In 1991, James McElveen fell 30 feet from a waterfall and broke his back. He was employed by a small business and had no medical insurance. His lifetime friend, Benny Milligan, was with him when the fall occurred. Benny took James to the emergency room. Moved by his friend's severe injuries and pain and suffering and realizing that James did not have insurance, Benny switched IDs with James in

Question

the hospital emergency room. James required surgery to fuse his back to avoid what doctors said would have been certain paralysis. The cost of the surgery and hospitalization was $41,107.45 . Neither James, employed as a mechanic, nor Benny, employed as a painter, could have paid for the surgery and follow-up care. Benny's employer's insurance paid for the surgery because the hospital took the information from Benny's ID found in James' pockets. While Benny was contemplating telling his employer, someone notified the insurance company of the switch. Benny, James, and Benny's wife, Tammy Milligan were charged and convicted of mail fraud, wire fraud and conspiracy. Tammy, because of the Milligans' three young daughters, is serving her sentence through home confinement, Benny is serving 9 months and James is serving 7 months. All three were serve three years on probation and pay restitution. Benny states, "I know what I did was wrong. But I look back on it, and I feel that I had to do it at the time. I don't feel like I'm a criminal in the sense of rapers, muggers and murderers." Benny said he did not understand that a hospital has an obligation to treat someone who is dying. Friends testified that as they were racing James to the hospital they told Benny that hospitals in the area had routinely refused to provide medical treatment. Benny said he wanted to tell his employer, but he was afraid he would be fired and then be stuck with the bill. Tammy adds that the government is right to demand restitution but wrong to imprison them. James asked the judge if he could go to prison for all three of them, "I would be lost without my friendship with Benny. I probably would be dead."
a. Benny and James committed an illegal act. Was it unethical?
b. What punishment is appropriate in the case?
c. If you were Benny's employer, what would you have done?

Answer 1

a. It was wrong and illegal to defraud the insurance company. It was taking the costs of the medical care, something that did not belong to James. Although the case evokes a great deal of sympathy, we all pay the cost when someone who is not insured enjoys payment by an insurer. The harm comes in the form of higher payments for all of us. Benny, James and Tammy all had to lie and sign sworn statements that were untrue in order for James' surgery to be covered under Benny' insurance. They committed their acts in the name of something very important, but it was wrong.

Benny defined the problem incorrectly: it was either switch IDs or have his friend suffer. In fact, there were alternatives, but Benny did not think them through. James would have received his emergency treatment at the first hospital. If the surgery was not something necessary to preserve his life, he would have been transferred to another hospital, such as a county hospital, where care is provided without regard to whether the individual has insurance. No one was asking questions about the care. They made assumptions and committed fraud to be certain there was medical care.

b. While the fact that there was lying and fraud involved cannot be changed, the circumstances, as well as Benny's misunderstanding about the availability of medical care, should have some impact on the punishment for the three individuals. It is proper and fair to require reimbursement. However, Benny's lack of criminal intent should be considered as a factor in determining whether jail time is appropriate. Some other form of punishment such as restitution along with community service or the funding of a program of medical insurance coverage for those without would seem to suit the situation better than imprisonment.

c. Benny's employer probably had little choice but to report the problem because the impact on its insurance costs was perhaps tremendous because of the extensive nature of the injury and care. The employer could not be expected to lie to the insurer about Benny's presence at work after such major surgery. In short, the employer could not be asked to participate in the fraud. However, the employer could have served as a character witness if Benny was a good and stable employee. Further, the employer might have been more understanding about Benny's motivations. On the other hand, from the employer's perspective, it is difficult to send a strong message to employees about insurance fraud if Benny is retained.