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‘Multiple-Employer’ Health Plans: Using Federal Law As A Shield From State Insurance Investigators

Federal officials hope to crack down more effectively on operators of “multiple employer” health plans  that have defrauded small businesses and their workers of hundreds of millions of dollars, often leaving them stuck with unpaid medical bills, according to new rules proposed Monday by the Obama administration under the health care legislation.

Known as Multiple Employer Welfare Arrangements, or MEWAs, such plans have a checkered history under operators who used federal law in the past as a shield from state insurance investigators. The plans are set up for small businesses to provide their workers with lower cost coverage by pooling premium contributions from the employers and workers together for benefits that are paid from the arrangement.

Yet an unintended consequence of the Employee Retirement Income Security Act of 1974, which has restricted states from regulating multiple employer arrangements, allowed these plans to dodge state insurance examiners, often after high fees were paid and money was then unavailable to pay medical claims and other benefits.

In the last two decades, the Department of Labor said it had initiated 800 civil and more than 300 criminal investigations, but often had been unable to prevent the operators of the plans from draining assets of the plans through a variety of schemes that included “excessive administrative fees or outright embezzlement resulting in harm to participants and their families,” the agency said in a statement.

Under the rules proposed Monday, the Secretary of Labor would have the authority to issue a “cease and desist order” when federal officials believe fraud is taking place. The secretary can also freeze assets, stop marketing and certain other business practices.

“For the first time, the federal government has some tools that we have never had to get at these MEWAS early before the money is gone and everybody is left in the lurch,” said Phyllis C Borzi, assistant secretary of labor for the Employee Benefits Security Administration. “Once we have these new tools, hopefully the losses will go down because we will be able to intervene before the money is gone.”

There have been many high profile cases of defrauded MEWAs, like that of TRG Health Plan, which had more than 11,000 plan subscribers and operated in more than 40 states and left behind more than $17 million in unpaid medical claims when it was terminated 10 years ago. The labor department alleged TRG’s operators diverted assets to accounts of an affiliated marketing firm, failed to charge adequate premiums and did not have sufficient assets to pay benefits.

Often, small employers, unions or trade associations will turn to a MEWA for affordable benefits because an insurance company will not cover those who may have an older population of workers or employees who might be in poor health. So analysts say operators of MEWAs bilked the most vulnerable of Americans in search of affordable coverage for themselves and their workers.

Take the National Writers Union, which turned to a MEWA known as Employers Mutual when their insurance carrier dramatically raised rates. The plan, based in Nevada, sold benefits to 22,000 policy holders and was unlicensed in states, claiming its structure did not require it to be licensed. The plan left behind more than $24 million in unpaid claims, a 2004 General Accounting Office report said.

“Whenever people are desperate for affordable coverage, they look for alternatives and unscrupulous individuals target those kinds of people,” said Mila Kofman, the former superintendent of insurance for Maine who is professor at Georgetown University’s Health Policy Institute. “Many have been hauled into federal court but the U.S. Department of Labor didn’t have tools to act quickly.”

Federal officials estimate more than 2 million Americans are enrolled in hundreds of MEWAs but they cannot be certain because they don’t know.

Another crucial part of the proposed regulations are that MEWAs have to register with the Department of Labor before operating or be subject to various penalties. The lack of licensure or registration made MEWAs a fertile opportunity for frauds.

“We don’t even know how many of these there are,” Ms. Borzi said.

Following a 90-day public comment period, the proposed rules will become final, probably by mid-2012.

The insurance industry, which is not known for welcoming new regulations, welcomed the labor department’s proposals.

“We are pleased the government is going to have these added powers,” said Alissa Fox, senior vice president of the Blue Cross and Blue Shield Association. “These entities are avoiding oversight and harming consumers. It hurts consumers and we are concerned when consumers are being hurt by entities that are not going to be paying these bills.”

 

By: Bruce Japsen, The New York Times Prescriptions, December 5, 2011

December 6, 2011 Posted by | Health Care, Insurance Companies | , , , , , | Leave a comment

What Maine’s Assault On Labor History Really Means And Why Governor LePage Can’t Erase History

Maine Governor Paul LePage has ordered state workers to remove from the state labor department a 36-foot mural depicting the state’s labor history. Among other things the mural illustrates the 1937 shoe mill strike in Auburn and Lewiston. It also features the iconic “Rosie the Riveter,” who in real life worked at the Bath Iron Works. One panel shows my predecessor at the U.S. Department of Labor, Frances Perkins, who was buried in Newcastle, Maine.

The LePage Administration is also renaming conference rooms that had carried the names of historic leaders of American labor, as well as former Secretary Perkins.

The Governor’s spokesman explains that the mural and the conference-room names were “not in keeping with the department’s pro-business goals.”

Are we still in America?

Frances Perkins was the first woman cabinet member in American history. She was also one of the most accomplished cabinet members in history.

She and her boss, Franklin D. Roosevelt, came to office at a time when average working people needed help – and Perkins and Roosevelt were determined to give it to them. Together, they created Social Security, unemployment insurance, the right of workers to unionize, the minimum wage, and the forty-hour workweek.

Big business and Wall Street thought Perkins and Roosevelt were not in keeping with pro-business goals. So they and their Republican puppets in Congress and in the states retaliated with a political assault on the New Deal.

Roosevelt did not flinch. In a speech in October 1936 he condemned “business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.”

Big business and Wall Street, he said,

had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me – and I welcome their hatred.

Fast forward 75 years.

Big business and Wall Street have emerged from the Great Recession with their pockets bulging. Profits and bonuses are as high as they were before the downturn. And they’re spending like mad on lobbying and politics. After the Supreme Court’s disgraceful Citizens United decision, there are no limits.  

Pro-business goals are breaking out all over. Governors across America are slashing corporate taxes as they slash state budgets. House and Senate Republicans are intent on deregulating, privatizing, and cutting spending and taxes so their corporate and Wall Street patrons will do even better.

But most Americans are still in desperate trouble. Few if any of the economic gains are trickling down.

That’s why the current Republican assault on workers – on their right to form unions, on unemployment insurance and Social Security, on public employees, and even (courtesy of Governor LePage) on our common memory – is so despicable.

And it’s why we need a President who will fight for workers and fight against this assault — just as Perkins and FDR did.

By the way, Maine’s Governor LePage may be curious to know that the building housing the U.S. Department of Labor in Washington is named the “Frances Perkins Building.” He can find her portrait hanging prominently inside. Also portraits and murals of great leaders of American labor.

A short walk across the mall will bring Governor LePage to an imposing memorial to Franklin D. Roosevelt, should the Governor wish to visit.

Governor, you might be able to erase some of Maine’s memory, but you’ll have a hard time erasing the nation’s memory – even if it’s not in keeping with your pro-business goals.

By: Robert Reich, Professor of Public Policy, University of California at Berkeley, March 23, 2011

March 24, 2011 Posted by | Big Business, Class Warfare, Collective Bargaining, Conservatives, Corporations, Democracy, Dictators, GOP, Gov Paul LePage, Governors, Ideologues, Maine, Middle Class, Politics, Republicans, Right Wing, States, Unions | , , , , , , , | Leave a comment

   

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