Movie makers in the Michigan film industry are questioning the cap Governor Rick Snyder proposed for the state's incentive-based film tax credit.
As part of Synder's first budget proposal, the Michigan Governor added a limitation on the amount of funds allocated for the film tax credit to $25 million. That's less than 20% the amount the state paid out to the industry in 2009.
The drastic reduction in tax funds is raising the eyebrows of many Michigan filmmakers and activists.
"Putting a $25 million cap would severely curtail Michigan's attractiveness to the film and television industry and create a severe limitation," said the senior vice president for state government affairs.
Producers who choose Michigan to shoot their big screen masterpieces are eligible to recoup up to 42 percent of production expenses totaling over $50,000 through the program.
The film tax credit was first introduced in 2008 by the former Governor Jennifer Granholm as an effort to increase major film production in Michigan - a plan that potentially offers many indirect benefits to the state's commercial interests.
The motives behind the program include attracting more jobs, in addition to enhancing state's image as it has become synonymous with the decline of the manufacturing sector in American. Such tax credits have attracted the creation of movies like "Detroit 187" and "Gran Torino."
Since the program's launch in 2008, 133 projects have wrapped in Michigan with $365 million in incentives approved and $95.6 million already paid to production companies, according to data from the Michigan Film Office, which disburses the tax credits. The production of those films resulted in over $648 million spent in the state since the program took full effect.
In addition to the direct affect the tax incentive has had on Michigan movie production, the film credit has improved business in various other industries - indirectly. For instance, Michigan furniture manufacturer Case Systems was able to capitalize on few high volume purchases in accordance with the tax credit.
Currently, there are applications for over $93 million in tax credits pending at the Michigan Film Office for 2011. However, warnings are being announced that if the tax breaks are cut, Michigan's talent base for movie making may soon be headed to other areas like Hollywood. One production in particular has been already pulled out of the state.
"It's safe to say that a number of our companies may not consider Michigan in the mix anymore because of the uncertainty as to whether they would be able to obtain a portion of the credit," said Michigan's senior vice president of government affairs. "The potential for a mass exodus is real given those parameters," Stevenson said.
He acknowledged that most film producers were lured by the size of state's tax credit since 40 states have film industry incentives in place and most are competitive, if not quite as generous as the credit in Michigan.
The governor's proposal would limit tax incentives to $25 million for fiscal 2012 and 2013. The budget is still pending approval by the state legislature, but many officials on the conservative side have argued that Michigan cannot afford the tax credit in the face of a $1.8 billion budget deficit.
On the liberal end of the fight, proponents are arguing that the tax credit has a positive impact in many sectors beyond the arts, ranging from auto transport companies to unique Michigan-based boutiques.
The move has displeased over 5,000 state residents who were employed by the film industry in 2010. Plans for a new film studios near Detroit could be jeopardized, prompting over 1,000 Michigan residents to meet on the issue. Mitch Albom and actor Jeff Daniels were among the powerful voices behind the assembly.
28 February 2011
08 February 2011
Accelerate your career search by earning one of these promising degrees
Wouldn't it be wonderful to hear the words: "So can you take the job?" shortly after you earn your degree? By choosing the right degree, you just might be able to select your ideal job of choice.
According to the National Association of Colleges and Employers (NACE), your major is the most significant factor in determining your employment status come graduation. Review, highlight, and study these five degrees that offer grads great odds for getting hired - almost immediately.
#1 - Accounting Degree
New regulations in accounting practices, which were recently passed by Congress, have made this credential even more valuable. According to a 2010 survey by NACE, 47 percent of accounting majors earn a job prior to graduation.
Related Careers and Salaries:
Accountants: $59,430
Personal Financial Advisors: $69,050
Financial Analysts: $73,150
Did You Know? According to a 2010 survey by Universum Group, the Big Four accounting firms (KPMG, Ernst & Young, PricewaterhouseCoopers, and Deloitte) finished just short of Google and on top of companies like Apple, Microsoft, and Goldman Sachs on a list of "dream employers" for students going for a bachelor degree in accounting.
#2 - Business Degree
Businesses will pave the road out of an economic slump, and they will need new workers to help make it happen. Over 45 percent of students pursuing a bachelors degree in business administration discovered a job prior to graduation, according to NACE.
Related Careers and Salaries:
Insurance Underwriters: $56,790
Administrative Services Managers: $73,520
Financial Managers: $99,330
Did You Know? According to the U.S. Department of Education, degrees related to business made up 21 percent of all bachelor's degrees awarded in 2008.
#3 - Computer/Information Systems Degree
Over 44 percent of bachelor degree CIS students were given at least one job offer prior to graduating in 2010, according to NACE.
Related Careers and Salaries:
Computer Support Specialists: $43,450
Network Systems Analysts: $71,100
Computer Scientists: $97,970
Did You Know? Large tech companies like Facebook and Apple have ramped up their hiring in Silicon Valley. For the IT industry, this was an increase in jobs for the first time in nearly two years in September 2010.
#4 - Engineering Degree
Engineering students find jobs quick - often times prior to graduation. In addition, engineering graduates, even entry-level, earn handsome salaries that exceed many MBA degrees. According to a separate NACE survey, eight of the top 10 highest-paid majors are related to engineering.
Related Careers and Salaries:
Civil Engineers: $74,600
Chemical Engineers: $ 84,680
Petroleum Engineers: $108,020
Did You Know? The first wireless telephone patent was issued in 1908 to an engineer named Nathan B. Stubblefield. He also ran a school founded on a farm that is now coined Murray State University.
#5 - Health Sciences Degree
According to NACE, nearly 39 percent of health sciences majors have earned a job offer before graduating in 2010. The U.S. Department of Labor estimates that health care will provide over 3 million new jobs through 2018.
Related Careers and Salaries:
Medical Assistants: $28,300
Health Information Technicians: $30,610
Registered Nurses: $62,450
Did You Know? Many careers in the health care sector are available to those with just an associate's degree. But for students, like those seeking a bachelor degree in nursing, will need a full four years under their belt.
(*All salary data comes from the U.S. Department of Labor and is based upon median salaries for 2008.)
According to the National Association of Colleges and Employers (NACE), your major is the most significant factor in determining your employment status come graduation. Review, highlight, and study these five degrees that offer grads great odds for getting hired - almost immediately.
#1 - Accounting Degree
New regulations in accounting practices, which were recently passed by Congress, have made this credential even more valuable. According to a 2010 survey by NACE, 47 percent of accounting majors earn a job prior to graduation.
Related Careers and Salaries:
Accountants: $59,430
Personal Financial Advisors: $69,050
Financial Analysts: $73,150
Did You Know? According to a 2010 survey by Universum Group, the Big Four accounting firms (KPMG, Ernst & Young, PricewaterhouseCoopers, and Deloitte) finished just short of Google and on top of companies like Apple, Microsoft, and Goldman Sachs on a list of "dream employers" for students going for a bachelor degree in accounting.
#2 - Business Degree
Businesses will pave the road out of an economic slump, and they will need new workers to help make it happen. Over 45 percent of students pursuing a bachelors degree in business administration discovered a job prior to graduation, according to NACE.
Related Careers and Salaries:
Insurance Underwriters: $56,790
Administrative Services Managers: $73,520
Financial Managers: $99,330
Did You Know? According to the U.S. Department of Education, degrees related to business made up 21 percent of all bachelor's degrees awarded in 2008.
#3 - Computer/Information Systems Degree
Over 44 percent of bachelor degree CIS students were given at least one job offer prior to graduating in 2010, according to NACE.
Related Careers and Salaries:
Computer Support Specialists: $43,450
Network Systems Analysts: $71,100
Computer Scientists: $97,970
Did You Know? Large tech companies like Facebook and Apple have ramped up their hiring in Silicon Valley. For the IT industry, this was an increase in jobs for the first time in nearly two years in September 2010.
#4 - Engineering Degree
Engineering students find jobs quick - often times prior to graduation. In addition, engineering graduates, even entry-level, earn handsome salaries that exceed many MBA degrees. According to a separate NACE survey, eight of the top 10 highest-paid majors are related to engineering.
Related Careers and Salaries:
Civil Engineers: $74,600
Chemical Engineers: $ 84,680
Petroleum Engineers: $108,020
Did You Know? The first wireless telephone patent was issued in 1908 to an engineer named Nathan B. Stubblefield. He also ran a school founded on a farm that is now coined Murray State University.
#5 - Health Sciences Degree
According to NACE, nearly 39 percent of health sciences majors have earned a job offer before graduating in 2010. The U.S. Department of Labor estimates that health care will provide over 3 million new jobs through 2018.
Related Careers and Salaries:
Medical Assistants: $28,300
Health Information Technicians: $30,610
Registered Nurses: $62,450
Did You Know? Many careers in the health care sector are available to those with just an associate's degree. But for students, like those seeking a bachelor degree in nursing, will need a full four years under their belt.
(*All salary data comes from the U.S. Department of Labor and is based upon median salaries for 2008.)
01 February 2011
Chrysler plans to pay UAW workers a $750 "performance award"
Next week Chrysler plans to pay its UAW and CAW employees an average "performance award" of $750, based on the automaker's 2010 operating profit of $763 million. This all comes at a surprise to investors given the fact Chrysler lost $652 million after interest expenses and other restructuring obligations.
Workers who get paid by salary, except for the top 50 executives of the company, also will receive the award, a Chrysler spokeswoman said early in the week. Because the company still has debt of $5.8 billion to the feds, the U.S. Treasury can restrict senior management's compensation.
"The obligation to our people was much greater than the need to improve our bottom line profitability." said the company's CEO Sergio Marchionne."It was absolutely owed that we treat our people properly,"
Praising the idea of the performance award is Chrysler's VP of the UAW department, General Holiefield.
"This certainly shows the character of the new Chrysler to give recognition to the UAW Chrysler workforce," said Holiefield. He also mentioned that some employees would receive a payment in excess of the $750 average, while other workers would receive less, depending on their eligibility.
The Michigan automaker reported a $199 million net loss for the last quarter, but a $198 operating profit when interest expenses and taxes are excluded.
For the entire year of 2010 Chrysler reported a net loss of $652 million, but a better than projected operating profit reaching $763 million.
The core reason for the company's large difference in net loss and operating profit is the interest expense due to government loans. That interest accumulated to $329 million in the fourth quarter and $1.23 billion for all of 2010. CEO Sergio Marchionne has spoken with investment bank Goldman Sachs about ways to refinance some of those loans at a lower interest rate.
Such financial adjustments likely occur before Chrysler can follow through with an IPO that would allow the U.S and Canadian governments to sell shares in Chrysler. The U.S. owns 9.2% and Canada owns 2.3%.
Marchionne and CFO of the company Richard Palmer said Chrysler projects to earn a net profit of between $200 million and $500 million for 2011, without having to refinancing the federal loans. Excluding interest expense, management expects its operating profit to more than double from $763 million last year to $2 billion in 2011.
But the burden of Chrysler's financial aid from the government remains heavy. Palmer added that those loans carry an average interest rate of 11%.
Chrysler's loan interest could see an increase this year. The automaker is waiting for word from the U.S. Department of Energy on an application for a $3.5 billion loan, which would fund new projects to improve the fuel economy of future vehicles.
Last week, neighboring automaker Ford said it would award its 40,600 UAW workers an average of $5,000 in profit-sharing. Chrysler has not paid profit-sharing since 2005, when its UAW workers received an average of $650.
Marchionne elected to the call the payment "performance award" rather than "profit-sharing", because it is difficult to mention profit sharing when you have a negative figure at the bottom line, he added.
Chrysler reported a net loss of $199-million for the fourth quarter, but an operating profit of $198-million when interest expenses and taxes are excluded.
“I want to express my gratitude to everyone for their hard work as we move forward towards the achievement of our goals,” Marchionne said in his e-mail. “You are the authors of this success. I want to thank you for your dedication, your creativity and your willingness to embrace change without which these results would not have been achieved. "
For the full year, Chrysler reported a net loss of $652 million, but a better-than-expected operating profit of $763 million. Additionally, the company still maintains key relationships with large clients, in sectors like transportation services and auto transport.
Workers who get paid by salary, except for the top 50 executives of the company, also will receive the award, a Chrysler spokeswoman said early in the week. Because the company still has debt of $5.8 billion to the feds, the U.S. Treasury can restrict senior management's compensation.
"The obligation to our people was much greater than the need to improve our bottom line profitability." said the company's CEO Sergio Marchionne."It was absolutely owed that we treat our people properly,"
Praising the idea of the performance award is Chrysler's VP of the UAW department, General Holiefield.
"This certainly shows the character of the new Chrysler to give recognition to the UAW Chrysler workforce," said Holiefield. He also mentioned that some employees would receive a payment in excess of the $750 average, while other workers would receive less, depending on their eligibility.
The Michigan automaker reported a $199 million net loss for the last quarter, but a $198 operating profit when interest expenses and taxes are excluded.
For the entire year of 2010 Chrysler reported a net loss of $652 million, but a better than projected operating profit reaching $763 million.
The core reason for the company's large difference in net loss and operating profit is the interest expense due to government loans. That interest accumulated to $329 million in the fourth quarter and $1.23 billion for all of 2010. CEO Sergio Marchionne has spoken with investment bank Goldman Sachs about ways to refinance some of those loans at a lower interest rate.
Such financial adjustments likely occur before Chrysler can follow through with an IPO that would allow the U.S and Canadian governments to sell shares in Chrysler. The U.S. owns 9.2% and Canada owns 2.3%.
Marchionne and CFO of the company Richard Palmer said Chrysler projects to earn a net profit of between $200 million and $500 million for 2011, without having to refinancing the federal loans. Excluding interest expense, management expects its operating profit to more than double from $763 million last year to $2 billion in 2011.
But the burden of Chrysler's financial aid from the government remains heavy. Palmer added that those loans carry an average interest rate of 11%.
Chrysler's loan interest could see an increase this year. The automaker is waiting for word from the U.S. Department of Energy on an application for a $3.5 billion loan, which would fund new projects to improve the fuel economy of future vehicles.
Last week, neighboring automaker Ford said it would award its 40,600 UAW workers an average of $5,000 in profit-sharing. Chrysler has not paid profit-sharing since 2005, when its UAW workers received an average of $650.
Marchionne elected to the call the payment "performance award" rather than "profit-sharing", because it is difficult to mention profit sharing when you have a negative figure at the bottom line, he added.
Chrysler reported a net loss of $199-million for the fourth quarter, but an operating profit of $198-million when interest expenses and taxes are excluded.
“I want to express my gratitude to everyone for their hard work as we move forward towards the achievement of our goals,” Marchionne said in his e-mail. “You are the authors of this success. I want to thank you for your dedication, your creativity and your willingness to embrace change without which these results would not have been achieved. "
For the full year, Chrysler reported a net loss of $652 million, but a better-than-expected operating profit of $763 million. Additionally, the company still maintains key relationships with large clients, in sectors like transportation services and auto transport.
31 January 2011
Borders Group to delay payments to remain liquid
Borders Group announced on Sunday that it plans to delay paying some of its bills, which are due at the close of January, to help "maintain liquidity" while attempting to finish the restructuring of its debt.
Last week, Borders confirmed commitment for $550 million in financial assistance from General Electric Capital. The financing is subject to conditions that include securing $175 million from other lenders and resuming store closures.
The nation's second largest book chain laid off 45 employees, most of them at the company's headquarters. Last month, Borders delayed payments to publishers as it began seeking new financing. Compounding the situation, earlier this month the chain said payments would be delayed to "vendors, landlords and others."
Borders said in a statement on Sunday that the company "understands the impact of its decision on the affected parties, but ... is committed to working with its vendors and other business partners to achieve an outcome that is in the best interest of Borders and these parties for the long term."
Shedding light on the case is one St. Louis business attorney, "The company is taking some risky moves to become more financially solvent, which should provide a very interesting outcome."
The book chain has about 19,500 employees nationwide, mostly throughout 650 Borders and Waldenbooks stores. Borders has shown a loss of almost $800 million since 2006.
Bloomberg News reported that resources from GE does not factor out a possible bankruptcy reconstruction.
"They have a long way to go before seeing any major improvements" said a Salt Lake City business lawyer who is also following the case.
Last week, Borders confirmed commitment for $550 million in financial assistance from General Electric Capital. The financing is subject to conditions that include securing $175 million from other lenders and resuming store closures.
The nation's second largest book chain laid off 45 employees, most of them at the company's headquarters. Last month, Borders delayed payments to publishers as it began seeking new financing. Compounding the situation, earlier this month the chain said payments would be delayed to "vendors, landlords and others."
Borders said in a statement on Sunday that the company "understands the impact of its decision on the affected parties, but ... is committed to working with its vendors and other business partners to achieve an outcome that is in the best interest of Borders and these parties for the long term."
Shedding light on the case is one St. Louis business attorney, "The company is taking some risky moves to become more financially solvent, which should provide a very interesting outcome."
The book chain has about 19,500 employees nationwide, mostly throughout 650 Borders and Waldenbooks stores. Borders has shown a loss of almost $800 million since 2006.
Bloomberg News reported that resources from GE does not factor out a possible bankruptcy reconstruction.
"They have a long way to go before seeing any major improvements" said a Salt Lake City business lawyer who is also following the case.
21 January 2011
Meijer seeks settlement with insurance providers
After a court battle that revealed some of Meijer's secret payouts to Acme government officials, the Grand Rapids-based retailer has settled a lawsuit with its insurance providers.
Meijer solidified a settlement with American Home Assurance Co. out of New York - a company that sued in the summer of 2010. American Home Assurance said it was not responsible for more than $2.2 million of the $4.4 million in payments Meijer made to Acme officials that derived the retailer's illegal campaigning in Acme.
Insurance lawyers from both sides told the court judge that they need 30 days to finalize a mediation deal. The attorneys also declined to comment on any specifics of the settlement.
"The settlement is about as confidential as it can get" said one Oklahoma City insurance lawyer who has been tracking Meijer's legal issues from the beginning.
Last year, Meijer's top lawyers had mistakenly revealed the settlement amounts paid to Acme officials. The exposed legal documents revealed that Meijer paid the former Acme treasurer $2 million and another Acme supervisor $700,000.
New York's American Home argued that it was not responsible to pay for Meijer's public, $1.5 million settlement with five Acme commissioners and trustees because the retailer publicized "known false information" about the officials, failed to offer information about the lawsuit, and did not utilize it underlying coverage held by another entity.
As a response, Meijer counter-sued American Home Assurance as well as its insurance broker (Marsh U.S.A. Inc.)
"Meijer's legal disputes are panning out to be an interesting turn of events" said a Tucson insurance defense lawyer who is following the case.
The insurance claim dispute effectively resolved two lengthy mysteries in Meijer-Acme story: the 2007 legal settlement with the former Acme treasurer and the subsequent unannounced deal with the Acme supervisor.
Meijer later paid out $190,000 due to civil fines for violating State campaign finance regulations. The county prosecuting attorney awaits a state Supreme Court decision to see if he can prosecute unidentified individuals at Meijer who allowed the illegal activity.
Meijer solidified a settlement with American Home Assurance Co. out of New York - a company that sued in the summer of 2010. American Home Assurance said it was not responsible for more than $2.2 million of the $4.4 million in payments Meijer made to Acme officials that derived the retailer's illegal campaigning in Acme.
Insurance lawyers from both sides told the court judge that they need 30 days to finalize a mediation deal. The attorneys also declined to comment on any specifics of the settlement.
"The settlement is about as confidential as it can get" said one Oklahoma City insurance lawyer who has been tracking Meijer's legal issues from the beginning.
Last year, Meijer's top lawyers had mistakenly revealed the settlement amounts paid to Acme officials. The exposed legal documents revealed that Meijer paid the former Acme treasurer $2 million and another Acme supervisor $700,000.
New York's American Home argued that it was not responsible to pay for Meijer's public, $1.5 million settlement with five Acme commissioners and trustees because the retailer publicized "known false information" about the officials, failed to offer information about the lawsuit, and did not utilize it underlying coverage held by another entity.
As a response, Meijer counter-sued American Home Assurance as well as its insurance broker (Marsh U.S.A. Inc.)
"Meijer's legal disputes are panning out to be an interesting turn of events" said a Tucson insurance defense lawyer who is following the case.
The insurance claim dispute effectively resolved two lengthy mysteries in Meijer-Acme story: the 2007 legal settlement with the former Acme treasurer and the subsequent unannounced deal with the Acme supervisor.
Meijer later paid out $190,000 due to civil fines for violating State campaign finance regulations. The county prosecuting attorney awaits a state Supreme Court decision to see if he can prosecute unidentified individuals at Meijer who allowed the illegal activity.
11 November 2010
Chrysler CEO Says ‘Successful Transformation’ Is Under Way
Bloomberg
Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, has laid the “groundwork for a successful transformation,” the companies’ chief executive officer said today.
Sergio Marchionne, CEO of both Chrysler and Fiat, addressed workers in a message obtained by Bloomberg on the day the U.S. automaker raised its operating profit forecast for the year and said its net loss narrowed to $84 million in the third quarter.
“The changes we are bringing about are beginning to enter into the DNA of the company,” Marchionne said in the message. “You can tell by how the language and tone of conversations have changed, by the long hours people are working, and by the way teams form and function.”
Shawn Morgan, a Chrysler spokeswoman, confirmed the memo was sent.
“We knew when we began this reconstruction process that the road back would be a long one,” Marchionne said. “We’ve hit some key milestone and we’ve made progress in important areas. We have laid the groundwork for a successful transformation. I ask you to continue to have faith in your leadership.”
Sergio Marchionne, CEO of both Chrysler and Fiat, addressed workers in a message obtained by Bloomberg on the day the U.S. automaker raised its operating profit forecast for the year and said its net loss narrowed to $84 million in the third quarter.
“The changes we are bringing about are beginning to enter into the DNA of the company,” Marchionne said in the message. “You can tell by how the language and tone of conversations have changed, by the long hours people are working, and by the way teams form and function.”
Shawn Morgan, a Chrysler spokeswoman, confirmed the memo was sent.
“We knew when we began this reconstruction process that the road back would be a long one,” Marchionne said. “We’ve hit some key milestone and we’ve made progress in important areas. We have laid the groundwork for a successful transformation. I ask you to continue to have faith in your leadership.”
10 November 2010
Inside a $4.5M Court Award: Lawsuit questions Blue Cross' Power
The Detroit Free Press
Therapy program fight raises red flags about giant's reach
Blue Cross Blue Shield of Michigan -- a nonprofit created to keep health costs affordable -- has tried to derail physical therapy programs designed to save auto giants Ford and Chrysler millions of dollars annually, according to a review of hundreds of pages of e-mails and internal documents produced in a lawsuit against Blue Cross.Blue Cross, the state's largest health insurer, strongly denies the allegations.
Yet an Oakland County jury disagreed this summer, finding the insurer wrongfully interfered with physical therapy firm TheraMatrix's efforts to create a program for Chrysler. TheraMatrix was awarded $4.5 million. Blue Cross has appealed.
Now, antitrust investigators at the Michigan Attorney General's Office and the U.S. Justice Department are reviewing records in the case, along with other practices by the Blues. Competitors say Blue Cross is so powerful that it negotiates deals with hospitals others don't get -- driving up health costs to customers insured by other companies.
Together, these issues have put Michigan in a national spotlight.
The tale of Pontiac-based TheraMatrix's efforts to carve out a cost-saving physical therapy program for some of the nation's largest employers raises larger questions about whether relationships between insurers and hospitals are inflating the cost of health care and stifling competition critical to controlling costs under the nation's new health law.
"It's really an exposure of the entire health care situation in this state," said Robert Whitton, TheraMatrix's CEO.
Inside a $4.5M court award
As health care costs soared nationwide, a small Michigan firm gave Ford a proposal to cut its physical therapy costs. The automaker signed up for an instate pilot program, which was so successful Ford expanded it last year to cover about 390,000 employees, retirees and their families nationwide.
Yet the cost-saving program created by Pontiac-based TheraMatrix has come under attack from Blue Cross Blue Shield of Michigan.
Court records allege Blue Cross used its position as the state's dominant insurer to try to crush TheraMatrix as it worked also to sign up Chrysler and General Motors. A USA Today review of hundreds of pages of e-mails and internal documents that are part of a lawsuit TheraMatrix filed against Blue Cross indicates that TheraMatrix's efforts to carve out a niche market in managing outpatient physical therapy costs was seen as a threat by officials at Blue Cross and by some Michigan hospitals.
"They tried to destroy us," said Robert Whitton, a physical therapist who founded TheraMatrix in 1981. TheraMatrix has cut Ford's physical therapy costs by about half, Whitton says, saving millions of dollars annually. Under Blue Cross, Ford's costs averaged $745,000 a month just in Michigan, he said. "We shouldn't have been in this position for creating a program that helped save health care costs."
As health care costs soared nationwide, a small Michigan firm gave Ford a proposal to cut its physical therapy costs. The automaker signed up for an instate pilot program, which was so successful Ford expanded it last year to cover about 390,000 employees, retirees and their families nationwide.
Yet the cost-saving program created by Pontiac-based TheraMatrix has come under attack from Blue Cross Blue Shield of Michigan.
Court records allege Blue Cross used its position as the state's dominant insurer to try to crush TheraMatrix as it worked also to sign up Chrysler and General Motors. A USA Today review of hundreds of pages of e-mails and internal documents that are part of a lawsuit TheraMatrix filed against Blue Cross indicates that TheraMatrix's efforts to carve out a niche market in managing outpatient physical therapy costs was seen as a threat by officials at Blue Cross and by some Michigan hospitals.
"They tried to destroy us," said Robert Whitton, a physical therapist who founded TheraMatrix in 1981. TheraMatrix has cut Ford's physical therapy costs by about half, Whitton says, saving millions of dollars annually. Under Blue Cross, Ford's costs averaged $745,000 a month just in Michigan, he said. "We shouldn't have been in this position for creating a program that helped save health care costs."
A different picture
Blue Cross denies trying to hurt TheraMatrix's business.
"The picture that they're trying to paint is the big whatever giant with a chainsaw in his hand coming down on the little guy," said Jeffrey Rumley, Blue Cross' general counsel. "I just don't buy into that too easily."
Court records depict Blue Cross -- a nonprofit created under Michigan law to provide affordable health care -- as working with a major hospital to stop expansion of TheraMatrix's program. They also reveal that Blue Cross barred TheraMatrix from the insurer's medical provider network, which covers most Michigan patients.
An Oakland County jury awarded TheraMatrix $4.5 million in July, finding that Blue Cross breached an agreement with TheraMatrix to process claims for its Ford program, then wrongfully interfered with TheraMatrix's efforts to launch a Chrysler program. Blue Cross has appealed.
Last month, the U.S. Justice Department sued Michigan's Blue Cross, accusing the insurer of a different kind of anticompetitive behavior: paying hospitals higher prices for medical care in exchange for a promise they would charge competing insurers as much as 40% more than they charge Blue Cross. Blue Cross says the suit is without merit.
Blue Cross denies trying to hurt TheraMatrix's business.
"The picture that they're trying to paint is the big whatever giant with a chainsaw in his hand coming down on the little guy," said Jeffrey Rumley, Blue Cross' general counsel. "I just don't buy into that too easily."
Court records depict Blue Cross -- a nonprofit created under Michigan law to provide affordable health care -- as working with a major hospital to stop expansion of TheraMatrix's program. They also reveal that Blue Cross barred TheraMatrix from the insurer's medical provider network, which covers most Michigan patients.
An Oakland County jury awarded TheraMatrix $4.5 million in July, finding that Blue Cross breached an agreement with TheraMatrix to process claims for its Ford program, then wrongfully interfered with TheraMatrix's efforts to launch a Chrysler program. Blue Cross has appealed.
Last month, the U.S. Justice Department sued Michigan's Blue Cross, accusing the insurer of a different kind of anticompetitive behavior: paying hospitals higher prices for medical care in exchange for a promise they would charge competing insurers as much as 40% more than they charge Blue Cross. Blue Cross says the suit is without merit.
A battle over business
TheraMatrix's battles with Blue Cross go back to 2005. That's when Ford decided to try to save money by carving out physical therapy benefits from an employee health plan administered by Blue Cross. That February, Ford hired TheraMatrix to manage that aspect for its Michigan employees.
At the time, physical therapy spending for all Michigan Blue Cross customers was increasing by almost 17% a year, an internal Blue Cross report shows.
TheraMatrix saved Ford money by creating a network of physical therapists willing to accept $68 per visit --significantly less than what Ford had been paying under Blue Cross. TheraMatrix also reviews treatment plans so patients don't get too many or too few visits.
But the project nearly was derailed when Blue Cross said it couldn't process claims for TheraMatrix, records show. About the same time, TheraMatrix alleges, Blue Cross decided to create its own discount physical therapy network.
Ford kept TheraMatrix; the program began in August 2005.
Michigan hospitals, which provide outpatient physical therapy, weren't happy about the lost business, records indicate.
TheraMatrix's battles with Blue Cross go back to 2005. That's when Ford decided to try to save money by carving out physical therapy benefits from an employee health plan administered by Blue Cross. That February, Ford hired TheraMatrix to manage that aspect for its Michigan employees.
At the time, physical therapy spending for all Michigan Blue Cross customers was increasing by almost 17% a year, an internal Blue Cross report shows.
TheraMatrix saved Ford money by creating a network of physical therapists willing to accept $68 per visit --significantly less than what Ford had been paying under Blue Cross. TheraMatrix also reviews treatment plans so patients don't get too many or too few visits.
But the project nearly was derailed when Blue Cross said it couldn't process claims for TheraMatrix, records show. About the same time, TheraMatrix alleges, Blue Cross decided to create its own discount physical therapy network.
Ford kept TheraMatrix; the program began in August 2005.
Michigan hospitals, which provide outpatient physical therapy, weren't happy about the lost business, records indicate.
A string of urgent e-mails
By early 2006, Chrysler, which also used Blue Cross to administer its health plan, was looking to hire TheraMatrix. This set off a series of urgent e-mails among top Blue Cross executives, court records show.
David Kee, head of Blue Cross' Chrysler account, warned: "we need to do something fast and dramatic." His strategy included showing that Chrysler could lose its hospital discounts if it went with TheraMatrix. "I think a carefully worded document, perhaps from the hospitals themselves, could be valuable," he wrote.
About a week later, e-mails show, such a letter was being offered by Beaumont Hospitals Vice President Mark Johnson -- who had been a Blue Cross vice president before joining the metro Detroit hospital system in 2004.
Blue Cross Vice President Kim Sorget said in reply that Kee could "use the letter as leverage with his customer to not proceed with the carve out."
In August, after the TheraMatrix trial, Blue Cross rehired Johnson as a vice president. Blue Cross said Johnson, Kee and Sorget were unavailable for comment.
Beaumont spokesman Mike Killian said the hospital system had a financial duty as a nonprofit to stop honoring the discounts if necessary. When Ford went with TheraMatrix, it cost Beaumont $400,000 a year, Johnson testified at trial. Beaumont facilities would have lost $2 million a year if Chrysler and GM had followed suit, he said.
In spring 2006, Chrysler and the UAW agreed TheraMatrix would start managing physical therapy for the automaker around July 1.
Two weeks later, Blue Cross kicked TheraMatrix out of the insurer's provider network, which meant a huge loss of patients and doctor referrals.
"It was devastating," said TheraMatrix President Bob Read. Blue Cross controls more than 60% of Michigan's insurance market, covering nine times as many people as its closest competitor.
Blue Cross refused for more than a year to let TheraMatrix back into its provider network, and the Chrysler program became critical to TheraMatrix's survival, Whitton said.
Beaumont Hospitals gave Blue Cross the letter about potentially canceling discounts for Chrysler and Ford on June 26, 2006.
The next month, Chrysler decided not to go forward with the program. Chrysler spokesman Michael Palese said the company had no comment.
Blue Cross, in court records, contends TheraMatrix hasn't proven the insurer's actions influenced Chrysler's decision.
Blue Cross let TheraMatrix back into its provider network in August 2007, but a year later was again threatening to kick it out. The offense: TheraMatrix was discussing a potential program with GM, a letter sent to TheraMatrix shows.
Whitton said that's when TheraMatrix sued Blue Cross.
Neither Chrysler nor GM went ahead with a TheraMatrix program.
The U.S. Justice Department also is reviewing records, a June e-mail to TheraMatrix shows.
Both agencies said they can neither confirm nor deny any possible investigation.
By early 2006, Chrysler, which also used Blue Cross to administer its health plan, was looking to hire TheraMatrix. This set off a series of urgent e-mails among top Blue Cross executives, court records show.
David Kee, head of Blue Cross' Chrysler account, warned: "we need to do something fast and dramatic." His strategy included showing that Chrysler could lose its hospital discounts if it went with TheraMatrix. "I think a carefully worded document, perhaps from the hospitals themselves, could be valuable," he wrote.
About a week later, e-mails show, such a letter was being offered by Beaumont Hospitals Vice President Mark Johnson -- who had been a Blue Cross vice president before joining the metro Detroit hospital system in 2004.
Blue Cross Vice President Kim Sorget said in reply that Kee could "use the letter as leverage with his customer to not proceed with the carve out."
In August, after the TheraMatrix trial, Blue Cross rehired Johnson as a vice president. Blue Cross said Johnson, Kee and Sorget were unavailable for comment.
Beaumont spokesman Mike Killian said the hospital system had a financial duty as a nonprofit to stop honoring the discounts if necessary. When Ford went with TheraMatrix, it cost Beaumont $400,000 a year, Johnson testified at trial. Beaumont facilities would have lost $2 million a year if Chrysler and GM had followed suit, he said.
In spring 2006, Chrysler and the UAW agreed TheraMatrix would start managing physical therapy for the automaker around July 1.
Two weeks later, Blue Cross kicked TheraMatrix out of the insurer's provider network, which meant a huge loss of patients and doctor referrals.
"It was devastating," said TheraMatrix President Bob Read. Blue Cross controls more than 60% of Michigan's insurance market, covering nine times as many people as its closest competitor.
Blue Cross refused for more than a year to let TheraMatrix back into its provider network, and the Chrysler program became critical to TheraMatrix's survival, Whitton said.
Beaumont Hospitals gave Blue Cross the letter about potentially canceling discounts for Chrysler and Ford on June 26, 2006.
The next month, Chrysler decided not to go forward with the program. Chrysler spokesman Michael Palese said the company had no comment.
Blue Cross, in court records, contends TheraMatrix hasn't proven the insurer's actions influenced Chrysler's decision.
Blue Cross let TheraMatrix back into its provider network in August 2007, but a year later was again threatening to kick it out. The offense: TheraMatrix was discussing a potential program with GM, a letter sent to TheraMatrix shows.
Whitton said that's when TheraMatrix sued Blue Cross.
Neither Chrysler nor GM went ahead with a TheraMatrix program.
The U.S. Justice Department also is reviewing records, a June e-mail to TheraMatrix shows.
Both agencies said they can neither confirm nor deny any possible investigation.
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