By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
By 1989, investment returns were sagging throughout the United States. In Phoenix, the real estate bubble burst and the Resolution Trust Corporation had come to town.
As an architect, Randy Ewers was doing well in the Valley of the mid-1980s. He left Gosnell Development in 1985 to start his own architectural design business.
By then, Karen had already left the state Auditor General's Office after working there for more than six years. She was taking care of her toddler, Alexis, while she helped out with her parents' business, Naughton Jewelry.
When Randy left Gosnell, the Ewerses decided to continue buying health insurance from CIGNA. At the time, families who moved from a group plan to individual coverage were given "Non-Group" policies, known commonly as "conversion" policies.
Not long after Ryan's birth in early 1986, the real estate economy began to flag. CIGNA's investments began to tank. Buildings stopped getting built, so architects lost work. As people lost work, jewelry sales slowed.
CIGNA and the Ewerses were pretty much in the same sinking boat.
CIGNA began trimming benefits from all of its policies. Workers were laid off, clinics scaled back. Karen Ewers watched the decline as she took Ryan in for therapy at CIGNA clinics in the Valley.
On July 17, 1989, Karen and Randy Ewers received a letter explaining that CIGNA would no longer cover therapy benefits for pediatric patients with developmental disabilities. CIGNA stopped paying for Ryan's therapy in October of that year.
The change was devastating to the Ewerses and other families in their situation.
And there was something strange about the change, too. Policy changes had always been made January 1. They had never had a change come in the fall.
Karen Ewers would remember that tiny detail a decade later as she combed through Department of Insurance records.
By 1990, policyholders were becoming increasingly irate with insurance companies. In particular, people with conversion policies felt they were getting bait-and-switched. They would leave a group with full benefits, continue a conversion policy with those same benefits and then quickly have many of those benefits removed.
In 1991, the Arizona Legislature passed a law saying insurance companies could no longer make any reductions in the benefits given in conversion policies.
Insurance companies responded with an ingenious tactic. Companies would lure families with no health problems out of conversion policies by offering them cheaper rates in medically underwritten individual policies. Then the premiums would be increased on the unhealthy people left in the plan. Families without expensive pre-existing conditions left for the other less-expensive plans.
Over time, the only families left in the original plan were those who couldn't find insurance elsewhere.
Then premiums got jacked up some more. Insurance regulators call such policies "death spirals."
On October 25, 1995, the Ewerses received notice of their new monthly premium for 1996 -- nearly $800 a month.
Karen called CIGNA member services. She asked the premium rates for a family of four. Marjean Gurule in customer service told her it would cost $365.
When Karen asked why her family's rates were so high, she was told that hers was the rate for the "individual conversion policy."
Up until then, Ewers had no idea there was any difference between a normal individual plan and an individual conversion plan.
In the six years that followed, she would become a very reluctant expert on the topic.
A few weeks later, Karen Ewers wrote a complaint letter to CIGNA. She sent a copy of her 1987 schedule of benefits. The schedule was identified as "CIGNA Healthplan of Arizona, Inc. Individual Plan" with the document code IND86-244IP. In her letter she asked how she could have a "conversion plan" when her schedule said "individual plan." She also asked why her documents said she had an individual plan in 1986, when CIGNA didn't introduce individual plans until 1987.
Ewers knew Clyde Wright from her time serving on the board of the Arizona chapter of the March of Dimes. He wasn't any employee. He was the president of CIGNA Healthcare of Arizona.
She asked if she could speak to someone else. She didn't want to mix her charity work with a personal issue. Leyva said no.
Ewers and her husband met Wright on January 12, 1996. Wright, the Ewerses say, spent much of the meeting asking what documents the Ewerses still had. Frustrated, Karen Ewers told Wright: "Look, you know I'm an anal accountant, I've kept everything you've sent me." Then Ewers asked Wright: "Why are you asking me? You mailed the documents!"
Wright declined an interview request from New Times.
Ewers says Wright suggested the family bring all the insurance documents they had to a meeting with Wright and CIGNA attorneys.
In February, Wright wrote back that, after a review of the Ewerses' records, CIGNA believed the Ewerses had been properly placed on an individual conversion policy and that no refunds were due.
The Ewerses asked for copies of those records.
CIGNA didn't respond.
The Ewerses' attorney wrote a letter to CIGNA in March asking for a copy of the Ewerses' application for insurance and, also, "a copy of each and every document referred to in your letter of Feb. 22, 1996, stating: 'Our records reflect that you were covered under . . . an individual conversion plan effective June 1, 1985, and that you and your family have remained on this plan continuously since that time.'"