plans. That wouldn’t be so bad if the law just pertained to the solvency of the health plans. The problem for many people is that it goes much further. Because it is a federal law, ERISA preempts state laws—meaning that employer-sponsored plans are largely exempt from state benefit mandates and consumer protections. As a consequence, state insurance commissioners have almost no regulatory authority over ERISA-protected plans. Additionally, the 130 million Americans enrolled in ERISA-protected plans cannot sue their insurance company or employer in state court if they have been denied coverage for a treatment or procedure—as Nataline was. They can attempt to sue in federal court, but the potential remedies are so limited by the law that plaintiffs often have trouble even getting a lawyer to take their cases. There are relatively few lawyers who specialize in ERISA cases or are even knowledgeable of how the law affects health benefits.
The Sarkisyans had never heard of ERISA before Nataline died. In fact, it was not until the day after she died that the Sarkisyans and their attorney learned that the family’s insurance plan was protected by ERISA.
“When we first started working on the Sarkisyan case, our objective was to get her that liver transplant,” said Tamar Arminak, the lawyer at Geragos & Geragos who did most of the legal work for the family. “ERISA was not yet on our minds. Nataline died on a Thursday night, and Friday morning we realized Mr. Sarkisyan’s plan was covered under ERISA. We were familiar with ERISA but thought obviously that a situation like this would be exempt from ERISA protections. I discovered quickly that it wasn’t.”
Hilda Sarkisyan’s main mission in life today is to make people aware of the law and how it can affect them, and to get Congress to change it. In her view, it allows insurance companies to literally get away with murder. Sarkisyan has many members of Congress and most state insurance commissioners on her side. But she also has a familiar and very powerful opponent: CIGNA and its fellow insurance companies.
Insurers and their big-business allies are adamantly opposed to any changes in the law. So important is ERISA’s protection that CIGNA and other big for-profit insurers joined several of the country’s largest employers—coincidentally, less than a month before Nataline died—to bankroll a front group called the National Coalition on Benefits. The sole purpose of the coalition is to fight any attempt to tinker with ERISA. They like ERISA for the very same reasons that state insurance regulators, consumer advocates, and many jurists don’t: It allows insurers to thumb their noses at state laws designed to protect consumers against insurance company abuses.
As the National Association of Insurance Commissioners noted in a comprehensive report on the often harmful consequence to consumers of ERISA’s preemption of state laws, “ERISA provides few rights to consumers and, more significantly, it is used as a weapon to block the states’ implementation of health care consumer rights.”1
One of the reasons big employers are so fiercely protective of ERISA is that it allows companies with facilities in more than one state to offer uniform benefit packages to their employees whether they work in Portland, Oregon, or Portland, Maine. Companies can administer their employee benefit plans more easily and less expensively because—thanks to ERISA—they do not have to comply with varying state insurance regulations and consumer protections. Howe
ver, as important as that is to both employers and their insurance companies—such as Grigor Sarkisyan’s employer, Mercedes-Benz, and CIGNA—even more important is the near-total shield that ERISA provides them, preventing them from being sued.
Because of ERISA, Geragos could not sue CIGNA in any California state court for refusing to pay for Nataline’s transplant. But he could not bring suit against CIGNA in federal court, either, because—believe it or not—Nataline died. Few lawyers sue insurers in federal court because, under ERISA, the only remedy their clients are entitled to receive—even if a judge and jury agree they’ve been wronged—are the costs the insurer refused to cover. The law does not allow federal judges or juries to award punitive damages, so they cannot order an insurer to provide any compensation for pain, suffering, or lost wages. Further, if the patient who was denied coverage dies, the insurer cannot be ordered to pay anything to the patient’s survivors.
Because of this shield of protection, insurers have no financial incentive to provide timely treatment, wrote Jamie Court, president of Consumer Watchdog, in his 1999 book, Making a Killing (co-written with Francis Smith):
And that is the good news. The bad news is that companies are obligated to provide the cost of the benefit only when the patient survives long enough to receive it. If the patient dies before receiving the treatment, the insurer or HMO pays nothing. Because there is no meaningful penalty for denying medically necessary treatment, there is no incentive to approve costly care.
Imagine that the penalty for bank robbery was limited to giving back the stolen money. No jail time, no fines, just pay the money back—and only if you are caught. To top it off, the repaid money would be interest free. Would bank robbery increase under such circumstances? That’s the situation HMOs and insurers enjoy under ERISA.2
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