Vito Gigante's first inkling that trouble was afoot at EmblemHealth came three weeks ago, when the tech worker was asked to attend a meeting with employees of Cognizant, a Teaneck, N.J., IT services and outsourcing consultant.
“All of a sudden we were given invites to meetings to transfer knowledge base,” he said. "They didn't say why, they didn't say who, we were just told to start doing it. It was done very covertly."
Then on Tuesday, the full picture of what was happening became clear. He was among 250 employees issued lay-off notices, and ultimately was offered a role with Cognizant. The news landed in everyone's inboxes in the form of a video from CEO Karen Ignagni.
“These decisions will impact our workforce over the course of the next year,” Ignagni said in the video. “Over the next 12 months, we will be modernizing and automating. This move to a modernized platform will no longer require the level of staffing we now have to maintain the old system.”
In an even-keeled tone, honed during 22 years of leading America's Health Insurance Plans, Ignagni delivered the message that the insurer had conducted a thorough evaluation of its options. Emblem's conclusion: Modernizing technology and automating processes would help reverse huge losses. Gigante, a 47-year-old programmer, would ultimately be “rebadged” with the IT consulting firm.
The announcement ended months of rumors and speculation about the future of the company. Emblem's insurers, GHI and HIP, had a combined net loss of $113 million in 2015, a significant amount, but still less than the combined $485.8 million net loss recorded in 2014. Last year, Ignagni left her high-powered job in Washington, D.C., as head of America's Health Insurance Plans, the industry's lobbying group, to lead a turnaround.
Emblem's modernization involves bringing in TriZetto, a subsidiary of Cognizant.
“We came to realize that building our own technology would require hundreds of millions of dollars and require time that we didn't have,” Ignagni said.
The way in which Emblem went about the layoffs left many former employees angry. They have turned to Florida labor attorney Sara Blackwell to fight the changes. Blackwell, who has represented workers around the country whose jobs have been outsourced, said she became involved last week. She has fought a string of these battles around the country with employees of companies, including life insurers New York Life and MassMutual. Her work received national attention when Blackwell represented ex-Disney employees who claimed in a lawsuit that Disney, which also used Cognizant, replaced current workers with foreign H1-B visa holders, the New York Times reported. She uploaded Ignagni's video to YouTube with the title, “Super rich American CEO fires Americans.”