Volume 1, Edition 2
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IN MEMORIAM William O. Bailey July 1, 1926 – January 28, 2005 President, Chief Operating Officer & Vice Chairman One of the Aetna Greats |
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Table of Contents |
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Upcoming
Event: Aetna Shareholder Meeting April 29, 2005 |
CT
Legislative Committee Holds Hearing –
Declares
Support for Retiree Cause
The
Legislative and Public Employees Committee of the Connecticut state legislature
held a hearing on February 8th.
Over one hundred people attended the hearing and almost twenty people
testified in support of our cause.
Senator Edith Prague and Representative Kevin Ryan chaired the meeting.
Dwyer Testimony:
John
Dwyer, ARA’s Chairman led off the testimony and framed the issues for the
Committee. He “Reviewed the history of
Aetna’s broken promise to retirees” and offered “To work with you and others to
formulate a remedy.” He went on to cover how the news was delivered by Elease
Wright, how Aetna took a $32 million credit to the bottom line while canceling
a $3 million annual retiree benefit. He
told Aetna how retirees were promised benefits and that he had made many of
those promises in management’s behalf.
Dwyer
tried to provide a context for how retirees felt by saying, “By almost any
measure, [Aetna] is producing historic financial results, but I will tell you categorically,
if Aetna were threatened in any substantial way, most of the people in this
room would have a vastly different attitude than the one they have.”
John
went on to tell the Committee how each time an Aetna Representative tries to
defend Aetna’s position he talks about how other companies have never offered
dental benefits. “His statement is
nonsense. It’s as if I were to tell you
that I used to keep my promises but then I found someone who never made a
promise so I don’t have to keep my promises anymore.”
Dwyer
then talked about the significant staff reductions he was responsible for in
the 90’s. “My staff and I not only
negotiated those enhanced packages but if questioned, we reassured those
employees that they didn’t have to worry about their benefits. And I can tell you categorically that not
once in that entire process did Corporate Personnel, the Human resources staff,
or the most senior levels of the Law Department or management advise us to alert
or otherwise warn the retiring employee that some years later his or her
benefits might be reduced or eliminated.
There was no reason to even consider that someone ten or twenty years
later might seek to change or eliminate benefits that had been promised and
were being received.”
“As
a young claim representative, I was trained that if I made a claim offer and
later discovered that it had been made in error, it had to be honored
irrespective of cost.” This was the environment of trust that John and other
retirees worked in and why they trusted what they were hearing. That’s why when we all heard of Bill
Donaldson’s promise in the 2000 Shareholders meeting that “You have the
commitment of this corporation that the retiree benefits will not change” we did
not need it in writing. Aetna’s word was
its bond.
John
went on to ask whether, in challenging his shareholder proposal which asks
Aetna’s Board to reconsider this decision in light of Donaldson’s promise,
Aetna’s current management was, “trying now to protect Mr. Donaldson, the current Chairman of the SEC,
from being embarrassed by the actions of his successor or seeking to protect
themselves from his affirmation of the commitments he made at the 2000
shareholders meeting.”
Senator
Prague thanked Mr. Dwyer for taking up
this cause. “I commend you. Somebody has to stand up for these people.”
Legal Testimony:
The
Committee had arranged for three lawyers to speak to the legal issues involved
in the recent trend of employers taking benefits away from their retirees. Helen Kemp from Robinson & Cole, LLP
detailed the technical aspects of the Employee Retirement Income Security Act
(ERISA) and how it was designed to protect employees but was now protecting
employers who were taking away benefits.
She indicated that those employees who belong to unions were better
protected than those who were not. The
most fortunate thing for retirees was that the Second Circuit of the federal
court system which covers Connecticut has been more favorable in its findings
than other Circuits.
Attorney
Kemp went on to say that the courts first look at the written documents but if
there is any gap or reason to question the written documents, the Court is
willing to look at the pattern of actions to make a determination.
Rep.
Cafero suggested that this all sounded one sided. “All of us who were raised from the time we
get to the kitchen table that you keep your word when you give your word;
especially for those people who are relying on it when they are most needy. I just think it stinks. If you make a promise to someone that’s put
in that kind of time and you summarily change their benefits at your whim, that
stinks... I hope whoever is out there
from the Company thinks long and hard about that because that just stinks.” He then wondered whether since the State did
not have any control over ERISA, might it be possible to take action on
corporate tax breaks.
Tom
Moukawsher of Moukawsher & Walsh, LLC and co-chairman of the American Bar
Association’s Committee on Employee Benefits and Individual Rights, suggested
there was a lot of “bad” law in this area.
“ERISA is indeed a complicated and annoying statute.” He urged the
Committee to get the federal congressional people involved. The Committee had invited the federal
legislators’ staffs, many of whom were present.
He also reinforced the view that the second Circuit was most willing to
look at the “totality of the circumstances.”
David
Rintoul of Brown, Paindiris and Scott talked further about how the rules work
against defending these cases. Few
lawyers are willing to take on these cases because there is no guarantee of
payment.
Together
the three lawyers presented a sobering view that litigation is difficult but
that there was hope especially for those bringing their case in the Second
Circuit.
Other Aetna Retirees
Testify:
A
wide array of Aetna retirees testified before the Committee. Rich Bazzone, formally in the benefits area,
talked about how he counseled employees that their benefits would be
there. Tom Paulus confirmed this from a manager’s
point of view. Then Paul McLaughlin
testified that in his years with the health claim department, “Never once did I
say keep in mind that Aetna can change, remove, abolish and throw out any of
these benefits without any warning whatsoever.”
He also cited a New York Times Magazine article on the disappointing
ethics evidenced by management in exactly these circumstances at other
companies.
Jack
Moore, after talking about the cost of his own dental and medical care, tried
to help the Committee understand how the stock buybacks approved by Aetna
management increase the value of all those stock options that same management
has. Is it any wonder they approve
spending $750 million on that while taking a $3 million benefit away from
retirees? (Another $750 million has been approved for even more stock buy backs
since the Hearing.) Jack went on to say, “For 150 years, Aetna held itself to
an exceedingly high ethical standard.
The present administration has a different standard – lower.”
Giles
(Bud) Desmond talked about his time in Corporate Planning when he was being
asked to estimate the costs of acquisitions, mergers and other major
changes. Management asked for multiple
scenarios on almost everything but when asked about benefits they always said “assume
benefits as current package.” He
recalled, “There was never any question.
There was never any option.”
Charlotte
Bradbury read Marilyn Wilson’s statement because Marilyn was not feeling well
and couldn’t come. She told of the area
executive telling everyone that although Aetna may not pay as well as other
companies, you were always assured of good benefits and that would really pay
off in retirement.
Catherine
(Denny) Lally expressed the feeling of so many retirees when she said, “We were
very proud of Aetna. This is very
hard.” And Sharon Valechko talked about
her cancer operation and how hard it is to carry the burden of this disease
when you feel even more financially at risk because of Aetna’s actions. Not just what has happened with dental but
the fear of what may be next. Even
Sharon’s husband Thad chimed in that his benefits at another company appear to
be at risk.
John
Perra asked the Committee to recognize that if companies are allowed to
eliminate retiree benefits for the subsidies, all these retirees are going to
end up looking to the State for health care so they should recognize that the
taxpayers have a very real stake in these issues.
We
are in a different era from the one we worked in at Aetna. John (Tad) Bell was able to put this in
perspective better than anyone. He
talked about when he worked at Aetna as Benefits Head and John Filer and Bill
Bailey decided not once, but twice to increase the pensions of those already
retired because they were being hit so hard by inflation. There were no rules to make them do
this. They did it because they cared and
because it was the right thing to do. He
then contrasted that with what today’s management is doing and said, that
taking away this subsidy made him feel like he was a shill for management. We never warned the employees [that] at some
point, when the Company needs a nickel or two, they’re going to raid these
benefits, especially if you’re a retiree.” when I talked of how good Aetna was to
retirees. “It’s as if I had been gutted.”
And
others testified as well: Bob Gerrol, Roger Evarts, John Drost, Art Bradbury
and Ed Gundaker. All spoke and spoke
well. They made the ARA Board members
and Leadership Team feel more strongly than ever that they have to achieve the
organizations goals. These are people
that deserve to be heard and should have their benefit’s subsidy restored. We are very thankful for their testimony and
for all those who attended to show their support.
The Legislative
Committee:
The
members of the Committee could not have been more supportive. They immediately committed to asking the
Federal congress people to write the SEC in support of the shareholder proposal
that John put forward. (See article
below for more.) They also promised to explore tax changes that might be
possible at the State level. And they
consistently voiced their support for what the ARA is trying to do. They have followed up with John Dwyer several
times already. We are very thankful for
the Committee members who held the hearing and stayed with us through the
entire three hours of testimony.
Others:
Others
in attendance at the Hearing were also quick to voice their support. Union leaders, whom we would have avoided in
the “Old Aetna”, were suddenly people with a common interest. One even asked John Dwyer to come on his radio
program and also talk with some of his peers.
It is a very different position for your ARA leaders. One we were not initially enthusiastic about
but we have to be open to new friends when our old ones abandon us.
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Legislative
Follow-up
At
the Legislative Committee Hearing, Representative Rosa DeLauro’s staff asked
for a follow-up meeting on the issue with ARA.
Then meetings were arranged with the staffs of Senators Chris Dodd and
Joseph Lieberman and with Representative John Larson, himself. John Dwyer, who presented our concerns in all
these meetings, had also met with Representative Nancy Johnson at an earlier
date, thus covering most of the Connecticut delegation.
All of these people were
supportive but realistic in their advice.
They made it clear that if we want something accomplished we have to combine
our efforts with the National Retiree Legislative Network (NRLN) and its two
million members and be prepared to be a visible, tangible presence. Several used the families of the 9/11 victims
who just would not be put off. They
wrote to members of congress, they showed up to testify at hearings and they
talked to their representatives until it was clear they were not going to go
away until something was done. We have
to exemplify the same behaviors if something is to happen on retiree benefits
issues.
John,
along with John Perra, Art Bradbury and Bob Quinn made it clear in these
meetings that we were not going away.
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ARA
Testifies at a Second Legislative Hearing
On Mar.15, Board Chairman
John Dwyer led a group of ARA spokesmen at a hearing in the Legislative Office
Building support of SB 1273. Proposed
by the Labor and Public Employees Committee, this State Senate bill was crafted
“…to eliminate state financial assistance to businesses that reduce employee
retirement benefits.” Hamstrung by pre-emptive ERISA rules which effectively
prohibit any state attempts to take corrective actions, this committee has
followed through on its promise to be supportive of ARA’s concerns regarding
Aetna’s “take-away” of the dental subsidy.
At the hearing chaired by
Sen. Edith Sprague and Rep. Kevin Ryan, about 15 Aetna retirees attended,
giving evidence of our organization’s interest and support. Dwyer spoke in favor of the proposed bill,
citing its role as a “…critical first step along a path that confront(s) a
wrong and try(s) to make it right.” He stressed that the General Assembly has
this opportunity to pass legislation which “will serve as a warning that
eliminating or eroding (retiree) benefits has to stop.”
Also speaking in agreement
with the purposes of SB 1273 was Laurie Pelletier, Secretary-Treasurer of the
local AFL-CIO. She emphasized that
hard-earned tax dollars should not be made available to companies who mistreat
their retirees by reducing or taking away benefits. Further, she proposed that officers of
companies that take such actions should be prohibited from serving on the
Boards of State institutions.
As might be expected, a CBIA
spokesperson expressed opposition to the bill, since it fails to recognize
circumstances which may be beyond a company’s control, for instance, a
financial downturn that might worsen its competitive position. (Presumably, they feel such a circumstance would
justify taking away promised benefits!)
In addition to John Dwyer,
ARA Vice President Bob Quinn offered effective testimony to the need for the
proposed legislation. On a personal
note, he deplored the loss of the dental subsidy because of its impact on
persons who are diabetics, and thus more prone than others to dental infections
resulting from inadequate dental care.
Bob pointed out that “it’s time to stop rewarding this behavior and it’s
time to start punishing those who are profiting on the backs of people who can
least afford it.”
Tad Bell, who had also
spoken at the first hearing, described a company’s benefit supports as a
“financial security net” and spoke to the devastating damage which the loss of
assumed benefit protection can bring to a retiree and his family. “Aetna killed the dental subsidy,” he
reiterated, giving rise to a couple of all-consuming questions: “What’s next?”
and “What happened to Aetna’s sense of social responsibility?”
John Perra was the final
speaker on SB 1273. In a slightly
different approach, John started by saying that we wouldn’t need this bill “if
businesses operated in an ethical manner.”
With the over-riding focus on protecting their bottom line, America’s
corporate community seems bent on pursuing a reversal of Robin Hood’s goal,
namely, “robbing the poor and giving to the (already) rich.” All of the speakers saw this proposed
legislation as an opportunity for the State of Connecticut to take the “moral
high ground” in establishing itself as one in which ethical treatment of
retirees is truly valued.
Local television stations,
both Channel 3 and 30, recorded interviews with John Dwyer during the course of
this hearing, attesting to the prominence of our cause, and the perceived
importance of this pending legislation.
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Aetna
and SEC Reject Shareholder Proposal
As
many of you know, John Dwyer, ARA’s Chairman, submitted a proposal as an Aetna shareholder. The intent was that shareholders would get
the opportunity to vote on this proposal at the April shareholders’ meeting in
Philadelphia. At the heart of the
proposal is the following statement:
RESOLVED: That it is recommended that the Board of Directors restore Aetna’s
subsidy for dental benefits to retirees.
REASONS: The shareholders of Aetna have a vested interest in the reputation of
Aetna as a company that honors its commitments to its policyholders, customers,
employees and retirees, especially those that have been confirmed publicly by
its management, including its Chairman.
The proposal goes on to quote William Donaldson at
the 2000 shareholder meeting:
“You have the commitment of
this Corporation that the retiree benefits will not change in terms of what
benefits you have now, and the obligations and the details of the future are,
will be the same as they are right now.”
The
Company objected that the proposal did not apply to all shareholders and
therefore, under the SEC’s rules, should not be in the proxy. They concluded this even though Mr. Donaldson had considered his original
statement suitable for discussion at a previous shareholder meeting and John’s
proposal showed how bad it will be for the business as a whole to break
promises to retirees when Aetna is in a business that is fundamentally based on
one’s reputation for keeping promises.
The SEC, which is now headed by William Donaldson, sided with Aetna.
We
have to assume Mr. Donaldson, who has an
excellent reputation and is leading the call for businesses to go beyond
legalities and become more ethical, was not involved in the decision making on
this one.
It will be important for us to find other ways to
have an influence at the shareholder meeting.
We hope that any of you who are shareholders and can make it to
Philadelphia on April 29th will let us know so we can coordinate
retiree-shareholder input. Please e-mail
to general@aetnaretirees.com or call and leave a message at 860-282-3127.
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NRLN
Supports Pharmaceutical Access and Drug Safety Act (Senate Bill 2328)
The
Pharmaceutical Market Access and Drug Safety Act (Senate Bill 2328) recently
introduced in the U.S. Senate on a
bi-partisan basis “allows importation of Food and Drug Administration (FDA)
-approved drugs from countries with comparable regulation to that of the
FDA. It also requires imported drugs to
be tracked, examined and properly labeled by licensed pharmacists, so any
concerns over safety have been answered,” according to the Network’s President
A. J.
Norby.
“We’re urging all of our
members and other retirees to contact their elected representative in Congress
to urge passage of this needed legislation.
It only takes a minute for someone to send an e-mail or write a letter
to their elected officials using the ‘Write to Congress’ feature on our NRLN
Web site (www.nrln.org),” Norby added.
“We are encouraging all our
ARA members to support this effort and help reduce the cost of prescription
drugs for those retirees and others who do not have the benefit of drug plans,”
said Warren Azano, the government relations expert on the ARA Board who has
been working actively with the NRLN. It
is sponsored by a bi-partisan group which includes U.S. Senators Byron Dorgan (D-N.D.), Olympia Snow
(R-Maine), Chuck Grassley (R-Iowa), John McCain (R-Arizona), Edward Kennedy
(D-Mass.), Trent Lott (R-Miss.) and Hillary Clinton (D-N.Y.).
The NRLN is a grassroots, non-partisan coalition of retiree organizations dedicated to protecting the pension plans and retirement benefits of their members. Based in Washington, D.C., NRLN represents nearly 2 million retirees from Association of US WEST Retirees, Association of BellTel Retirees, Lucent Retirees, Association of Prudential Retirees, Monsanto Retirees Association, Association of Raytheon Retirees, Aetna Retirees Association, along with groups from Boeing, GE, GM, IBM, Johns Manville, AT&T, Portland Electric (Enron), DaimlerChrysler, Delta, SNET and others. For more information, visit the NRLN Web site at www.nrln.org.
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ARA
Membership Growth and Plans
The
Aetna Retirees Association started with a handful of people who wanted to
protect Aetna retiree benefits. We soon
found a bunch of e-mail lists that various retirees were using to just keep in
touch with their friends from Aetna. In
total there were close to 1500 names on these lists although not all were
retirees with benefits. We used these
lists to contact retirees and over the last year about two thirds of the people
on those lists have become members.
Those members include at least three former Division Heads and two
former subsidiary heads along with hundreds of other former employees. All these members remember the commitment to
retirees; both as those who voiced the commitment and as those who received it
and based their plans on it.
Your
ARA Leadership believes that if we could contact the other 10,000 retirees a
good two thirds of them would join as well.
We have to appeal to you, our current members, to contact as many
retirees as you can and encourage them to join.
To
support this effort, Dorothy Cooney, who was Chief Information Officer for
Corporate and Financial Systems before retiring from Aetna, has joined the
Leadership Team to coordinate various membership activities. Helping her in this important effort are:
Marilyn Wilson who coordinates volunteer activity, Moe Belanger who is acting
as a special advisor to the membership team, and Brian Farrell who built our
ARA database and helps us pull together and coordinate our mailing lists as
well as get out our e-mails. Then Betty
Rose provides membership information to the Leadership Team as required, and
Mary Wynn makes sure all the details are taken care of, that new memberships
are recorded, that funds get to the treasurer and so much more. Bob Quinn helps this team with the
recruitment of Board and leadership team members as well as helping Marilyn
identify those with any special skills.
Jack Barry, in Oregon, has become our first regional coordinator for the
Northwest. This team is critical to our
efforts. We hope you will cooperate with
them whenever they call on you for assistance.
Remember
that you can go to our website, www.aetnaretirees.com, at any time to register or copy an
application. If you don’t use a
computer, just write or call our office in East Hartford and we will get some
applications out to you. Carry some with
you so that when you see fellow retirees who haven’t joined you can make it
easy for them.
Aetna Retirees Association,
Inc.
PO Box 280165
East Hartford, CT 06128
860-282-3127
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Responses to Retirees
Q. Is
ARA a nonprofit organization
A. ARA
makes no profit and all members who work for us do so voluntarily. The Board even pays for its own lunch at
meetings. We have applied for nonprofit status
with the IRS but even assuming acceptance this will mean the organization does
not need to pay taxes but the member dues will not be tax
deductible. The kind of nonprofit that
ARA will be does not allow for tax deductibility of dues under IRS rules.
Q. Is
ARA going to take legal action against Aetna?
A. Because
ARA as an entity is not an aggrieved party, the organization will not take
legal action. We have, however,
investigated the legal issues and have collected a great deal of relevant data
with your help. We have prepared lawyers
to work with aggrieved parties if and when it is necessary. We already have volunteers to file such legal
claims.
Q. Why
isn’t ARA moving more quickly on all its activities – legislation, litigation,
shareholder and company influence?
A. As
far as we can tell we have generated more interest in our cause in a relatively
short period of time than any of the better established retiree groups. There is a natural impatience with all of
these activities because we all feel Aetna should not have done this in the
first place. Unfortunately we needed to
form an organization, write by-laws, stimulate media interest and enter the
political arena in order to generate support for our cause. None of this is easy and it all takes time,
but we have had numerous press interviews, the legislative hearing, letters to
the editor, a shareholder proposal and a website kept up to date through the
efforts of Dick Wenner, Doug Halbert, Walt Busalacchi and many others. We volunteers have had to work very hard to
get all this done.
Q. Can
I look to ARA for support on my medical claims when I don’t get satisfaction
from Aetna?
A. ARA
has no special expertise in determining what is appropriate under Aetna’s
policies. Some other retiree organizations
do provide staff to help their members to get through the process but they
typically are on better terms with the company they retired from and have not
experienced benefit reductions. We may
be able to establish such a group overtime, but doing so is admittedly not a
priority at this time.
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