The Conduct of Health Insurance Policy Fraud in the Rainmaker - Assignment Example

The “Rainmaker” is originally a novel written by John Grisham which has a movie adapatation of the same title. Its main plot centered on the lawsuit filed by Rudy Baylor against the insurance company “Great Benefit” for denying the insurance claim of its client which could have saved his life through a bone marrow transplant. The conduct of the health insurance policy Great Benefit is considered unethical because it adopted a policy of non-settlement or initially denying all the claims made by its policy holders against their insurance coverage which in this case, bone marrow transplant. It even went as far as telling its employees to have that policy of non-settlement of claims included in their manual of operations regardless if the claim is covered or not. In addition, Great Benefit insurance company has wilfully committed fraud when it continued to accept premiums and new policy holders when it know for a fact that it is in a precarious financial condition to settle obligations due to its huge debt. I. What policies and procedures that you devise would allow ethical conduct to be fairly reviewed, evaluated, with application to all employees’, including management?  I would like to give Great Benefit insurance company the benefit of the doubt that when it incorporated the company, it did not intend to wrong its policy holders but meant to fulfill its obligation. In the novel or movie, the insurance company may have been caused to commit fraud to preserve itself as a business entity because it is already hemorrhaging financially due to heavy debts. They may have employed the initial policy of denying all claims regardless of its legitimacy as a coping mechanism of their dire financial status. So the first measure that I will institute is for the insurance company to avoid the circumstance that will cause them to commit fraud in the future. I will fix their financial position by devising a policy that will make the company liquid at all times to settle all the claims of its policy holders in the future. Just like in the banks, I will require the insurance to have a liquidity that is commensurate to a certain number of policy holders that should a significant number of them will file a legitimate claim against their policies, the insurance company will be in a financial position to fulfill its obligation. Equally important is the institution of policy of limiting the acceptance of new policy holders in accordance to its financial capacity and liquidity. For the time being, I will recommend that Great Benefits insurance company not to accept new policy holder until it has restructured its financial position. Last, I will have it included in the operations manual of Great Benefits insurance company what constitutes an illegal and unethical act of an insurance company. It will also be included in their manual that should an employee be induced to commit an illegal act by their employers, or any officer, employee, contractor, subcontractor, or agent of the company, they are protected by law when they report and complain such malpractice. To paraphrase 18 USC section 1514A “Individuals who file, or cause to be filed, participate, or assist in a proceeding relating to an alleged violation of mail fraud, wire fraud, bank fraud, securities fraud, or violation of SEC rules or regulations are also protected”. That would put Great Benefit’s upper management on its toes not to give illegal instructions among its employees in the future such as denying all the claims of its policy holders even if it is legitimate. The idea that their employees can report them and will be protected by law will be a tremendous deterrence for the prevention of the commission of similar fraudulent and unethical acts in the future. II. Write what improvements and changes you would make to your ethical corporate evaluation process.  There will be several improvement and changes that I will implement in the ethical corporate evaluation process. First, knowledge of the law against fraudulent acts shall become a part of every employee performance appraisal. This will ensure that each employee in the company can discern what is fraudulent and what is not, and will be able to refuse in carrying those illegal orders knowing that they are protected by law by such refusal. Second, an audit of the claims and its dispositions shall be made to ensure that all claims were processed according to contract of policy holder’s coverage as agreed between the insurance company and the policy holder. III. Ethical issues in Wall Street Journal and its applicability in the Rainmaker case a. Fraud – the case of WorldCom is the best example for illustrating a fraudalent case in a corporate environment. Just like Great Benefit, WorldCom comitted fraud when it misdeclared its financial position by window dressing its books while Great Benefit lied to its potential policy holders of its true financial position that it is in heavy debt and incapable of settling claims. b. Misrepresentation – this was best illustrated in the case of the CEO of Omnimedia when asked by investigators why she sold ImClone Systems stock. In the same manner that Great Benefits insurance misrepresented itself to its policy holders to fulfill its obligation in case of a legitimate claim when in fact it enforced a policy of denial to all of its claims, Martha Stewart, CEO of Omnimedia was also untruthful in giving the real circumstances of selling her stocks. She may have gotten away with inside trading but she was convicted for obstruction of justice. c. Cheating – Fraud is cheating. When a company lies and misprepresent itself, it is cheating its customers which in the case of Rainmaker, its policy holders. Currently, there are dozens of Fortune 500 company officers who are in jail for cheating on their financial statements. In the same manner that Great Benefits cheated its policy holders. Read More