COBRA Health Insurance Fraud?

If you're a big insurance provider, here is a way you can defraud your customers: First, hire a third party to "manage" the benefits. Then give the benefit management agency incentive to hinder processing of claims. Then refuse to deal directly with beneficiaries, instead directing them to the benefit manager, who can, in turn, blame others for providing bad information. Then they can place big barriers and delays in the way of people trying to access their benefits. How many people give up or miss deadlines because the benefits management company misdirects forms, subjects customers to long waits on hold, or otherwise refuses customer service?

Here is how that scenario is playing out in my life right now. I am trying to elect COBRA continuation of coverage from The Permanente Medical Group, Inc., the physician group of Kaiser Permanente. Their COBRA "benefits manager" is Ceridian Benefits Services.

I would strongly encourage anyone who is considering employment with or insurance through Kaiser or any employer who contracts with Ceridian to think about what these actions might mean should you ever need to access your benefits.

I will post updates if and when I receive replies.

-- RonRisley - 25 Jan 2007

24January2007 The Letter and History to Date


re: COBRA election, ID: NC-22964839

Dear Representative:

Back on 06June2005 I attempted to contact The Permanente Medical Group (TPMG, Inc.) regarding regarding continuation of coverage under the Comprehensive Omnibus Budget Reconciliation Act ("COBRA"). I was told that I had to wait until you contacted me.

I only recently received an "IMPORTANT NOTICE" regarding my election of continuing coverage under COBRA. Enclosed is my completed election form and a copy of the "IMPORTANT NOTICE." Of note:

My receipt of the "IMPORTANT NOTICE" was delayed because it was mailed to an incorrect address in a city and county in which I have never lived. That it reached me at all was miraculous.

Immediately upon receipt of the notice, I attempted to enroll using the "Elect by Net" option. Though I followed the instructions exactly, I was not able to log in.

My attempt to access online support resulted in my being sent boilerplate responses, repeating the instructions I had already followed, that made it clear that no human had bothered to read my request.

I next attempted to get support by telephone, which resulted in an endless looping phone tree that never connected me to a real person.

I then attempted to "Elect by Phone." After an extensive phone tree, I waited on hold with blaring music for over twenty minutes. Three minutes into my conversation with your representative, she hung up on me.

I attempted another telephone contact. Again, I waited on hold for over twenty minutes with loud, overdriven music blaring in my ear. When I finally reach a representative, he flatly refused to allow me to speak with a supervisor. After questioning me for about fifteen minutes, he finally told me that the account had a social security number completely different from my own. He would not disclose this number, but said there was nothing he could do to help me unless I had it. He did give me this address and suggest that I send the completed election form here.

Your system functions to put significant barriers in the way of people trying to access benefits to which they are legally entitled. In an effort to shame you or TPMG into behaving more responsibly, I am posting this letter and a record of your responses to the web address shown below.

Please process my COBRA election form in a timely fashion, and correct my mailing address (captioned above) and social security number (found on the election form). Please be aware that I plan to hold you responsible for any and all expenses I might incur as a result of your negligence in handling my account.


Ron Risley, MD

enclosures: "IMPORTANT NOTICE", COBRA election form
cc: TPMG, INC.,


27January2007 Update #1 -- Kaiser signs for the letter

Kaiser Permanente has received and signed for the letter:

  • confirms delivery of the letter to Kaiser: confirms delivery of the letter to Kaiser

So far, Ceridian hasn't received their copy.

29January2007 Update #2 -- Ceridian receives their copies

I sent copies to Ceridian at both the address on the form, and the address I was given by telephone. They have them now.

Track & Confirm e-mail update information provided by the U.S. Postal Service.

Label Number: 7006 2150 0005 0804 8086

Service Type: Certified

Shipment Activity        Location                               Date & Time
Delivered                SAINT PETERSBURG FL 33747              01/29/07 11:27am

Arrival at Unit          SAINT PETERSBURG FL 33711              01/29/07 11:15am

Acceptance               SACRAMENTO CA 95825                    01/25/07  2:30pm

Track & Confirm e-mail update information provided by the U.S. Postal Service.

Label Number: 7006 0100 0003 2992 2795

Service Type: Certified

Shipment Activity        Location                               Date & Time
Delivered                SAINT PETERSBURG FL 33747              01/29/07 11:27am

Arrival at Unit          SAINT PETERSBURG FL 33711              01/29/07 11:14am

Acceptance               SACRAMENTO CA 95825                    01/25/07  2:28pm

14February2007 Update #3 -- I am still being pointedly ignored

Sadly, though it has been well over two weeks since TPMG and Ceridian received my requests for benefits, to date they have utterly failed to respond: no telephone calls, no email, no USPS mail, nothing.

Do I hire an attorney? Find out what regulatory agencies (if any) have jurisdiction over these perps? If anyone who's reading this is considering Kaiser insurance, consider my experience: they just might ignore you when you need them.

24February2007 Update #4 -- A form letter!

On February 21st, a mere 24 days after receiving my written complaint I have received a form letter with no apology or explanation for the problems I encountered thus far. Instead, it's an invoice that I am given only a few days to pay, and it includes charges dating back to 12/1/2006, though I am sure it would have taken a lawsuit to collect if I had required medical services in December, January, or February. The monthly charge is also considerably more than the amount I was quoted when I first contacted TPMG, Inc. back in June -- they say because I am required to purchase supplemental "self-insurance" coverage that I neither want nor will be able to use.

It also raises an interesting question -- if Kaiser thinks their coverage is so great, then why do they require that their physicians and their families purchase supplemental policies? Kaiser, apparently, is not willing to eat their own dog food.

I imagine this effectively brings this saga to an end. I will send them their $1,178.63 in order to keep my health insurance active, and probably send copies of this page to appropriate regulators.

If I ever get any kind of explanation or apology from Ceridian, I'll be sure to post it here. Otherwise, if you are considering any kind of relationship with Kaiser or Ceridian, well, you've been warned.

19March2007 Update #5 -- They took the money and ran

I'm sick. I'm a doctor, so I have to be pretty significantly sick to actually need to see one of my colleages. Today was one such time. I called, waded through Kaiser's fairly innocuous phone tree, and got an urgent appointment scheduled. I dragged my sorry, febrile butt out to Roseville where I was told...

*I do not have benefits.*

To Kaiser's immense credit, they allowed me to see the physician anyway. But I was told that I couldn't get any lab work, x-rays, or prescriptions. So...

  • Nine months after I first tried to make my COBRA election
  • Two months after I attempted to make my COBRA election using the instructions Ceridian mailed to the wrong address
  • Seven weeks after Ceridian received, by certified mail, my valid COBRA election
  • After I have paid premiums for four months during which I plainly had no coverage

*I still am being denied benefits.*

No wonder Ceridian is being sued. No wonder they were able to pay their new CFO over a million dollars in salary and perquisites his first year. Of course, poor Ceridian CEO, chairman, and president Ronald Turner apparently took a big salary hit back in 1974, earning only a paltry $1.78 million, down from his previous year's take of $1.98 million.

Take the money and run. At Ceridian, it would seem, crime really does pay.

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