Despite its dismal record insuring state workers, Intergroup has been welcomed back with open arms. The move has some employees seething.

Kertesz's reassurances didn't mollify the Smiths; they didn't want Intergroup. Harvey Smith says that when Knight was asked if there was any way to change the decision, she said, "'This is absolutely set in concrete, there's no way you can change it.' We asked, 'No way?' And she said, 'Well, you can go to the Legislature if you want to.' And Ruth said, 'Okay, I will.'"

Knight refused to comment for this article.
But after the professors began raising hell--calling reporters, legislators and the governor--the state reversed itself. On June 10--three months after Intergroup was awarded the bid--DOA told the professors that Blue Cross would share the contract.

In a May 2 letter, DOA had told Intergroup that state employees currently on Blue Cross' indemnity plan would automatically go into Intergroup's program. But on May 29, Intergroup wrote to the state Procurement Office and proposed sharing the indemnity contract with Blue Cross. On June 10, the state formally agreed to Intergroup's proposal.

Blue Cross officials balked, saying they first heard they would share the contract from a DOA press release.

In a letter received the same day, DOA informed Blue Cross that the state has a right to award multiple contracts for up to 120 days after the bidding deadline.

Blue Cross has since filed a protest, saying it didn't intend to offer coverage in concert with another insurer and disputing the state's interpretation of the 120-day clause. The protest was rejected by the Procurement Office, and it is now before DOA director Rudy Serino. If Serino also rejects the protest, it will go before an administrative law judge.

Smith and others at the May 21 meeting say Intergroup VP Jerry Kertesz told them that Intergroup had no new complaints against it. But the Department of Insurance has a hefty file of complaints lodged against Intergroup since it was sold to Foundation.

The company has racked up 250 resolved complaints in the past three years. Intergroup has paid $238,778 to settle those claims. The company's position was upheld only 46 times out of the 250 closed disputes.

By way of contrast, the $57,480 fine imposed on Intergroup involved about 200 complaints.

Most of the complaints aren't as serious as Ana Rubi's, but there is no doubt that some of Intergroup's customers are frustrated.

Take, for instance, the letter from the parents of Nico Lorenzen, a 3-year-old who needed tubes in his ears. It's a common procedure for kids with chronic ear infections, and the Lorenzens' pediatrician recommended it. But their claim got stuck in Intergroup's system for five months.

The Lorenzens' pediatrician recommended they file a complaint with the Department of Insurance. They did, and the procedure was approved.

Lisa Lorenzen, Nico's mother, says she's remained with Intergroup because she likes the doctors, but she doesn't know why the surgery was ever denied.

"One day, they said, 'Absolutely not,' and the next, they said, 'Sure, why not?' I just didn't understand," she says.

Some of the complaints are almost comical. One Intergroup claims processor had trouble getting her employer to pay her claim until she complained repeatedly to state regulators.

"I have to, through gritted teeth now, reassure Intergroup patients every day that they have not made a mistake in selecting Intergroup as their health-care insurer," Monica Thomas wrote. "Intergroup is an excellent health insurer, but how can I confidently assure Intergroup patients that Intergroup really cares about them when Intergroup doesn't care about me--and I'm a patient myself!"

Intergroup also has far fewer people on indemnity plans than the 15,000 or 20,000 the Smiths say they were told. According to Intergroup's bid for the state contract, only 108 people in Arizona (of 47,383 Intergroup customers at the time) are covered by Intergroup's straight indemnity plan. The rest are enrolled in HMOs.

These aren't the only things that concern the Smiths. It's the little things as well; when Harvey Smith tried to call the 800 line "dedicated" for indemnity, the operator didn't know what he was talking about, he says.

"Now he's [Intergroup's Kertesz] contrite, but he lied to us, same as last time," Smith says.

"I'm a pretty healthy person," Smith adds. "This isn't for my part so much. I'm just a 'worried well.'"

Intergroup won't comment on individual cases. But the company points out that its membership has grown, from 41,279 to more than 50,000 members in the past four years. Intergroup is also accredited by the National Committee for Quality Assurance, a board which reviews HMOs nationwide. And the firm's spokeswoman, Donna Kreutz, cites state surveys which show customer satisfaction with Intergroup at 87 percent and 92 percent in its northern and southern regions, respectively.

But those figures are for Intergroup's HMO. What Kreutz doesn't mention is that another DOA study of Intergroup's indemnity plan found that 31 percent was dissatisfied with the program. By comparison, only 5 percent of Blue Cross/Blue Shield's customers was dissatisfied with its indemnity product.

Consumer's Checkbook magazine, published by the Center for the Study of Services, ranked Intergroup along with other Arizona health plans--CIGNA, FHP, Humana, and Partners--in 1996. Its survey found that 87 percent of respondents did rate Intergroup good or better for overall quality. But Intergroup's scores for specific care issues--the ones most likely to affect people who need lots of service, as opposed to the healthy majority in HMOs who rarely ever use its benefits--were mainly in the 80s and 70s. Intergroup also had the highest "disenrollment"--27 percent, more than double the nearest competitor.

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