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CEO honored for giving cyclist a boost(42 posts)

CEO honored for giving cyclist a boostjs5280
Nov 7, 2002 11:03 AM
Thought I'd pass this along. . .

--------------------
CEO honored for giving cyclist a boost
--------------------

By Bonnie DeSimone
Tribune staff reporter

November 6, 2002, 3:18 PM CST

Six years ago, one of athlete Lance Armstrong's
corporate sponsors
threw him a lifeline that had nothing to do with the
bottom line.

In 1996, 25-year-old cyclist Armstrong had just been
diagnosed with
cancer. As Armstrong recounted in his book, "It's Not
About the Bike," he
had begun his first round of chemotherapy when a terse
letter informed
him he had no safety net. His contract with his old
team had expired,
and his health insurance with it.

The policy held by his new French team, Cofidis,
wouldn't cover a
pre-existing condition. Cofidis would soon thereafter
wiggle out of its
contract with Armstrong. He wasn't poverty-stricken;
he was a newly minted
millionaire who drove a Porsche. But the surgeries and
follow-up
treatment he faced would have bankrupted even him and
his future income
potential was uncertain at best.

Mike Parnell, chief executive of wraparound sunglasses
manufacturer
Oakley, strong-armed his company's insurance provider
into covering
Armstrong by threatening to pull Oakley's business.
The insurer, which has
declined to be named, initially resisted but
eventually agreed.

"I'll spend the rest of my life trying to adequately
convey what it
meant to me," Armstrong wrote of Parnell's deed in his
autobiography.

On Thursday, Parnell will be recognized in Los Angeles
for his stand on
behalf of then-not-so-famous client.

As award ceremonies go, it will be low-key. No black
ties, no celebrity
presenters cracking wise. Just a small reception
hosted by Loyola
Marymount University's Center for Ethics and Business,
which finds Parnell's
"simple act of compassion" worthy of note, according
to the center's
director, Thomas I. White.

"It's a little bit awkward," said Parnell, 53, now
semi-retired.
"Ethics is a pursuit. It's not something I've been
able to cross off my list.
Mostly what I've learned in business is what not to
do. This is an
opportunity to promote sound decisions that aren't
just made for a profit."

Parnell had learned something about risks and
relationships in his 20s,
when he was a professional skydiver. He competed in an
event called
eight-man freefall, in which a team executes
choreographed maneuvers in a
55-second window, holding hands to form circles and
snowflakes. Trust
is as essential as good gear and steady nerves.

His career hasn't been without its crashes. When
Parnell headed Ocean
Pacific sportswear, he approved marketing decisions he
regards in
retrospect as errors.

"We had 800 employees depending on the brand, and we
destroyed it," he
said. "It was hubris. We thought we were invincible."

And his personal life hasn't been without
tribulations. Parnell's two
sons, 7 and 13, have a rare kidney disorder that has
made him aware of
the strains a chronic disease can put on a family,
even a well-to-do
one.

Parnell saw Armstrong at his lowest--emaciated and
emotionally gutted.
In a plane on the way to a fishing trip, the once
cocksure world
champion broke down and sobbed. "I don't know what I'm
going to do,"
Armstrong said to Parnell. "What am I going to compete
at? No one's going to
want me."

Not all ethical gestures are as amply rewarded as
Parnell's. He looks
like a genius now that the four-time Tour de France
winner is one of the
world's most influential cancer survivors. The two
still go salmon
fishing, and Parnell reports that Armstrong refuses to
quit--once ignoring
a bear ambling nearby--until he has hauled in a bigger
catch than
anyone else.

But at the time, Parnell's phone call was simply a
chance taken for a
friend he wasn't willing to ditch
Am I crazy?Wayne
Nov 7, 2002 11:37 AM
what's ethical about that? "Mike Parnell, chief executive of wraparound sunglasses manufacturer Oakley, strong-armed his company's insurance provider into covering Armstrong by threatening to pull Oakley's business." If a mafia guy did this it would be called racketeering, wouldn't it?
I can see two ethically commendable actions that could have been taken in this case. 1) Parnell paid for Armstrong's treatment 2) Armstrong paid back the insurance company (esp. once it became apparent that his earning potential was not compromised by his cancer after he won his 1st TdF). Cofidis (and their insurance provider) behaved badly, but I would assume within the law. How does that give Parnell (and Armstrong) the right to "rape" another insurance provider for Armstrong's treatment cost? And furthermore, what's ethically admirable about it? Parnell get's credit for forcing a company that is in no way responsible for covering Armstrong's treatment to cover him, Armstrong accepts it (understandable, but not ethical, if you think the cost of your treatment is going to bankrupt you and your future earning potential may be nil) but then doesn't pay the company back when it's clear he is very capable of doing so. Parnell get's credit when it's really the other people of the nameless insurance provider who paid for Armstrong's treatment through increased premiums, etc.
No, you are right, in partms
Nov 7, 2002 11:53 AM
Parnell's strongarming did not cost him anything initially. But, it probably raised the insurance premiums for Oakley in the future. Depending upon how much Oakley subsidizes its employee health care, it probably paid (and continues to pay) something for Armstrong's coverage. Of course, to the extent that its employees pay for health coverage, they too are paying for it. That being said, Parnell did a big favor for Lance -- Parnell could have just left him on his own. Insofar as Lance's payback is concerned, the things that he said about Parnell and Oakley in his book and his continued endorsements of Oakley products is probably worth a lot more than anyone paid for his cancer treatments.
guess i am tootao
Nov 7, 2002 11:56 AM
Had the same thoughts reading the article. What I can't figure out is why he wasn't covered by Motorola, aren't cyclists usually signed until the end of the calendar year? Or at least until the end of October, lest they ride Worlds.
Yep. . .js5280
Nov 7, 2002 12:09 PM
Actually you make some good points however Parnell was ultimately able to convince the insurance carrer to cover Lance through legal means, even if heavy handed. I'm thinking he probably had some case to cover Lance since he was an "employee" of some sort or else the insurance company would of out right refused. It's not like they're afraid of entering a lawsuit. Usually it's us getting screwed by them though. Insurance companies are all about numbers and Lance's treatment cost must of been less than the profit from Oakley's business. Parnell is free to do business whereever and the insurance carrier is free to cover Oakley or not. It's business, no leg breakings by Pauly were involved. Parnell stuck his head out to help a friend which is comendable. At the time, nobody knew Lance's fate. Also we don't have enough information on if insurance premiums did rise for the employees of Oakley, maybe Oakley absorbed the increase, we don't know. Confidis is definately the snake here as evidenced in Lance's book. They left Lance out to hang because he couldn't pass the physical which gave them a loophole to get out of the contract and deny him health coverage he thought he had. Although legal I'd argue it's ethical merit.

Nowdays, this situation would probably not of happened because of the Heath Insurance Portability and Protection Act (HIPPA). If you have continous insurance coverage (technically no more than 60 days laspe), insurance companies can't discriminate against you for a pre-existing condition.
"he stuck his neck out to help a friend"TJeanloz
Nov 7, 2002 12:39 PM
Does 'sticking your neck out' to help a friend make your actions ethical?

If Parnell wanted to help Armstrong, he should have paid his medical bills out of his own pocket- not insisted that other policyholders come to Armstrong's rescue, which is what he did do. Who is really in the right here? The insurance company that acquiessed to cover Armstrong even though they didn't have to. This is an event where Parnell put a gun to the insurance company's head, effectively stole their product, and is given an award for doing the 'right' thing. Ridiculous.
gimme a breakColnagoFE
Nov 7, 2002 12:57 PM
this is just business. if the ins. company wants oakley's biz the ceo said they'd have to cover lance. they could have refused. nobody was holding a "gun" to their head. they simply didn't want to miss out of oakley's biz. their choice. same as oakley saying they will change suppliers for something like lenses unless they come down in price. it's just business. some times you have leverage, some times you don't. if the company in question was joe bob's bait shop and they threatened the same ins. company for lance they would have lauged at them.
Not as I understand it,TJeanloz
Nov 7, 2002 1:13 PM
If there was a reasonable way by which Armstrong could have been construed to be an Oakley employee, and thus covered by the plan, and the insurance company was refusing to cover him, that's one thing.

But as I understand it, Parnell told the insurance company that they would cover Armstrong or he would remove his business. The appropriate correlary is: you will pay my friend X dollars, or I, the CEO of a major client, will not let my company do business with you. This is called a kickback, and it is generally considered unethical. People are in an uproar over this exact practice on Wall Street right now, where CEOs used corporate leverage for personal gain. But this story has a happy ending, so Parnell gets an award for his acts.
Um, is it obvious that Armstrong was not covered?djg
Nov 7, 2002 1:58 PM
I'll confess to being ignorant of the details of the insurance contract in question and the facts relevant to triggering coverage (or not) in this case. But given what I've read, it's at least conceivable that the insurance company was taking a debatable (perhaps highly questionable) postion regarding the denial of coverage. If I'm wrong about that, I apologize for wasting the bandwidth. But if Parnell simply went to bat for someone he thought had a real claim against the insurer, then it's hard to say he stole anything, even if he played hardball in making his case (negotiating his deal).
I agree entirely,TJeanloz
Nov 7, 2002 2:15 PM
As I understand the situation, and somebody please clear this up if they know otherwise:

1. Armstrong is diagnosed with cancer.
2. Cofidis refuses to cover him, saying he has never passed a physical, and thus never become an employee.
3. Parnell 'hires' Armstrong, explicitly so that he will be covered by Oakley's medical insurance. I don't believe that Armstrong had a job at Oakley prior to this time (being sponsored definitely does NOT make you an employee).
4. Oakley's insurance company balked, saying that the cancer was pre-existing, which it was.
5. Parnell threatens to take Oakley's business elsewhere if the insurance company doesn't cover Armstrong.

If Armstrong was a long-term employee, with paid premiums, by all means, Parnell should have gone to bat for him - but I don't understand that to be the case. The pre-existing condition has to make sense; if insurance companies had to cover pre-existing conditions, it would be like buying life insurance after the policyholder had died. The whole point of insurance is that you need to have it before you need it.
iirc, you're right about what happenedweiwentg
Nov 7, 2002 2:36 PM
as I remember from reading Armstrong's book, you correctly described what happened.
do I agree with you? I don't know. this is quite a thorny issue. I agree with you that Parnell was, at the very least, heavy handed with his insurance company. if I were the president of the insurance company, and I agreed to cover Armstrong, that would be good ... but it would also set a precedent. I can't afford to have everyone who's sick come to me and sign on, because that would bankrupt the company. Armstrong's a damn good bike racer, but is his life worth more than the life of any other human being? sorry, but no. in the end, I do agree with what Parnell did. not completely, but I do agree with him.
on a side but related note, the health system in this country is ridiculous. everyone rags on Britain (and well they should), but there are other countries with working public health systems. you would do well to emulate them.
I guess the beef would be with insurance laws thenColnagoFE
Nov 7, 2002 2:41 PM
Lance for sure didn't intentionally give up his insurance when he thought he might have cancer and the timing of the diagnosis gave the future insurance company a loophole out. I'm sure if this was some inner city worker in the same situation that they would have just been hung out to dry and lost everything, but since it was Lance he got some special favors from powerful people. Unfortunately that's the way the world works. Life ain't fair. I still have yet to find anywhere that the insurance premiums rose significantly following Lance's inclusion on the policy. You are just assuming that happened, but Oakley is a big company and usually the way it works is there is a overall "score" given to the entire pool of workers. If they get tons of high cost cases then the premiums go up but for one extra case? I don't think so. And the CEO could still shop for another insurance company if that did happen.
There's usually a window of opportunity for new hires ...Humma Hah
Nov 7, 2002 4:03 PM
... to be accepted without a medical exam, and usually there's no pre-existing conditions clause, providing they start insurance promptly after being hired. Maybe this has changed recently, but it should have been standard policy in the 90's for all large corporate accounts.

Individuals getting insurance if they have been uninsured for more than 30 days usually face the pre-existing conditions exclusion.
Are you people really this bitter and cynical all the time?pnitefly
Nov 7, 2002 12:26 PM
Can't people just take a story at face value? Parnell's deed is just a nice anecdote to hear in a F@#$ed up world! I have worked in medicine for 11 years and stories like Lance's happen everyday. Some have happy endings some don't. Take it for what it is...don't over analyze!
No doubt...merckx56
Nov 7, 2002 2:25 PM
If I had the juice to strongarm an insurance company when a friend was in need of their help, I would do it in a heartbeat! He was merely exercising his right as the CEO of a company to add someone to the health insurance. Lance was also added to the paypoll as an "official" employee so the insurance could cover him. He wasn't just a sponsored athlete. Parnell is the consummate lead dog! And you know if you aren't the lead dog...
Am I crazy?novagator
Nov 7, 2002 12:45 PM
If I remember from the book, Oakley got Lance covered as an "employee" of the company. I don't think that qualifies as "ethics", but rather a friend doing a favor. If Lance was carrying cash to pay his medical bills, lost the money, which was then found by Parnell, who then returned it to Lance so he could pay his medical bill...then that is ethical ;-)
I think it all depends of why the insurance was not willing...Bruno S
Nov 7, 2002 1:39 PM
I think it all depends of why the insurance was not willing to pay Armstrong coverage. Insurance companies will use any legal means to avoid paying for treatments and I think that Armstrongs case fell into a gray area. (Prior condition, etc.) What the guy from Oakley did was to force the insurance company to pay for the kind of treatments people buy insure for.
insurance company claimed....ClydeTri
Nov 7, 2002 2:01 PM
it was a pre-exising condition thus not covered.
pre-existing but not detected?...Bruno S
Nov 7, 2002 2:17 PM
He didn't get insured after being diagnosed, did he?
I believe his was only insured post-diagnosis (nm)TJeanloz
Nov 7, 2002 2:30 PM
Nice article....thanksbent_spoke
Nov 7, 2002 11:37 AM
it's good to know that there's at least one CEO with some compassion and integrity
Great lesson - thanks for posting (nm)outofthesaddle
Nov 7, 2002 11:42 AM
So a famous guy i know...Wayne
Nov 7, 2002 11:57 AM
is down on his luck due to no fault of his own. Me, being the powerful guy I am, go to this other guy I know and tell him to give my famous friend $100 or I'm going to stand outside of his shop and scare away $1000 worth of business. He caves in. My famous friend uses that $100 to get back on his feet and goes on to even greater fame. Do you think I deserve an ethics award? Or is it only a great lesson when it's a faceless (and actually nameless, in this instance) company that gets screwed out the $100.
I somehow doubt the insurance company went bankrupt (nm)ColnagoFE
Nov 7, 2002 12:59 PM
So what you're saying is that....Wayne
Nov 7, 2002 1:15 PM
it is all right to extort money from someone or a company, as long as you don't clean them out!
Nope, just that the Insurance Co. did a cost/benefit analysisjs5280
Nov 7, 2002 1:45 PM
and covering Lance was cheaper than losing Oakley as a customer. It's BUSINESS. It's a negotiation, not a robbery. In this case it benefited a person instead of the company's bottom line which is commendable. It's not like Lance was irresponsible and had no insurance, it was all bad timing. Like I said this is now a moot point with HIPPA. Provided Confidis is subject to this law, they would have to extend benefits to Lance but Lance would have to pay 100% of the premimum (ala COBRA).

Gees, who knew there was so much sympathy for insurance companies, particularly health. My guess is you haven't had to deal with them before. Talk about FUBAR. . .
Helping your friends at the expense of your company...TJeanloz
Nov 7, 2002 1:49 PM
Helping your friends, at the expense of your company, is not "business"- it is theft.

We have to assume that if Parnell was a good CEO, he was using the insurance company that charged the lowest premium, if he leaves this insurance company because they won't cover his friend, and makes Oakley pay more for insurance- how is that legit?
because....ClydeTri
Nov 7, 2002 2:00 PM
a company that shows allegiance to its employees will have that good will come back multiplied from the employees..and Lance was technically an employee
Your right, Parnell is scum. . .js5280
Nov 7, 2002 2:37 PM
God forbid someone tries to help a person with a case of cancer and bad timing. Lance is scum too because he actively sought to bend the rules for his own personal benefit. He's rich, he should have paid it for himself. I'm scum as well because I left the company whom paid for my cancer treatment after a year and half. Not nearly enough time to offset the $150,000+ it cost and saddled my co-workers with the increased premiums.

The reality of the situation is that Confidis weaseled themselves out of Lance's contract. Then Oakley's insurance company tried to weasel themselves out of paying for Lance's treatment by exploiting the "pre-existing" clause. That was wrong, although legal at the time, and HIPPA was passed (actually passed before Lance's diagnosis but didn't go into effect till afterwards) to correct that practice. This was not the case for Lance, he had coverage but had lasped for a very short time in which he was diagnosised with cancer. The "pre-existing" clause was originally implemented so that people wouldn't go uncovered then getting coverage only when they needed it, forcing insurance companies under.

Parnell used his influence, which MAY have had a negative influence on other Oakley employees and/or investors. Do you think Parnell would have changed his decision in hindsight since this apparently was so wrong? Do you think Oakley employees hate Lance? Do you think Lance has maybe perhaps repaid his debt to society with the millions he's raised for medical research and patient services? How about the thousands who bought LA edition Oakley Sunglasses? Woe the poor insurance company who got the short end of the stick, give me a break TJ and Wayne. . .

That's all I got to say about that.
In the same situation, how would I act?TJeanloz
Nov 7, 2002 3:14 PM
I think we can agree on a few things:

1. Cofidis or Motorola should have shouldered the burden of health insurance coverage.

2. Parnell did the morally right thing, in helping a friend. I'd like to think that I would do the same. He deserves the 'friend of the year award'.

Had HIPPA been in place, he would have been o.k., assuming he made his COBRA payments. It was not, his health insurance was terminated- a tough break that is no longer legal.

What we don't agree on is:

1. What Parnell did, while morally right, was ethically innappropriate for a CEO of a public company. If Armstrong had been an employee of Oakley, and legitimately should have been covered, he should have been covered. But, when Armstrong was made an 'employee', what, exactly were his tasks? What was his job description? What did he do to bring value to the shareholders? Or is this a case of a buddy helping out a friend to defraud an insurance company?

If Parnell wanted props, in my book, he should have paid for Armstrong's treatment out of his own pocket- forcing your shareholders and vendors to pay for something that you want and makes you look good is straight out of the Dennis Kozlowski play book.
exactly!ColnagoFE
Nov 7, 2002 2:46 PM
It's not like Lance intentionally cheaped out of buying insurance from what I hear. He fell into a trap that a lot of people do...losing insurance after being terminated from a job and then trying to get other insurance without being on a work group plan (most group plans don't limit pre-existing conditions). He just happened to have friends in high places that could help him out. Many people don't have those resources.
Oops, here's the rest of the article. . .js5280
Nov 7, 2002 1:27 PM
But at the time, Parnell's phone call was simply a
chance taken for a
friend he wasn't willing to ditch just because he was
no longer fit and
pretty.

"I believe [cancer] was divine intervention in his
life," Parnell said.
"He was going to live hard and use himself up. Having
to depend on
other people humbled him, and he is a more complete
person now."

But White and the panel of southern California
business leaders who
conceived of the award consider that intervention
special.

"This is the kind of example we want other executives
and young people
in the field to hear about," White said. "Business is
not just about
financial calculations. It's about people and
relationships. Not everyone
in business is a crook."

Copyright (c) 2002, Chicago Tribune
I just finished reading the book this week...ClydeTri
Nov 7, 2002 1:27 PM
so, its fresh on my mind....He, Lance, was considered an Oakley employee, but the insurance company considered it a preexisiting condition, they claimed it , the cancer , was already there when Oakley signed Lance up, so they werent' liable. The owner of Oakley just basically said, okay..we take our business elsewhere...the insurance company saw it was in their ultimate good to go ahead and absorb the costs, which were ultimately passed along to all their insured as it always is.......nothing unethical, the insurance company could have told oakley adios and oakley would have found another insurance company, but a business decision was made...
I just finished reading the book this week...jfd141
Nov 7, 2002 1:49 PM
There is nothing illegal about what the CEO did, however it shouldn't be commended as 'ethical' business practice. CEO of Oakley tried to help his friend out by using a slick business maneuver. I'm not sure he should be commended, then again it's a lot better than most of the CEO stories you hear on the news anymore.

John
I think the crux of the matter...Wayne
Nov 8, 2002 4:13 AM
is "Lance, was considered an Oakley employee". Apparently not until he was diagnosed with cancer and realized Cofidis and/or Motorola's insurance provider wasn't going to pay for his treatment (one or the other of which, you would think, should have). Thus, his cancer falls under a known, pre-existing condition when he gets enrolled in Oakley's insurance program. If it was legally their obligation to pay, then Oakley/Armstrong/Parnell could have taken them to court, which they didn't. Ethically I can't see why they should pay either. Why don't we all just forego insurance and sign up once we realize we need it?
Nobody seems to think there's anything ethically wrong with screwing an insurance company out of thousands if not millions of dollars?
It's commendable Parnell wanted to help a friend out, what he did, however, was not. I would even go as far as to say it was unethical.
Everyone is blowing this out of proportion.NJRoad
Nov 7, 2002 2:09 PM
My guess is that this 'threat' was made to show how important this was to Parnell. The wife of a new hire with my company was diagnosed with breast cancer. The diagnosis came within weeks of him starting with the company. Our operations manager made a personal appeal to the insurer and they covered her treatment.

It is not extortion, the insurer was asked to make an exception. If anyone wants to try to impeach Parnell, the question is, would he make the same appeal for any of his employees?
No we're NOT!js5280
Nov 7, 2002 2:41 PM
Just kidding ;-) Personally I think we're compensating for lack of negative political adverstisements by creating our own muckraking.

Excellent story and point you made NJR, thanks.
That's right!NJRoad
Nov 7, 2002 2:46 PM
I forgot the elections where over, it's now safe to watch TV, listen to radio and read the paper without feeling like you're caught in a continuous loop of Jerry Springer.
Moral of the story- Don't let your Health Coverage laspe!js5280
Nov 7, 2002 2:56 PM
more than 63 days. There are exceptions, check out this website for details on HIPPA

http://cms.hhs.gov/hipaa/online/default.asp

Most companies have to extend you benefits via COBRA for 18 months but you'll have to cover 100% of the premium during that time.
..or move to Canada. NMSpunout
Nov 8, 2002 4:54 AM
or any other country offering socialized medicine NMColnagoFE
Nov 8, 2002 7:20 AM
It's an old storyMel Erickson
Nov 8, 2002 7:32 AM
It's the end justifying the means. It is commendable and indeed ethical for Parnell to want to help Lance. The way he went about it is not as commendable or ethical. I sure hope I have friends like this if I'm ever in such a pickle!