Whistle-Blower Blues





In January, the National Writers Union (NWU) created a committee to steer the union out of a disaster in which its insurance administrators persuaded hundreds of writers to sign up with Employers Mutual (EM), a health insurance carrier that failed to pay thousands of dollars in medical claims and is now defunct and under federal investigation.

But in late February, Illinois-based medical writer April Applegate resigned from the committee, publicly accusing colleagues of avoiding two of its stated priorities: investigating “how this crisis occurred” and “how similar situations can be prevented” in the future. “In my opinion,” she wrote, “when it becomes impossible to distinguish the deliberations of a union committee from those of a corporate boardroom, there isn’t much that’s worth preserving.”

Now supporters are calling Applegate the Sherron Watkins of the NWU, and hoping she will bring the union to accountability, just as the Texas whistle-blower did for Enron. Following in Applegate’s footsteps, an anonymous supporter recently created a Yahoo group called Take Back NWU and posted the resignation letter along with revealing union documents. Then on March 6, Yahoo shut down the site without warning, leading some observers to cry censorship.

In an interview, Health Care Solutions Committee co-chair Marybeth Menaker said that the union had complained to Yahoo about the posting of confidential union information, including members’ medical histories. Yahoo did not return calls for comment.

Menaker denied any suggestion that the committee is whitewashing the investigation. “We want to find out what went wrong,” she said. “No one is avoiding that at all, but our priority is getting out of the mess.” By that, she means, finding a new insurance carrier. Other tasks include helping members (the union made a $10,000 emergency loan to a member who needs chemotherapy), reporting on legal and regulatory matters, and conducting interviews about the seeds of the crisis. The committee plans to hire a health care consultant, to whom it will hand over the lion’s share of its $20,000 budget, and expects to release a preliminary report to the NWU National Executive Board at the end of April.

One union member who champions Applegate is Sandra Smith, a writer based in California. She paid about $2000 in premiums to Employers Mutual last year, and still has about $2000 in unpaid medical claims.

“I feel the union will come out stronger by telling the truth and cleaning house,” said Smith. “Just tell the truth, get over it, fix it and move on… Instead, there’s a whole lot of shuckin’ and jivin’ going on.”

For readers new to this scandal, a brief recap: The NWU is best known for winning a 2001 Supreme Court case that requires publishers to obtain freelancers’ permission before selling electronic rights to their work. But the union is now embroiled in Byzantine internal disputes, not least of which is a recent vote to overturn the November reelection of President Jonathan Tasini.

The health care crisis harks back to June 2001, when Aetna raised rates for NWU members in Illinois and California. Beth Tani of Customer Service Solutions, the union’s insurance administrator, began urging members to switch to Employers Mutual instead. But EM, a new company based in Nevada, lacked the necessary licenses, and by October, several states had issued cease and desist orders. The NWU assured members that the insurance was valid long past December, when EM went belly up and the Department of Labor accused company managers of diverting $6 million into their personal accounts. (EM defendants have denied the charges.)

When Press Clips broke the story in January, some members felt Tasini had not responded fast enough to the problems with EM, a charge that he denied. Later that month, members who still had EM health insurance learned that all benefits would end on February 1. Fortunately, a judge barred medical providers from collecting unpaid claims until the Department of Labor lawsuit is settled. In the meantime, some members have sought insurance outside the union. Some remain uninsured. Some have terminal diseases and unpaid claims. And some are talking about suing the union.

Then there is the creator of the Take Back NWU listserv, who released documents that back up Applegate’s claim that the union’s health care committee is incapable of conducting a meaningful internal review. For example, in an e-mail to the committee dated February 15, a named committee member stated that it would be “unwise and unfruitful” for the committee to conduct any investigation at all. One reason: “If we do find negligence and write up a report, we have something that qualifies as an admission of liability in court. The union could face virtually limitless exposure from lawsuits, which could put it out of business and make our efforts at obtaining insurance worthless.” The writer then suggested leaving the investigation to reporters and lawyers.

The Take Back NWU site also featured a series of e-mails between Applegate, NWU president Tasini, and Michigan-based insurance administrator Beth Tani. In the first one, dated June 26, 2001, Applegate asked for specific terms of the EM insurance policy in writing. Tani dodged the request, explaining that offering insurance to freelancers is “the most complicated task possible” and “truly a labor of love.” Applegate then complained that she had been given less than a week to decide on a new policy and no chance to review the terms, and threatened to complain to the Illinois and Michigan insurance bureaus.

In an e-mail dated June 27, Tani discouraged Applegate from contacting regulators, because “it will be brought to their attention that an insurance company is offering group rates and benefits to individuals,” whereupon regulators would issue a cease and desist order. “While it’s not against the law for carriers to do this (obviously, or we wouldn’t have a plan) they HATE to do it and would be all too happy to get a cease and desist order, which they no doubt will after an investigation,” Tani wrote. She then recalled how a 1994 investigation caused the union to lose Blue Cross, which Tasini confirmed later that day. Tasini dismissed the regulators’ beef as a “bureaucratic technicality” and pleaded with Applegate not to jeopardize health insurance for freelancers.

In an interview, Applegate said she stuck with Aetna, which paid her claims.

Asked about the e-mails, Menaker said, “I can’t comment on those types of things until the committee completes its report.” She said the committee will ask “all the relevant questions” about accountability and that the National Executive Board will make the final determination. As for liability, she said, “I’m not a lawyer, so I don’t know what the legal issues are.”

CSS president Rick Tani confirmed the veracity of statements made in Applegate’s correspondence, but denied withholding the terms of the policy. “Why would we refuse to provide that information to 800 members?”

Tasini did not return calls for comment.

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