Ex-IBM sales veteran sues for access to health benefits
Complaint alleges age discrimination harms certain retirees
A former IBM enterprise salesperson has sued the mainframe titan claiming its recent healthcare benefit changes represents age discrimination.
On Thursday, George Adomavicius, who worked for IBM for 42 years before retiring in October 2020, filed a pro se lawsuit – meaning he's representing himself in court – against the IT goliath. Adomavicius told The Register the reason he chose to sue on his own was, "To correct a wrong."
The alleged wrong, in this instance, is the employee benefits transition that IBM announced last September. The corporation sold off pension obligations to Prudential and MetLife, adjusted its 401(k) plan, and shifted medical coverage for Medicare-eligible IBM retirees to a new IBM-sponsored Medicare Advantage program run by UnitedHealthcare, as of January 1 this year.
UnitedHealthcare, coincidentally, was just sued for using an allegedly faulty AI algorithm that limited post-acute care among elderly Medicare Advantage patients.
As The Register previously reported, IBM's health benefits transition angered some retirees because the American giant withheld Health Reimbursement Arrangement/Account (HRA) subsidies – credited to retirees during their time at the company – from anyone who refused to select one of the two new Medicare Advantage plans and preferred to retain their prior policy.
One of those individuals, Steve Bergeron, another former IBM employee, started a petition to convince Big Blue to let retirees choose their healthcare plans without forcing the issue by denying HRA funds. He managed to collect more than 3,500 signatures though ultimately gave up.
"We struggled to find an attorney who found any grounds to sue IBM," Bergeron told The Register in a phone interview. The problem, he said, was that IBM's benefits documentation didn't actually appear to promise anything.
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Medicare is a government-run healthcare program in the US for people of age 65 and older, with some exceptions. Medicare Advantage is a privately-run version of Medicare, reimbursed by the government.
In 2020, according to the Congressional Research Service, Medicare was estimated to cover about 63 million persons – 54 million older members and nine million disabled. About half of those are said to be in Medicare Advantage plans.
According to an April 2022 report [PDF] from the Inspector General of the US Department of Health and Human Services, private Medicare Advantage programs deny 13 percent of service authorization requests that would have been approved by the government-run Medicare.
In other words, those on Medicare Advantage are likely to have to pay more of their healthcare expenses from their own pocket. Adomavicius makes this argument in his complaint:
"IBM's [Summary Plan Description] causes specific identifiable select groups of Medicare-age retirees to suffer financial loss (access to HRA and higher overall healthcare costs), emotional and mental stress, and undue duress."
And he notes that IBM stands to benefit financially from withheld HRA subsidies when retirees who refused one of the new Medicare Advantage plans pass away.
Adomavicius said he tried to resolve the situation with IBM but after six months of waiting received a letter that said the company's healthcare terms were final, but mentioned that he could still sue to challenge the decision.
Time to take it care of personally
Hiring a lawyer wasn't an option, he explained, because it would have cost about $20,000 to hire one, which is more than the amount of benefits at issue. But after filing a complaint with the Equal Employment Opportunity Commission (EEOC) and receiving a letter acknowledging his right to sue, he decided to represent himself, at the cost of about $400, despite the long odds and challenge of pro se litigation.
"I'm retired and I do have the time and I can't afford, you know, to retain a lawyer to do it," he said.
"I just want a cooperative judge who says, 'you know, I think he did get kind of treated unfairly.' Is the discrimination charge stretching it? I don't think so, because the criteria for what I understand to be discrimination are: you can identify a unique group, you can identify the intention, and you can identify that there's a negative result of that intention."
Specifically he argues that IBM's own literature divides retirees up into different segments in a way that discriminates on the basis of age.
"All they have to do is wait out until I die and they save that money," he said. "My $20,000 [in benefits] is a drop in the bucket. But if there's 3,000 like me, all of a sudden you're in the tens of millions of dollars. That is what drives IBM. What's the motive? Money. Very simple. It's just money."
All they have to do is wait out until I die and they save that money ... What's the motive? Money. Very simple. It's just money
Bill Kadereit, president of the National Retiree Legislative Network, told The Register that his organization has been involved in a similar health benefits transition with the Tennessee Valley Authority. After trying to convince the State of Tennessee and the Centers for Medicare and Medicaid Services (CMS), which administers Medicare, to intervene, he said the plan is to seek a statutory remedy or pursuing a class action lawsuit.
Kadereit said Medicare and Medicare Advantage plans typically pay only a portion of healthcare costs, about 80 percent. As a result, many people have private supplemental policies like Medigap, employer-sponsored retiree plans, or Medicaid to make up the difference.
But with Medicare Advantage, "once you're in a Medicare Advantage plan for more than 12 months, you cannot then buy a Medigap plan unless you meet insurance requirements," he claimed. So if you have a preexisting condition, they can deny you coverage and the retiree then has to pay that 20 percent.
Kadereit argues this state of affairs is being allowed to happen by Congress to avoid tough decisions about how to deal with spiraling healthcare costs. And business accounts departments like it because there's profit to be made.
"What Congress was trying to do is privatize Medicare. And the way they do that is to subsidize the insurance companies to put them in a market advantage, thus cannibalizing their own plan Medicare," he opined.
"And now Medicare Advantage plans have a 54 percent market share and their incurred cost per enrollee is nine percent higher than the old fee for service costs. So what Congress is doing is avoiding having to talk about taxes because it affects electability."
IBM did not respond to a request for comment. ®