Imagine that you recently lost your job and the bills are piling up.  However, you take pains to pay your COBRA insurance premium in full and on time because you suffer from leukemia and require monthly chemo treatments.  Shortly thereafter, while hospitalized for treatment,  a letter arrives announcing that your medical benefits are being terminated for a short payment of…ready for it? ONE PENNY!!

How would you feel?  Outraged?

That’s how La Rosa Carrington of Denver felt when it happened to her last week.   She immediately phoned the benefits administration company, believing a mistake had been made.  She spoke with a customer service representative twice and a company supervisor;  both steadfastly maintained that the bill was accurate and demanded the same thing:  pay the ONE PENNY via check or money order and then we will restore your benefits!

It wasn’t until Ms. Carrington suggested that the media would be interested in her story that the supervisor decided to check her figures and whadda ya know?  The company had made a rounding error!  La Rosa had, indeed, paid in full.   ( FYI, the company is disputing this report which is why I have chosen not to name them….)

Is the Legal Thing always the Right Thing?

Error or not, why cancel a person’s medical benefits for one cent?  Any rational, ethical employee understands that no policy-holder deliberately underpays by a penny.  They would assume it was a mere clerical error and waive the payment.  Legally, benefits administrators have the freedom to waive any amount from one penny up to 10% of the COBRA premium…but they don’t have to.

Since it cost far more than one cent to mail Ms. Carrington the termination notice,  I suspect that the company viewed the shortage as a legal way to get rid of a policy holder whose treatment was costing them too much money.  It was a legal business decision,  but was it ethical? Was it the right thing to do?

Integrity gone AWOL

The benefits administration company describes itself as “a customer-focused organization” and lists “Integrity” as one of its core values:  “We do the right thing with integrity, honesty and respect. ”

Clearly, the employees’ actions in this case did not align with the company’s published values.  Why?  Perhaps the employees  didn’t know they had the authority to waive a penny fee.  Maybe they were  ignorant of the corporate values?  Or could it have been that the posted values were just corporate window dressing and never promoted as an integral part of day-to-day decision-making?

Then again, perhaps the employees wanted to do the right thing, but feared negative consequences for doing so.  In this economy, the intense pressure to maximize revenue and cut costs often pushes ethics and empathy to the back of the line.  According to the 2009 National Business Ethics Survey, belt-tightening procedures have contributed to a dramatic increase of ethical misconduct.

What to do?

It makes a difference when a company’s ethics and values code is a living, breathing behavior guide rather than a dead document decorating the walls of corporate headquarters.  Ethical decision-making is also more effective when individuals have taken the time to reflect upon their personal ethical standards and considered what to do in the event of an ethical clash between business and personal ethics.

In future postings, we’ll take a look at these issues as well as the true costs of ethical misconduct and how to use emotional intelligence to strengthen personal and corporate ethics.