First of two articles
HUNTINGTON — In 1997, the seamstresses at Corbin Ltd. gave up two years of raises so the company could create a self-funded health-insurance plan.
"We agreed to work for less so we could get our medical bills paid," said Wynona Maynor, president of local 747 of the Union of Needle Industrial Trade Employees.
Then in 2001, the company quietly quit paying most of the employees' medical bills. Nobody told the seamstresses.
By the time Corbin Ltd. declared bankruptcy in April 2003, it had saddled 444 former employees with at least $2 million in medical bills the company should have paid, according to a West Virginia Division of Labor audit.
Many of the seamstresses had pieced together pants at Corbin's Huntington plant for more than 20 years. They found out Corbin had quit paying their bills when they got collection notices in the mail from medical providers.
"When Corbin didn't pay the doctors and hospitals, the doctors and hospitals came after the employees," Maynor said.
"We'd all signed those forms doctors' offices make you sign, the ones that say if your insurance doesn't pay, the patient owes it," Maynor said. "Now we're being sued by hospitals, our credit rating's ruined or threatened, we've been turned down for loans, and we're swamped with bill collectors."
Some have filed bankruptcy, she said. Many are thinking about it.
"People should realize that this could happen to anyone who works for a company with a self-funded insurance plan," said Rebecca Hess, UNITE's regional representative.
"Most self-funded companies don't completely stiff their employees," she said. "But they could. That's the scary part. These self-funded plans are completely unsupervised in that regard, and there's nothing to stop these kinds of things from happening."
Acordia National was the administrator for Corbin's health plan. "They knew the bills weren't being paid," Maynor said of Acordia. "But they didn't tell us, either."
Acordia kept pre-certifying medical procedures and sending out "Explanation of Benefit" letters for 15 months after Corbin stopped paying most bills, a Sunday Gazette-Mail review of the records of five former employees showed.
In July, former Corbin seamstresses filed suit against Acordia National and David Corbin, former president and owner of Corbin Ltd., asking that they be forced to pay the medical bills.
David Corbin testified in federal bankruptcy court this fall that he made all the decisions for the Corbin Ltd. Health Care Plan, said Doug Richards, the seamstresses' attorney.
The seamstresses' lawsuit also alleges that Acordia's actions led employees to believe their bills were being paid.
The seamstresses are suing on behalf of all affected Corbin employees. "We are not asking for a penny for ourselves," Maynor said. "We want our credit rating back. We want them to pay these bills, and we want these collection calls to stop."
Through most of 2002, they scrambled for help from their union and an array of state and federal agencies and elected officials. Nobody stopped the unfolding financial disaster. They were caught in a regulatory no-man's land.
Their story exposes a dangerous weakness in West Virginia — and national — health-insurance law.
"Self-funded insurance plans are a very big part of the West Virginia market," said Charles Dunn, state Insurance Commission consumer advocate. "It's the major unions and all the large employers in this state." But federal law does not let the state Insurance Commission regulate self-funded plans.
Self-funded plans escape state regulation, taxation and requirements. Under the Employee Retirement Income Security Act of 1974 (ERISA), self-funded plans can include as little or as much coverage as the employer chooses.
The U.S. Department of Labor regulates these plans. But no Labor Department regulations cover a situation in which an employer refuses to pay legitimate health-care bills. "There are no rules that govern that," said Sharon Morrissey, a Labor Department spokeswoman.
Self-funded plans pay claims with their own money, but the Labor Department does not even require a company to prove it can pay claims before it sets up a self-funded plan. The Labor Department does not require the company to pay within a given length of time and does not grant hearings to individuals.
"So the main thing standing between an employee and what happened at Corbin Limited is the employer's goodwill," said UNITE's Hess. "Luckily, most employers will not destroy their credibility as thoroughly as this one did."
But Kathy Beck, who directs consumer services for the West Virginia Insurance Commission, said that about half of the health-insurance consumers who call her office want to register complaints about self-funded plans. The Insurance Commission gives them the phone number of the U.S. Department of Labor. Sometimes they call the company for information.
In the past year, Beck said, thousands of consumers complained about self-funded plans of coal mines and trucking firms that shut down, as well as the plans of Shawnee Hills, Bethlehem Steel, Multi-CAP and Weirton Steel. "It's a steady stream," she said.
"The administration of self-funded plans is basically an undefined area of law," said Steven Summer, president of the West Virginia Hospital Association. "When it's that vague, it presents opportunities for abuse. If the feds are going to say the state can't regulate, then the feds need to write sufficient regulations, so people don't fall in the cracks," he said.
The 600-plus creditors in the Corbin bankruptcy proceedings include the employees and the medical facilities that are suing the employees, the union, and Acordia National, which claims Corbin Ltd. owes at least $32,600 for administration of the health plan.
"I didn't do anything wrong."
Juanita Johnson, a 63-year-old grandmother, worked at Corbin for 21 years, examining pants for flaws. According to the state audit, she inherited more than $20,000 in medical bills that Corbin owed. "I paid my premiums and co-pays," she said. "I didn't do anything wrong. It's driving me crazy, bill collectors calling me all the time. My husband's dying of cancer, and they're telling me they're going to take my house and car."
Willa Fay Bias, 48, stitched labels, seams and corners at Corbin for 13 years. In 2002, she had two heart attacks. "People can't imagine what it's like to not be able to walk to the mailbox or answer the phone without somebody threatening to take your home," Bias said. "I thought I was insured."
Now she is being sued by a hospital and a medical practice. According to the audit, she was stuck with $65,700 in bills that Corbin refused to pay.
The seamstresses have mailed hundreds of documents to the Labor Department, "but all they tell us is, 'We can neither confirm nor deny that an investigation is in progress,'" Maynor said. Labor Department investigations can take years.