A Doctor Tries His Hand At Whistle Blowing

Mario S. Feliberty hadn't been at Kemper Life Insurance Cos. for long before he began to see what he says were troubling practices at the Long Grove (Ill.) company. As its medical director from 1992 to 1994, the 55-year-old physician helped underwriters screen applicants for coverage. Feliberty says that underwriters often suggested that applicants with Hispanic or Asian surnames be denied insurance or charged higher premiums.

At the same time, Feliberty says, the underwriters recommended the approval of white applicants with similar, often routine health problems--such as fibrocystic breast conditions and elevated liver counts. "A small group of underwriters was carrying out practices that I consider very discriminatory," he says. "They wanted to decline, postpone, or delay these applications, and I didn't see any medical basis for that."

CIRCLED WORDS. Feliberty says he met with Chief Executive John B. Scott about his concerns in January, 1993, and that Scott flatly denied the allegations. To boost his claims, Feliberty gave Scott a package of policy applications that he believed illustrated the questionable conduct. Among Feliberty's ammunition: The words "black male" were boldly circled in applications from African Americans. Underwriters ordered special investigations to determine if certain Asian customers understood English. Managers instructed employees to scrutinize Vietnamese applicants more closely because of their supposed higher incidence of hepatitis. And Asian Indians were flagged for their alleged high rate of diabetes. Former employees confirmed that their managers told them to review applicants of certain ethnicities more carefully.

Kemper still denies Feliberty's claims. "We believe Kemper Life's underwriting practices fully comply with all the laws and regulations," says company spokesman Ira Nathanson. "Any information you have received which indicates Kemper Life unfairly discriminates is wrong." Indeed, insurance companies often say that they have actuarial studies showing higher rates of disease among certain populations. And as long as the insurance companies investigate each applicant's health conditions, they assert that there is nothing wrong with such generalizations.

NO INVESTIGATION. As for Feliberty's complaints, the Illinois Insurance Dept. has declined to investigate, in part because it didn't see enough jilted Illinois policy applicants in the mix to justify the inquiry, according to a regulator.

Complicating matters is a battle that Feliberty is waging over Kemper Life's alleged failure to accommodate his carpal tunnel syndrome--a disability that developed in his wrists while at Kemper. In March, 1994, Kemper terminated Feliberty's position, and the doctor is now engaged in a disabilities-discrimination lawsuit against the company. The company declines comment on Feliberty's case.

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