Read the "Employee Benefits Negotiation" and respond to the questions
The Employee Benefits Question—An Exercise in Managing Conflict and Diffusing Tension
Based on a True Story
On Wednesday, March 2, Fred Daily, a student intern in the human resource management office of the Houston Manufacturing Company (HMC), was working in the office that had been assigned to him. HMC is a unionized automobile parts manufacturer in Westvale, Michigan, with 800 employees. Fred’s job was to answer employee questions about their health insurance benefits, help them file claims, and explain the forms and letters that they received from the health insurance company.
On that day, Wilbur Smith came into Fred’s office. His face was flushed red, his posture was aggressive, and he was using an angry tone of voice. Wilbur demanded that the company pay his medical bills. He started to explain the problem to Fred, who felt overwhelmed by the situation. Fred called the human resource manager, Ricardo Martin, for help. At first, Ricardo thought that Fred should handle the problem himself, but Fred insisted that Ricardo talk with the visibly angry Wilbur.
Ricardo brought Wilbur into his office to discuss the situation. Still clearly upset, Wilbur took out the pile of medical bills and letters from the insurance company and threw them on Ricardo’s desk, demanding that the company pay the bills. Ricardo did not know Wilbur or his situation because he had started working for HMC only six months earlier. However, recognizing that it was important to get Wilbur to calm down, both to avoid a violent incident and to get a clear explanation of the situation from Wilbur, he asked Wilbur to take a seat. Ricardo was concerned not only for Wilbur, but also for his own personal safety; just two weeks earlier, an HR manager at a nearby plant had been shot and killed by an angry former employee.
Ricardo repeatedly said things like, “I really want to help you…but I don’t know this situation,” and “I care about you … please tell me your story because I don’t know what happened.” Wilbur interrupted, saying things like, “You’re all alike” and “You know what’s going on” and “Are you going to pay or not?”
Eventually, Wilbur sat down and told Ricardo his story. Wilbur was married to Wanda Smith, and they had both worked for HMC for 30 years. They had been high-school sweethearts and had lived their whole lives in the small town where the HMC plant was located. Everyone in the community knew and liked the Smiths. Only a few months ago, they retired on the same day and looked forward to spending the rest of their days together, fishing, traveling, visiting family, etc.
Two days after their retirement party, Wanda was diagnosed with a painful and terminal form of cancer. Wanda was depressed and angry for herself and for what this would do to Wilbur. She didn’t want to spoil Wilbur’s retirement—the time they had looked forward to for so long. She saw how it pained Wilbur to watch her suffer. She decided to end her suffering. In her first suicide attempt she slit her wrists, but Wilbur found her in time. He called the ambulance, and they rushed her to the hospital and saved her.
Her second suicide attempt was to swallow a bottle of drain cleaner. Wilbur found her coughing and vomiting. Again he called the ambulance. They rushed her to the emergency room, pumped her stomach and saved her. In addition, she received follow-up counseling to help her deal with the tragedy of her situation.
A few weeks later, on a sunny Saturday morning, Wanda told Wilbur that she wanted to make his favorite breakfast, blueberry pancakes with nuts. She asked him to go to the store, only a few minutes away, to pick up the mix. He repeatedly asked her if she was OK, and she assured him that everything was fine.
When he returned from the store, he found her in flames on the front yard of their home. She had dowsed herself with gasoline. He quickly wrapped her in a carpet and called the ambulance again. They came, brought her to the emergency room and treated her burns. She was admitted to the hospital, where she survived for 21 days.
Wilbur told Ricardo that all the medical bills had been submitted to the insurance company—bills for the ambulance, the physicians who treated Wanda, the hospital, the laboratory tests, etc. The bills had been submitted to the local claims review office, where clerical employees read them and entered information into a computer database for a benefit determination. Letters that explained what was covered and what was not were mailed from the company’s Dallas claims processing office.
Wilbur had been receiving several letters each week, which listed the amount charged and showed that the amount covered was “0.” There was a footnote on the letters that stated, “No coverage for self-inflicted injuries.”
Ricardo knew that HMC retirees received Medicare supplemental health insurance coverage, which pays for the difference between Medicare benefits and the health insurance that employees received before they reached age 65. He eventually found out that the total cost of Wanda’s uncovered medical expenses was approximately $15,000. The company’s insurance plan was funded on a self-insured basis, which meant that the company essentially paid for all actual medical expenses and the insurance company assumed little risk. The insurance company basically provided a claims handling service.
Discussion Questions
Assume you are the HR manager, Ricardo Martin. How do you handle this situation? Specific issues you should address are:
Employee perceptions of the value of their fringe benefits.
The cost of the benefits to the employer.
Concern about setting a precedent for other situations.
Is there a possible win-win situation here, where both parties come out ahead? If so, what is it?