GM591: Leadership and Organizational Behavior
Instructor: Michael McCarthy

Submitted By: Cassandra Norton
DSI#: D97056313
Date: November 8, 2009
Email: cassie.norton@comcast.net

Overview of Organization
The organization that will be the focus of my discussion in my final paper is Health Care Service Corporation (HCSC). HCSC is the largest customer-owned health benefits company in the United States and is the fourth largest health insurer in the country overall. The organization is an independent licensee of the Blue Cross and Blue Shield Association and is the parent company to four regional Blue health plans: Blue Cross Blue Shield of Illinois, Blue Cross and Blue Shield of Texas, Blue Cross and Blue Shield of New Mexico, and Blue Cross Blue Shield of Oklahoma. HCSC’s line of business is to provide group and individual health plans, managed care programs, and Medicare supplemental coverage to its members. Beginning in the late 1990’s, the corporate culture started to deteriorate and employee morale took a turn for the worst amidst public claims of unethical business practices and poor corporate citizenship.
In 1998, Blue Cross/Blue Shield of Illinois (BCBSIL) was involved in a public scandal and pled guilty to eight felony counts of Medicare fraud and agreed to pay $4 million in criminal fines and $140 million in a civil settlement for lying to federal auditors, destroying documents and mishandling claims. The company’s reputation suffered grievously and it seemed as if overnight BCBSIL went from a highly-regarded organization to an unscrupulous vulture in not only the public’s eyes, but also in the eyes of their employees. Not only did the public’s perception of BCBSIL become tarnished, the whole affair took a toll on employee morale as workers started to view the leadership team as disingenuous and untrustworthy. Employees began to leave the company and some of the worker’s who remained may not have left the organization physically, but started separating themselves mentally from the company as they became disengaged with their work and uninterested in accomplishing corporate goals as they no longer believed in the company.
I started working for the company in 2006 as a Sourcing/Acquisition Manager, but left in December of 2008 to pursue other opportunities. During my orientation I can remember the leadership talking about how much the valued HCSC’s ethics programs and ever-so casually mentioned that the reason there was so much focus on this area was to prevent a reoccurrence of the events leading up to the scandal in 1998. I guess I hadn’t done enough research on the company prior to accepting my position there because I was oblivious to what events they were referencing. Later in the day there was a Q&A session in which the various presenters posed questions to us, the audience, and we were to provide the correct response. The Ethics team took the floor and asked whether the company had ever committed a felony and was subsequently sanctioned by the government. Most of the audience responded by saying No, but we stood corrected and were told that the company had been found guilty back in 1998 of Medicare fraud. Most of us were floored and I remember thinking at that moment – what have I gotten myself into by working for this company, but I tried to remain open-minded and decided that I would remain positive and reserve judgment until after I witnessed for myself what the corporate culture was like and whether the company was still a good choice for places to work.
Prior to this period, most employees considered themselves fortunate to work for the company and regarded it as a highly-ethical place to work. There was always a large turnout to company sponsored events and people really believed in the company’s mission. Employee surveys administered during this timeframe generally yielded positive results and employees noted that they considered the company a “highly ethical company” and that they believed in their leadership team. The employee surveys that were taken after the scandal were a far cry from previous years. The most recent survey that I was a part of in 2007-2008, still indicated that the company was struggling with how employees viewed leadership and whether employees believed that they worked for an ethical company. Although I was not at the company during the scandal nor the years immediately following, I have heard stories from other long-term employees about what the company was like before the scandal. Most employees had nothing but positive things to say about the work environment, the quality of management, and their belief and support of the direction leadership was taking the company to. There is still a big contrast between that period and now as some employees don’t trust their managers, feel that the company is not interested in them or their careers. Furthermore many employees believe that the mandatory Ethics training program is nothing more than propaganda and a waste of time. They believe the extensive ethics programs are a result of government requirements/conditions imposed on the company because of the fraud violation. Initial Problem Statement
(Rebuilding HCSC’s corporate culture after a public scandal)
Today – HCSC employees are less trusting, having witnessed fraud and corporate scandals. This in-turn affects employee morale and the overall corporate culture. Although we can chart HCSC’s progress and journey towards rebuilding the organization’s reputation and image, there is still discord amongst its workers and leadership teams. If employees feel they can't trust the people running their companies, then more than productivity will suffer. What should HCSC have done to minimize the damage from the corporate corruption scandal? How can the company restore a sense of trust amongst its employees?