Insurance company executive refers to high-cost patients as ‘dogs.’
In the state of New York, insurers are legally prohibited
from discriminating against individuals who submit large claims. So when Guardian, a major insurance company, was faced with the high-cost claims of 37 year-old muscular dystrophy patient Ian Pearl, it decided to cancel its entire line of coverage in the state of New York rather than pay for Pearl’s claims. In an e-mail obtained by The Washington Times, it was revealed that one executive at the company refers to patients like Pearl as “dogs” that the company can simply “get rid o
Legally barred from discriminating against individuals who submit large claims, the New York-based insurer simply canceled lines of coverage altogether in entire states to avoid paying high-cost claims like Mr. Pearl’s. In an e-mail, one Guardian Life Insurance Co. executive called high-cost patients such as Mr. Pearl “dogs” that the company could “get rid of.”
A federal court quickly ruled that the company’s actions were legal, so on Dec. 1, barring an order by the federal Department of Health and Human Services, Mr. Pearl will lose his benefits.
The cost of Pearl’s annual treatment is approximately $1 million
a year. The Pearl family is unable to receive the quality health care that Ian needs. “One-on-one skilled nursing is essential,” Mrs. Pearl said.
He said Guardian has for years used private investigators to find pretexts to deny coverage. An investigator came to their door, he said, to get proof that he does in fact fly back and forth to New York and that his two-employee company really operates in New York. Investigators went to Mr. Pearl's job sites.
"The insurance companies are cheating in order to have obscene profits," he said.
Guardian, a 150-year-old mutual company, reported profits of $437 million last year, a 50 percent increase over $292 million in 2007. It paid dividends of $723 million to policyholders and had $4.3 billion in capital reserves, according to its annual report. The company's investment income totaled $1.5 billion that year, a small increase from the year earlier.
The insurer also canceled similar policies in New Jersey and South Carolina, and earlier ceased offering any health plans in Colorado, but did not cancel all of the policies in every state in which they were offered, said John Fried, the Pearls' attorney. The company took the action only against those plans where claims were highest, he said.
The insurer discontinued the coverage late last year, but was required by law to continue paying for Ian Pearl's care for another year.
In 2006, Guardian began an initiative called Moving Forward, which was "designed to increase Guardian's competitive position by reducing what it paid out in claims," wrote Judge William Pauley, of the U.S. District Court for the Southern District of New York, in his summary judgment in Guardian's favor in July.
The move would help the company lower overall rates to compete better for more business.
The judge found that the company had not violated the Employee Retirement Income Security Act (ERISA), because it canceled entire policy lines. The Pearls also claimed Guardian violated the Health Insurance Portability and Accountability Act (HIPAA), but the judge found that only HHS can enforce that law and that private citizens cannot sue under it.