Author: Matt Dunning

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Group Benefits Costs to Rise at Slowest Rate in 11 Years: Study

Group health benefits costs are projected to rise in the first half of 2013 at their slowest rate in more than a decade, according to a study by New York-based Buck Consultants L.L.C.

Buck’s survey of 123 insurers and benefits administrators, released Dec. 17, indicated that group health care plan cost increases through June 2013 will be between 0.2 percent and 0.6 percent lower than they were in the first half of this year.

The study noted that 2012 was the first year since 2001 that group health benefit costs were projected to grow at a rate of less than 10 percent.

Daniel Levin, a Chicago-based Buck principal and consulting actuary who directed the study, said in a press release accompanying the report that despite the projected reduction in cost growth rates, health care costs are still predicted to outpace inflation rates, “creating difficult business decisions for organizations.”

“The stubbornly high costs can be attributed to several trends, ranging from a greater use of diagnostic tests and treatments to mandated coverage of certain benefits,” Levin said in the release. “Employers need to decide how much of these increases to pass on to workers, or whether to drop coverage and pay the penalties imposed by the Affordable Care Act.”

Levin added that the study’s projections do not contemplate potential impacts of the proliferation of private health insurance exchanges.

“It remains to be seen how the development of private exchanges will affect the use of public exchange models, but it could likely impact the projected cost trends we measure in this survey,” he said.

Buck’s study predicted costs for employer-sponsored preferred provider organization plans, point-of-service plans, health maintenance organization plans and high-deductible health plans will increase by 9.7 percent, 9.5 percent, 9.3 percent and 9.6 percent, respectively, through June 2013. A year ago, cost increases for all four plan types were projected to grow by 9.9 percent.

Costs for employer-sponsored Medicare supplemental plans are projected grow by 5.4 percent in the first six months of 2013, compared with 5.8 percent during the same period in 2012.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. Comment below or email editors@workforce.com.

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Year-End Pension Funding Gaps Could be Largest on Record: Mercer

Pension funding levels among large employers rebounded slightly in November, though analysts predict year-end funding gaps could be the largest ever recorded, according to a Mercer L.L.C. report released on Dec. 5.

The aggregate funding deficit in pension plans sponsored by S&P 1500 employers narrowed to $607 billion in November, down $12 billion from the $619 billion deficit recorded in October. The gap represents an aggregate funded ratio of 72 percent, unchanged from October and slightly above the record low 70 percent funded ratio recorded in July.

In the report, Mercer analysts said the slight improvement witnessed in November was due largely to modest equity market gains and discount rates remaining relatively flat through the month.

Despite November’s gains, analysts said the year-end aggregate deficit was likely to be highest on record since Mercer began tracking pension funding among S&P 1500 firms in 2007, having already grown by $124 billion over the $484 billion gap recorded at the end of 2011.

Jonathan Barry, a Boston, Massachusetts-based partner in Mercer’s retirement risk and finance group, said it was unclear whether employer gains made in November could be continued into the final month of the year, especially given fluctuations in equity markets pinned to tense negotiations over the federal budget.

“We don’t have any expectations of significant changes in interest rates over the next 30 days, and equity markets could be volatile due to uncertainty around the fiscal cliff,” Barry said in a statement from Mercer. “It is very likely that we will see these plans at the highest aggregate deficit since we have tracked this data. This will mean higher year-end balance sheet deficits and pensions and liabilities expense for 2013.”

Mercer’s report estimated the aggregate value of S&P 1500-sponsored plan assets at $1.59 trillion through Nov. 30, compared with an estimated aggregate liability of $2.19 trillion.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. Comment below or email editors@workforce.com.

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Obesity-Related Conditions Could Add $66 Billion Annually to Medical Costs by 2030: Study

Medical costs associated with treating obesity-related diseases in the United States could increase by as much as $66 billion annually by the year 2030, based on current trends, according to a new study released by the health policy group Trust for America’s Health.

The state-by-state analysis of obesity-linked disease rates and associated medical spending, released Sept. 18 by the Washington-based organization, also projects that obese individuals could account for 44 percent of all American adults by 2030 if obesity rates nationwide continue to grow at their current pace.

According to the study, “F as in Fat: How Obesity Threatens America’s Future 2012,” that rate of growth would likely lead to more than 6 million new cases of type 2 diabetes, 5 million cases of coronary heart disease and stroke, and more than 400,000 cancer diagnoses in the next 20 years.

Those new cases will add between $48 billion and $66 billion per year to the nation’s spending on direct costs for obesity-related medical care by 2030 under current projections, according to the study.

An unchanged growth rate of the percentage of obese Americans also would significantly inflate indirect costs over the same 18-year period, the report says. The associated loss in economic productivity, the study predicts, could be between $390 billion and $580 billion annually.

The study also notes that workers’ compensation claims costs generated by obese employees are typically much higher than those generated by “healthy weight” workers, though it did not provide a year-over-year prediction for cost growth under current conditions.

Risa Lavizzo-Mourey, president and CEO of the Princeton, New Jersey-based Robert Wood Johnson Foundation, which co-sponsored the study, said in a statement on Sept. 18 that the study “shows us two futures for America’s health.”

The projected growth rate of obesity and its attendant health and financial impacts over the next 20 years could be lowered significantly if individual states can reduce the average body mass index of their residents by 5 percent by 2030, Lavizzo-Mourey said.

“At every level of government, we must pursue policies that preserve health, prevent disease and reduce health care costs. Nothing less is acceptable,” she said.

As dire as the study’s predictions are for the nation as a whole, they are even more so for certain states. Under current growth projections, obesity rates in 13 states — including Kansas, Kentucky, Mississippi, Missouri and Oklahoma — likely would rise above 60 percent by 2030. Nine states — including Alaska, Colorado, New Hampshire and New Jersey — would see annual medical costs associated with obesity-related treatments increase between 20 percent and 34.5 percent by 2030.

Conversely, a reduction of their residents’ average BMI by 5 percent over those same 20 years would shave as much as 7.8 percent off projected medical cost growth in every state but Florida, which would likely see a 2.1 percent reduction in obesity-related costs due largely to the relatively high average age of its population, the study said.

“We know a lot more about how to prevent obesity than we did 10 years ago,” said Jeff Levi, executive director of Trust for America’s Health. “This report outlines how policies like increasing physical activity time in schools and making fresh fruits and vegetables more affordable can help make healthier choices easier. Small changes can add up to a big difference. Policy changes can help make healthier choices easier for Americans in their daily lives.”

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Memphis Opens Health Clinic for City Employees, Retirees, Dependents

Memphis, Tennessee, officials on August 15 celebrated the opening of a new on-site health and wellness clinic for city employees, dependents and retirees.

Open three days a week from 9 a.m. to 1 p.m., the clinic offers diagnostic services and non-emergency care for a range of conditions, including sinus, urinary tract and upper respiratory infections, cold and flu symptoms, muscle sprains and minor cuts and burns.

The clinic will be staffed by Memphis-based Methodist Le Bonheur Healthcare. Its operating expenses will be supported through a partnership with Bloomfield, Connecticut-based Cigna Corp., which insures the city’s employee health care plan.

“With the city’s renewed emphasis on health and wellness, we wanted to provide a convenient way for our employees to be seen and treated by a medical professional,” Memphis Mayor A.C. Wharton Jr. said in a joint statement released August 15. “Too often, we put off going to the doctor because we have other things to do.”

Patients will be charged a flat rate of $15 for clinic visits, according to the statement.

“(Memphis) employees will have easy access to high quality care at a very affordable cost,” said David Cummings, administrator of Methodist Healthcare’s community care division. “This increased access will allow them to be seen earlier by a medical professional, which should allow them to return to work quicker or mitigate any absence from work at all.”

The city began exploring the idea of opening an on-site health clinic during its renewal discussions with Cigna earlier this year, the statement said.

“The clinic will help promote prevention and enhance employee productivity,” said Mary Tate-Smith, Cigna vice president in Memphis, in the statement. “We are excited to be a part of the city’s efforts and to help support the health and well-being of our customers.”

The Memphis clinic was one of several publicly sponsored employee health and wellness centers to open in August, as clinics in Rome, Georgia, Lake County, Florida, and Cass County, Indiana, also began treating their eligible employees this month.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Former Wells Fargo Employee Says Company Fired Him Over Daughter’s Cancer Costs

A former Wells Fargo & Co. mortgage consultant has accused the San Francisco-based bank of firing him in order to avoid paying for his daughter’s cancer treatment.

According to a lawsuit filed Aug. 2 in a Florida Fifteenth Judicial Circuit Court in Palm Beach, Wells Fargo fired Yovany Gonzalez in August 2010—three days before his daughter Mackenzie was scheduled for surgery to remove a cancerous tumor—based on allegations that he had falsified his time records. In his lawsuit, Gonzalez contends that the bank manufactured the fraud allegations as a means of ducking premium costs that would have resulted from his daughter’s treatment.

Mackenzie Gonzalez’s surgery was delayed for several months due to a lack of insurance coverage after Gonzalez’s termination, according to the lawsuit. Mackenzie died of cancer-related complications in March 2011 at age 6.

“Wells Fargo terminated Mr. Gonzalez to avoid the need to further accommodate him in light of his daughter’s illness and to avoid incurring additional expenses associated with her treatment,” the lawsuit claims, adding that the company’s accusation that he had tried to defraud the company’s payroll system “was a mere pretext.”

According to the suit, his daughter’s treatment needs forced Gonzalez to work irregular hours, often away from his office at the company’s Palm Beach branch. Between 2009 and 2010, Wells Fargo made several changes to its time records management system, including a new rule prohibiting employees from logging time previously worked.

Gonzalez said in his lawsuit that he was forced to ask a supervisor to input some of his hours for him, an action he claims the bank used as the basis for its fraud allegations.

Additionally, Gonzalez alleges that the bank purposefully delayed sending him information on extending health and life insurance benefits after his termination until after the extension opportunities had expired.

Gonzalez’s lawsuit accuses the bank of disability discrimination under Florida civil rights laws, as well as defamation and breach of fiduciary duty. He is seeking punitive and compensatory damages, back pay and reinstatement of the life insurance policies held in Mackenzie’s name prior to his termination.

A spokeswoman for Wells Fargo said the company offers health care coverage to more than 500,000 employees, and that “use of those benefits does not affect their employment at Wells Fargo.”

“Mr. Gonzalez’s termination was completely unrelated to his family’s health care needs,” the spokeswoman said. “The passing of Mr. Gonzalez’s daughter was tragic. Our deepest sympathies go out to him and his family.”

Prior to filing the suit, Gonzalez submitted his complaint against Wells Fargo to the state’s Commission on Human Relations. According to court documents, the concluded that “reasonable cause exists to believe that an unlawful employment practice occurred.”

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Prudential Group Insurance to Wind Down Group Long-Term Care Business

Prudential Group Insurance, a division of Prudential Financial Inc., announced on Wednesday that it plans to stop selling group long-term care policies in most states, effective Aug. 1, 2012.

The Newark, New Jersey-based insurer will continue writing new policies in Indiana, Iowa, Kansas, Louisiana and South Dakota for varying periods of time dictated by state laws, according to a statement from the company.

Existing policies will remain in effect and renewable, provided an employer’s premiums are paid on time and its policy limits are not exhausted.

However, Prudential said it will cease accepting new enrollments to those plans after June 30, 2013.

“Prudential is committed to ensuring that current group long-term care insurance clients and plan participants will continue to receive quality service,” the company said in its statement.

Prudential said its decision to wind down the group long-term care products was a reflection of depressed interest rates, which have negatively impacted the bond investments the insurer relies on to fund its claim payouts.

The company’s exit from the group long-term care marketplace comes after its announcement in March that it would stop accepting new accounts in the individual long-term care market.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Hospital Employee Sues Employer After Being ‘Traumatized’ in Hostage Drill

A hospital director is suing her employer for running safety “drill” in which she was held hostage by a police officer playing the role of a gunman.

Ourida Diktakis, ICU director at St. Rose Dominican Hospital in Henderson, Nevada, claims the hospital’s administrators authorized a drill in May 2010, during which a man held her and two other staff members hostage at gunpoint, according to a lawsuit filed in Las Vegas’ Clark County District Court on Nov. 7.

According to court documents, a man who later identified himself as an off-duty Las Vegas Metropolitan Police officer walked into Diktakis’ ICU on May 24, 2010, and, after a brief argument, pulled out a handgun and pointed it at her. He then ordered Diktakis, a nurse and a unit supervisor into the break room, and held them hostage for “a period of time,” according to Diktakis’ complaint.

Eventually, the gunman—who was named as one of the defendants in the lawsuit—revealed himself to be an off-duty police officer, and informed the women that the entire ordeal had been a “drill,” court documents show.

In her complaint, Diktakis alleges that the hospital’s administrators, who are identified by pseudonyms in the complaint, intentionally did not inform her or the ICU staff of the drill. She claims the hospital’s actions not only “emotionally traumatized” her and her staff, but put patients in the ICU at risk by unnecessarily detaining their caregivers.

“There was no point to the ‘drill’ other than to traumatize staff, patients and visitors and there was no reason given as to why it was purportedly conducted,” the suit claims.

Diktakis is seeking at least $50,000 in damages for emotional trauma, assault, false imprisonment and civil conspiracy against her and her staff.

Hospital representatives did not immediately respond to a request for comment.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Teacher Alleges Retaliation by School District for Giving Newspaper Interview

According to a lawsuit filed Oct. 14 in a Brooklyn federal district court, Rebecca Posteraro, a third-year music teacher at the Bellerose Avenue Elementary School in East Northport, New York, broke her leg on Feb. 15, minutes before the curtain was to rise on the opening night of a school musical she was co-directing. Despite the injury, Posteraro stayed to see her cast through to the end of the show.

During the show, Barbara Falotico, the school’s principal, called an ambulance to take Posteraro to the hospital, but then realized she would have to miss the end of the production, the lawsuit alleges. Agreeing to let Posteraro finish the show, Falotico instructed an emergency operator to forget the request, saying that she would call back later, according to court documents.

The next week, both women were interviewed by a Newsday newspaper reporter about the night’s events. The article, published Feb. 20 and titled “Music Teacher Breaks Leg, Stays for Play,” detailed Posteraro’s efforts to remain on hand during the production in spite of the pain, according to court documents.

When she returned to work eight days later, Posteraro learned that Falotico and Northport-East Northport School District Superintendent Marylou McDermott had decided to deny her tenure because they interpreted the Newsday article as criticism of the school’s “failure to insist on Posteraro being taken immediately to the hospital,” according to court documents.

During the next two months, Posteraro claims in her lawsuit that she was retaliated against repeatedly for giving the interview. Falotico allegedly reprimanded Posteraro personally for talking to the reporter, despite having done so herself, court documents note.

On March 30, Posteraro alleges that she was forced to sign an inaccurate and misleading teacher evaluation. A week later, she discovered that her personnel file had been “pilfered” and that “all of the positive documentation had been removed,” according to court documents. On May 18, a few days before the school’s spring concert, she was told she would be fired at the end of the school year.

Posteraro also claims that another teacher, Izzet Mergen, and Falotico defamed her by telling parents who complained about her firing that they would “understand and agree” with the district’s decision if they “knew all the details,” leaving them to deduce that she had committed a serious infraction.

Calls to McDermott’s office seeking comment were not returned.

Posteraro has asked that the district’s actions be removed from her teaching record and is seeking back pay and additional compensatory damages.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Former Press Box Hostess Sues Indianapolis Colts Over Pay, Work Hours

A former press box hostess for the Indianapolis Colts has accused the National Football League of drastically underpaying her and “a dozen or more” of her co-workers and failing to document their hours worked, according to a class-action lawsuit filed Oct. 7 in federal district court in Indianapolis.

In her complaint, Colleen Fenstermaker said she worked part time in the team’s press box as a “hostess” of the team’s statistics crew from 1998 until Sept. 9, 2011, when the team allegedly fired her two days before the start of the regular NFL season.

The hostesses were responsible for passing out printed materials to coaches, announcers and other employees in the press box, as well as serving as the wait staff for all box attendees before, during and after the game.

For 12 seasons, Fenstermaker worked at least 10 regular and preseason games per year, plus any playoff games the team played at its home stadium, she said in the complaint.

Though each workday lasted eight hours or more, Fenstermaker alleges the team paid the hostesses only $40 in cash for the entire day. In 1998, when Fenstermaker started with the team, the daily pay rate was just $25, according to the complaint.

Fenstermaker alleges that the pay she and other hostesses were given is well below the federally mandated minimum wage of $7.75 per hour. Additionally, Fenstermaker alleges the Colts never recorded any of the hostesses’ time worked and instead allegedly paid them “under the table.” Both actions, she alleges, are violations of the federal Fair Labor Standards Act.

The Colts did not immediately respond to requests for comment.

According to court documents, Fenstermaker is seeking class-action status that would include other unnamed hostesses, in part because “some, if not most, of the individual group members may not be aware of their rights to wages under federal and Indiana law, or may not, because of financial means or experience, be in a position to seek the assistance of counsel to commence individual litigation.”

Fenstermaker has asked for an undetermined sum in unpaid wages, liquidation damages, attorney’s fees and other costs.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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