The Fine Print: How Big Companies Use "Plain English" to Rob You Blind (30 page)

What chance, you may well ask, does a solitary victim like Bob Manning have in a rigged system in which someone as intellectually corrupt as John Roberts sits as chief justice of the United States?

SEEKING COMPENSATION

We’ve all seen exposés on local television stations showing a cop, a firefighter or some other worker on disability laying bricks or wielding a shovel in his garden despite an allegedly debilitating back injury. That is cheating and should be pursued. But it is penny-ante abuse compared to the injustice of cases like Bob Manning’s.

First, a little background. Workers’ compensation insurance is tremendously profitable. In California, for example, insurers made more
profit
than they paid out in
benefits
to injured workers and the families of dead workers’ in 2004 through 2007. According to official data from the California Workers’ Compensation Insurance Rating Bureau, benefits paid totaled $26 billion versus profits of $28.2 billion. One implication of such profitability is that insurance rates are too high, but another is that profits are high because of improper denials of service.

Keep in mind what an insurance company is. Basically, it is just like a bank, with one crucial difference. Both banks and insurers take money from customers; these payments are called deposits at banks, premiums at insurers. The difference is in payouts. Banks return money on demand, insurers pay on event. And by arguing about the events, insurance companies can delay and deny claims, thus enhancing profits.

What happened to Bob Manning was, in essence, a denial of payment. The same thing can happen to you, even if you work in an office that you imagine is a safe place. If you get hurt at work and your employer dodges its legal duty to pay, as in Manning’s case, you and your family will have your suffering compounded. Even if you avoid such terrible luck, others will not. As many as seven workers a day suffer permanent spinal injuries needing lifelong medical care, yet resistance to paying benefits appears to be increasing. When companies refuse to pay for the medical care they are legally required to provide, the costs get shifted to the taxpayers.
That means the insurers’ profits are shielded and your taxes are diverted. By the time I met him, Bob Manning’s medical costs were in the millions of dollars.

In theory, each employer buys insurance, either in the marketplace or from a state agency. The benefits are modest, but that is because they are supposed to be awarded without the need for litigation, in which lawyers who win claims rake in a large share of the money. In a no-fault workers’ compensation system it should not matter if the injury was the result of employer misconduct, bad luck or even a mistake by the worker. As Bob Manning learned, though, the reality can be quite different.

When I met Manning he was sixty years old, living in Sacramento, California, in a ranch-style home with extra wide doors for his wheelchair. An aging van, modified to lift his wheelchair inside, sat in the driveway. His sons were grown, one of them an airline pilot entrusted with more than a hundred lives every day he worked. When some relatives died, leaving three children orphaned, the Mannings took them in and raised them as their own. The Manning home was as neat and clean as it was happy, filled with well-mannered grandchildren, cousins and kids from the neighborhood.

Manning was remarkably cheerful. But he also told me several times that he believed his old employer, the Niagara Mohawk electric utility, and its insurance carrier, Utilities Mutual, wanted him to die so they could escape the cost of keeping him alive. He recited details of what he felt was deliberate medical mistreatment and denial of care vital to keeping him alive, such as the insurer refusing to supply enough sterile catheters to help him urinate without getting an infection. “I understand what’s going on,” he said. “The company knows that if I don’t get the medical care I need I will die sooner. That is their strategy. They want me to die.”

At the time we spoke, I regarded those as the angry words of a man imprisoned in a body over which he had almost no control. But as I would learn a few days later, and again years later, Manning wasn’t imagining things.

Back in New York, I spoke with two lawyers who were trying to help him, Samuel Spalter and James D. Harmon. Both said Manning was spot on in his assessment that Niagara Mohawk and Utilities Mutual wanted Manning to die as soon as possible to cut their costs. The lawyers also pointed out that they had won several dozen administrative and judicial orders that Manning be paid and yet they could not collect. But let’s turn the clock back and revisit the beginning of the story.

Niagara Mohawk and nearly three dozen other corporate-owned utilities had formed their own insurance company to pay workers’ compensation claims. This nonprofit insurer was called Utilities Mutual.

In 1962, soon after Manning fell, Utilities Mutual started paying him a weekly benefit. There was no provision for automatic cost-of-living adjustments, though, so Manning knew that in the years to come his benefits would lose value. On the advice of a lawyer, he sued the old New York Telephone Company, then part of AT&T, which had half ownership of the pole from which he fell. In 1968 a jury awarded him $750,000, out of which his lawyers took a big chunk.

The award also meant that, under New York State law, Utilities Mutual was permitted to stop payments and to force Manning to reimburse the insurer the $129,000 it had spent over the years on him for financial support and medical care. Utilities Mutual took the position that it would not have to pay any more until the award from the telephone company had been exhausted, even though it did not help Manning win his case against the phone company.

By 1975, the money from the New York Telephone award was gone. Most of it had been placed with a neighbor, a stockbroker who traded the nest egg into the ground. Manning then sought a resumption of payments from Utilities Mutual. The company refused. Its lawyer was Philip J. Rooney, who argued an unusual theory about why Utilities Mutual should not have to pay for anything except some minor items. Rooney said Helen Manning was required to care for her husband without being paid.

Rooney explained that, in his judgment, it was the law that a spouse is not entitled to payment for services provided to her husband in the course of her household duties. “If I, as a mechanic, for instance, fix my wife’s car, she is not obligated to pay me for doing so if I do it around the house.” He insisted this was not his idea, but the policy of both companies.

Rooney also told me he was “deeply hurt” by the idea that he or his clients would want Manning’s life to be shortened. “Nothing could be further from the truth. I personally have deep sympathy for Mr. Manning, but I sincerely believe that there is a legitimate legal issue here and until it has been decided by the highest court in New York, the [insurance] carrier really is not obligated to make any payments at all.”

Subsequently, I met again with Spalter, who had become the lead lawyer for Manning. He called the theory on wifely duties “outrageous and contrary to the law.” So did other lawyers I consulted.

Helen Manning had her own take. She was a registered nurse. She said that if she had worked outside the home, Utilities Mutual, under its own theory, would have had to pay nurses to care for her husband because she—her husband’s caregiver—was away. Rooney told me he was not so sure about that.

Even when Manning needed outside nurses because Helen Manning could not give him care, Utilities Mutual refused to pay. Spalter once asked that nurses be hired for two months to care for Manning and the state Workers’ Compensation Board ordered Niagara Mohawk and Utilities Mutual to pay. The companies refused on the grounds that the New York Telephone award had not been exhausted. Spalter complained, but the Workers’ Compensation Board said, in effect, that it had no power to enforce its own order.

The Mannings struggled until 1988 when, after a bit of saber rattling by one hearing officer got Rooney’s attention, Utilities Mutual began voluntarily paying $350 a week. The rates were roughly those settled on in the first award back in 1962, even though inflation had reduced the value of a 1962 dollar to less than a quarter in 1988. Manning kept pressing; Rooney pressed right back.

Then in 1995, Manning finally won a $1.2 million award to cover the care his wife had provided at roughly $42,000 annually. The problem was that he could not get a check out of Utilities Mutual. By the time I got involved in 1997 more than thirty orders to pay had been issued, but not enforced.

Niagara Mohawk positioned itself as the good guy. A spokesman said the company had voluntarily provided lifetime medical care for Manning’s wife and children and had even given the family a color television. Niagara Mohawk insisted that it had absolutely no role or responsibility in the case because the workers’ compensation claim was in the hands of the Utilities Mutual insurance company. There was a small problem with that argument. Utilities Mutual was created by three dozen corporate-owned electric utilities, including Niagara Mohawk. For many years during Manning’s fight its president was William J. Donlon, who some of the time had doubled as chairman and chief executive of Niagara Mohawk. Plus, Utilities Mutual earned phenomenal profits, regularly paying its member utilities huge dividends. So ability to pay was never an issue, just willingness to comply with the law.

At last, one Niagara Mohawk spokesperson had the integrity to acknowledge what the case was really about—the cost of keeping Manning alive. “No one expected him to live this long,” the executive told me.

FRONT-PAGE NEWS

I wrote a story about Manning that ran on the front page of the
New
York Times.
I got a call within hours from then-governor George Pataki, who said the case was a disgrace. The state attorney general and other officials weighed in, too. But Rooney was unmoved.

When I told him that Pataki was clearly angry and had assured me that he would see to it that Manning got paid, Rooney was nonchalant. “He’s just a politician, not a court.” And then Rooney said that, even though an appeals court had issued an order barring any further appeals to delay payment, his reading of the court decision suggested grounds for many new appeals.

Fortunately, executives at Niagara Mohawk recognized the damage an angry governor or a nosy attorney general could cause a utility, even when those officials were well-known friends of business. Utilities Mutual soon assigned a new lawyer, who read over the unbroken string of decisions ordering payment. He told Manning’s counsel Spalter that the company would pay. A fight that had gone on for thirty-five years was over. Within ten days of the
Times
article, the Mannings had a check that, before legal fees and costs were taken out, came to nearly $2 million.

But the foolishness
still
wasn’t over—for Manning or for you. Utilities Mutual continued its tactic of not paying Manning’s medical bills. That meant that each time Manning needed to go to Sutter Hospital in Sacramento, the admission staff would perform what is known as a “wallet biopsy.” They would learn that Manning had insurance from Utilities Mutual, and get the insurance company approval to admit Manning. When the bills came due, however, Utilities Mutual would refuse to pay.

You might think that this would prompt more litigation. But at Sutter and every other hospital I have spoken with about such circumstances, the standard practice with totally disabled people is to submit the bill refused by workers’ comp insurers to Medicare, which pays without question. One hospital administrator was perplexed when I asked about pressing the insurer for payment. “Why would we get into a fight with the workers’ comp carrier when Medicare will pay?” the administrator asked.

The better question is, Why doesn’t Medicare go after the workers’ compensation insurer? Manning for years got on the telephone to Medicare officials, members of Congress, medical economists and anyone else he could get to listen to ask why Utilities Mutual and other insurers were
allowed to get away with shifting their costs onto Medicare. “It’s stealing,” Manning said.

Finally he got a lawyer to bring a lawsuit. It was not easy. For starters, the federal government had to grant permission to sue, which it was reluctant to do. Then a federal appeals court restricted the lawsuit so that only a small fraction of the bills Utilities Mutual shoved off onto taxpayers was recovered. This is typical of what happens in a system with not nearly enough judges to hear all the cases on their docket, a way that the push for smaller government creates not just injustice, but helps rich companies like Niagara Mohawk and Utilities Mutual shove their costs onto unknowing taxpayers.

Niagara Mohawk announced in 2000 that it was selling itself for $3 billion to a British company, National Grid. Soon after, Utilities Mutual was sold to Cologne Re, a reinsurance company. And right about then, a nurse started ingratiating herself into Manning’s care at Sutter Hospital.

Bob Manning told me that he instinctively did not trust this nurse. His doctor, Stanley Chew, also found the nurse’s interest odd. “She introduced herself as a home care specialist contracted by the workers’ comp insurance company, which was Cologne, to monitor his care,” Dr. Chew said. “At first she made a few simple suggestions regarding his seat cushion. In retrospect those comments were made to gain our trust in her. I also recall our meeting in my office in which she was extremely probing about Bob’s prognosis, wanting to know just how long he was expected to live.” The questions, Dr. Chew said, were entirely out of line—especially for an agent of a company with a financial interest in Manning’s dying as soon as possible.

Cologne Re is a Warren Buffett company. By buying Manning’s workers’ compensation claim, and all the other obligations of Utilities Mutual, Cologne Re was making a bet. If Manning and others like him died soon, the deal was more likely to prove profitable. But the longer Manning lived, the smaller the profit. If Manning and others like him lived long enough, the result would be a loss for Buffett’s Berkshire Hathaway holding company.