'UPI Failed to Make Insurance Payments'

Here's a story by George Garneau from the March 19, 1988 edition of Editor & Publisher:


United Press International has failed to pay at least $280,000 into its self-insured hospitalization plan, leaving employees with medical bills, from November and headaches from collection agencies.

The shortfall followed the imposition by former UPI president and chief executive Mario Vazquez Rana of what the Wire Service Guild has called a "budget" health insurance plan. The plan's subsequent underfunding was disclosed after Vazquez turned management of the financially troubled news service over to WNW Group Inc.

"The whole thing is frozen and only emergency payments will go out," said a source familiar with the situation. "It's a problem the new management inherited."

The Wire Service Guild said UPI had admitted falling behind by $280,000, a figure not disputed by UPI sources, in order to meet payroll. The Guild said UPI's admission in negotiations "contradicted" previous assurances that the problem was "backed-up paperwork."

Despite employee contributions from payroll deductions and apparently lower costs to UPI of the new insurance plan, imposed by management along with new work rules last November, UPI has been unable to pay claims approved by its claims processor, Comprehensive Benefits Service Company Inc., of Exton, Pa.

Wire Service Guild president Kevin Keane said in a letter to management that the union believed UPI's deducting health insurance costs from paychecks without paying claims was "a breach of the collective bargaining agreement, UPI's work rules and the law. It must be addressed immediately."

The number of unpaid claims could not be determined. Accounts were being audited by new managers.

"I can no longer go to my dentist. I am embarrassed to go to my physician and I'm tired of opening letters from hospitals and doctors containing unpaid medical bills," said one UPI staffer who owes about $2,000 for medical services. "I let them pile up, including letters from collection agencies."

During a period of escalating losses prior to the February management change, payments were withheld from the self-insurance account in what was described as "a question of prioritizing."

UPI president Paul Steinle acknowledged that the company was "behind in its payments for just about everything. UPI owes money to almost all its creditors, including employees. We are trying to raise money to pay all bills."

Steinle said he does not know how much the company owes, but said debts are "substantial" and include bills for health insurance, stringers, rent and advertising, among other things.

Under the current hospitalization plan, single employees' contributions of $23 a month were eliminated, and the monthly premium on their behalf dropped from $125 each to $91, fully company paid. For employees with dependents, whose $354-a-month premium was funded by a $122 payroll deduction and UPI's $232 contribution, the new monthly premium dropped to $258, $35 paid by the employee and $233 by the company.

UPI spokesman Christopher Smith blamed paperwork associated with the management change, but said paying hospitalization bills was "at the top of the critical 'to-do' list."

He said he did not know exactly why bills were not being paid, but pointed out there was some confusion in UPI's Reston, Va., accounting office because one clerk had quit and another was laid off.