Writers Union Hit by Insurance Scam
If anyone deserves the title of patron saint of freelance writers, it is Jonathan Tasini, president of the National Writers Union. Tasini's reputation soared last June when the Supreme Court sided with him, ruling that The New York Times and other publishers must obtain freelancers' permission for electronic reprints of their work. But now Tasini is frantically trying to protect his good name, according to freelancers who say the union has been bilked by a phony health insurance company, leaving hundreds of members with no protection and thousands of dollars of unpaid claims.
"It's unconscionable," says Judith Coburn, a California-based freelance writer who spent four months trying to get authorization for cataract surgery, a delay that caused her to need even more dangerous surgery. "The union should take on getting people's claims paid. Instead all they do is avoid responsibility," says Coburn, who is contemplating legal action against the union and its insurance broker.
Coburn is not alone. Last summer, Nancy Humphreys, a freelance indexer also based in California, had an emergency appendectomy, only to learn two months later that her bills were not getting paid. On November 1, she discontinued her coverage. She now has $110,000 in unpaid bills. "What I'm most angry about," says Humphreys, "is that I had this happen to me and I've gotten no sympathy from the national union and virtually no support in dealing with the problem." She says she will sue, if necessary, to get her claims paid.
Tasini denies any attempt to avoid responsibility. "My focus has been to make sure people's claims are paid and to make sure they have insurance," he said in an interview last week. "If I was really sitting here with my thumb up my ass, I would just be waiting" for the authorities to complete their investigations of Employers Mutual. Instead, he says, the union is seeking a new insurance carrier, which he expects to announce any day now. At press time, Tasini was promising members that their insurance is valid and that "all the claims will be paid."
Tasini's predicament reflects the rising cost of health insuranceand the idealism of the National Writers Union. For years, the union has provided health insurance that is reasonably priced and available to everyone regardless of pre-existing conditions. But in June 2001, one of the union's carriers, Aetna, threatened to raise its rates in some states. That's when the union switched its eligible members to Employers Mutual, a Nevada start-up that has sold 29,000 insurance policies nationwide.
The company fell apart quickly. In August, Florida ordered Employers Mutual to stop selling insurance, because it was unlicensed in that state. "Employers are looking for the best deal for their companies and their employees, and these sham operations use that to their advantage," said the Florida insurance commissioner in a statement about Employers Mutual. "They offer deals that seem too good to be true, and they are."
By the end of October, Nevada, Texas, Colorado, and Oklahoma had all issued cease-and-desist orders against Employers Mutual, advising consumers to get insurance somewhere else. In December, the U.S. Department of Labor froze the company's assets and began investigating. According to labor prosecutors, the company's managers collected $14 million in premiums last year, paid some claims and not others, and diverted more than $6 million to their personal accounts. James Lee Graf and three other principals have been removed, and on Tuesday, January 8, prosecutors were planning to ask a federal judge in Reno to freeze their personal assets as well.
Mark Cullen, a Boca Raton lawyer who represents Employers Mutual, did not return several calls for comment.
No doubt Tasini didn't intend to get in this mess. But last fall, while he was running for re-election and slow to announce the bad news, union members suffered the consequences. Coburn, Humphreys, and others got the worst of it, and even freelancers who were spared disaster feel cheated and want their premiums returned.
"I'm certainly not happy about this," says Tasini. "Number one, it's taking time that I would like to be focusing on The New York Times, and that's life. Number two, our members are feeling uncertain. To potentially have your health care threatened is a scary thing." Tasini estimates that 600 or 700 union members are enrolled in Employers Mutual, but says he does not know the number and cost of their unpaid claims. He had no comment on Coburn and Humphreys, and referred all questions about Employers Mutual to Thomas Dillon, a court-appointed "independent fiduciary" who has the power to marshal the company's assets and to reimburse unpaid claims. Dillon did not return calls for comment.
While admitting that insurance was not a "top priority" this past fall, Tasini says "the amazing fact is that these kinds of problems haven't happened to us before." In response to the current problem, he e-mailed a series of "special updates" to members and brought in the legal department of the United Automobile Workers (the parent union of both the NWU and the local that represents the Voice.) He says he has been targeted by opponents in the union, but everyone interviewed for this story denies being active in union politics.
"Do I feel that they dropped the ball? Absolutely," says a freelancer who asked to remain anonymous. Many union members are trade journalists who care more about valid health insurance than about suing the Times, says this source. Members should have been put on notice earlier, and Tasini should have been more forthcoming. As legal actions were unfolding, says the source, his e-mails "remained ambiguous. He didn't communicate that this was a scam."
Critics complain that Tasini's November 26 update failed to mention that Employers Mutual is currently under civil and criminal investigation in California, where the head of the company, James Graf, had already received cease-and-desist orders connected to two other companies he set up. They also want to know why the national union waited until December 18 to advise members to seek coverage somewhere else.
Randy Dotinga, a San Diego-based freelance writer, finds it ironic that the evidence about Employers Mutual was publicly available long before the union wised up. "In a way, we're all to blame," says Dotinga. "We're an organization of journalists, and we all got snookered by a fraudulent company that we didn't investigate." Nevertheless, Dotinga says, "I'd like to see an investigation into how this happened and how we can avoid having it happen again."
"Have we learned something from this?" Asks Tasini. "Yes. You have to be more cautious." He's likely to be more forthcoming on January 12, when he's scheduled to meet with his Chicago chapter, and on January 18, when the NWU National Executive Board meets in Los Angeles. Angry members are calling for an internal investigation. But for some of them, the answers are emerging a day lateand a dollar short.
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