THE LANCASTER GROUP Boulevard Executive Park 555 West Granada Boulevard Suite D-1 Ormond Beach, Florida 32174 (904) 667-0675 Fax(904) 677-0270 June 1, 1992 The Honorable William P. Barr Attorney General of the United States Department of Justice 10th and Constitution Avenue, N.W. Washington, D.C. 20530 Dear Mr. Barr: Our company is a small firm with only two full-time employees and a couple of part time workers. For the past ten years or so, we have been an Affiliate Member of the Florida League of Financial Institutions, a group composed of thrift institutions and those who provide services to the thrift industry. Our sole reason for membership in this group was so that we could obtain health insurance under their group insurance plan. Each year, we have paid approximately $1,000 for membership dues in the organization, or some $10,000. And, each year, we have faithfully paid the insurance premium on myself, and Mrs. Gail McTiernan, our other employee. That premium has risen, year after year, and is now $670 per month for the two of us, or an annualized $8,040. This means that, on an annualized basis, plus the $1,000 membership fee we have had to pay to obtain the insurance, the annual health insurance bill for just the two of us is approximately $10,000. I am 53 years old, and Mrs. McTiernan is 56 years old. During the many years we have been covered by the insurance plan offered by the Florida League of Financial Institutions, both of us, as people our age tend to do, have developed medical conditions, or have medical histories, that make us virtually uninsurable. The Florida League has traditionally reviewed the group insurance plan each year and at the beginning of each year, has decided to remain with the existing carrier for one more year (often with an 01-01466 -2- increase in rates), or retain a new carrier. Regardless of the insuror chosen, however, all members have always been insured. This year, on January 1, the Florida League selected the Travelers Insurance Co. for coverage for all of 1992. In May of this year, only five months into the Plan year, the Florida League began negotiating with Mutual of Omaha. The end result is that, on May 29, 1992, three days ago, we were advised that, effective today, our firm would no longer be allowed to participate in coverage through the new carrier, Mutual of Omaha, because of requirements dictated by the new carrier that members of the League with 75 or fewer employees must be individually underwritten, and not treated as the rest of the group The notification to our company, a copy of which is attached, states that, "Unfortunately, due to Mutual of Omaha's decision to evaluate the overall health risk of each League participant separately, (your firm) has been declined for life and health insurance for reasons attributable to adverse medical conditions." I feel confident that Mutual of Omaha's decision to selectively underwrite was not a unilateral one, but was supported and agreed upon by the Florida League. So here we are, at ages 53 and 56 respectively, we find ourselves uninsurable, with health problems, and with only three days notice, after being in the same group plan for many, many years, while others in the plan remain fully covered. It is my strong opinion that these actions violate numerous laws, regulations, rights constitutional guarantees, and various discrimination laws. I believe that both Mrs. McTiernan and I have: 1. Been singled out and discriminated against because we are a small company with less than 75 employees, even though we were 01-01467 -3- a long standing member of a group where all members are covered. 2. Been discriminated against because of our age. 3. Been discriminated against due to physical impairment. 4. Had our civil rights violated. 5. Not been treated fairly under the terms of our contract and Florida League's agreement with us and the insurance carrier. 6. Been a victim of collusion and a conspiracy that has resulted in a loss of our rights and benefits so that other members of our same group could enjoy lower rates. 7. Been a victim of violations of various anti-Trust laws. 8. Suffered as a result of numerous violations of Federal Trade Commission and State laws and regulations. The Florida League has offered to "negotiate with the old carrier" and see if they will carry our firm on an individual stand-alone basis until January 1, 1993, and to then see if the new carrier, Mutual of Omaha, will accept us at that time. There is no question in our minds that the old carrier will readily agree to accept us at a much, much higher rate, with severe restrictions, for only a few months, and then drop us, and that Mutual of Omaha will be no more inclined to accept us in January than are they now. In short, we see these actions as nothing more than a disguised effort to "cull" the entire ranks of the Florida League of folks who are undesirable from an age and/or medical standpoint, using the guise of those with 75 employees or less, so as to reduce overall health costs for the large, influential members of the League. It is, in our opinion, a blatant act of discrimination, an illegal and unethical business practice, and a shocking example of (a) the health insurance industry gone amok, and (b) a conspiracy between a member of that industry and an insured to hold costs down at the expense of a group that should be protected. 01-01468 -4- We need your help. What can you do to assist us in assuring that this unconscionable act is not allowed to stand? We thank you in advance for your consideration and your assistance and, even though we know you are busy with numerous other matters, hope you will find time to assist us. Further, in my opinion, this is a classic test case on such matters. If you wish me to testify, at any time and at any place, as to this situation, I will be more than happy to do so. Sincerely, Ralph D. Lancaster Principal 01-01469