For Workers, Medical Bills Add to Pain as Firms Fail

[question everything]

DECEMBER 6, 2008

For Workers, Medical Bills Add to Pain as Firms Fail

By IANTHE JEANNE DUGAN
WSJ

When Archway & Mother's Cookie Co. told employees in an October letter it would "go out of business immediately," some workers frantically sought medical care while they believed their insurance would still cover the costs. In Ashland, Ohio, a pregnant employee had labor induced before her due date. Another worker bought a $6,000 insulin pump for her diabetic daughter. "I called my doctor at home and said, 'I need to have my gallbladder removed this weekend,'" recalls Janet Esbenshade, a 37-year-old mother of two who lost her job packing cookies. Those employees and many others ended up saddled with huge medical bills anyway. Archway was self-insured -- and when it filed for bankruptcy on Oct. 6, there wasn't enough money in its coffers to cover hundreds of thousands of dollars worth of outstanding health-care claims along with all its other debts. Workers weren't eligible for Cobra, a federal act that gives certain laid-off employees the right to temporarily continue health-care coverage at group rates. That's because Cobra doesn't apply when a company terminates its insurance plan.

The Archway saga reflects the human toll of the credit crunch, as companies increasingly shut down because they can't get financing. Some are abruptly eliminating insurance and leaving laid-off workers with bills for medical expenses incurred before the shutdowns, a trend that is exacerbating health and money problems for tens of thousands of people nationwide. Catterton Partners, a Greenwich, Conn.-based private-equity firm that owned 72-year-old Archway, scrambled to find financing as it struggled with surging costs of fuel and cookie ingredients. But credit had dried up, a person close to Catterton says, forcing Archway to close down. It filed for Chapter 11 protection, liquidated and laid off all 673 full-time employees. Now that Archway is bankrupt, all its assets will be divided among creditors, including those with health claims. Archway bankruptcy documents list liabilities of $143 million and assets of $92 million.

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In May, Jevic Transportation, a New Jersey trucking company owned by buyout firm Sun Capital Partners Inc., told employees in a letter that it was shutting down and terminating insurance. "Continuation of these plans via Cobra is not an option since Jevic no longer provides any group health plan to any employee," a human resources official wrote. "My whole world ended when I opened that letter," says Elizabeth Vaughn of Bordentown, N.J. Her husband, D.S. "Sam" Vaughn, a 63-year-old Jevic driver, put off chemotherapy treatments when the company closed, she said. He later went to a government-subsidized clinic, Ms. Vaughn says, to get medicine for heart disease. She said he was ashamed. "After he was laid off," she says, "he'd just sit at the kitchen table saying, 'I'm sorry.'" Mr. Vaughn died over the summer of pneumonia. His obituary in the local paper, written by his wife, said: "He worked for 15 years for Jevic Transportation until they closed their doors and broke his heart."

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Wendy Carter, a 41-year-old former packer, had a hysterectomy in mid-September, and says she accrued $15,000 in medical bills that weren't paid. She also was on disability, so she couldn't collect unemployment insurance. She says she recently wound up applying to the Salvation Army to get $102 to help pay the rent. Similarly, Nadine Deck says she was out on disability with a chronic breathing disorder. When Archway shut down, she stopped receiving disability checks. So she turned to unemployment and received checks over four weeks. But the government stopped paying, saying she couldn't collect while on disability. The government now wants its $900 back, she says.

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Some employees say they have had to cut back on costly prescription drugs. Ms. Esbenshade, the cookie packer who had her gallbladder removed, says she didn't buy her six-year-old daughter's asthma medicine after Archway closed, because she lacked $100 to pay for it. They have since received a state-issued medical card to help cover the cost of the medicine. Darlene Miller, a 57-year-old packer, no longer has insurance to cover $300 a month for medications for high blood pressure, thyroid problems and a heart condition. So she is cutting each pill in half. "My doctor is going to chew me out when I tell him, but I didn't have a choice," Ms. Miller says. "I suddenly have no insurance."

http://online.wsj.com/article/SB122852525037084565.html (subscription)

[question everything]

1. And this is a main problem if we do not help Detroit

Millions of people with no health insurance, at best, depending on our tax money, at worse, just getting sick and dying.

[sarcasmo]

2. Mandatory Health Care for all. These scenes would not happen if we had Mandatory Health Care.