Anatomy of a layoff: How an embattled New York health insurer broke the news

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.”

Looking back, Gigante said, those first meetings with Cognizant foreshadowed Tuesday's events. After Blackwell became involved last week, Emblem moved quickly.

“It all points to this being rushed at the last minute to get this out,” Gigante said. “They weren't prepared.”

Employees received the emailed video from Ignagni and an invite to either a 3 p.m. or 3:30 p.m. meeting; attendees of the latter meeting were let go. In the presence of human resources personnel, William Lamoreaux, Emblem's chief operating officer, delivered the news via teleconference from the insurer's headquarters at 55 Water St.

Gigante has worked for Emblem for nine years. While frustrated by how workers were told about the new contract, he is joining Cognizant.

“I have three sons, two with autism, and I'm not in a position to say I don't want the job. These are the intangibles management doesn't see,” he said.

Ignagni, a former director of the AFL-CIO's Department of Employee Benefits, thanked staffers for the work they've done and pointed to resources to help them find their next jobs.

“We know that this is a very difficult day because we're going to be saying goodbye to close friends and colleagues to whom we owe a great deal,” she said. “I want to assure you we have worked very hard to maintain as many jobs as we can and also want to assure you that we, starting with me, are available to answer questions, discuss retraining, or simply to talk.”

Blackwell, however, led about two dozen EmblemHealth employees on a protest in front of the insurer's Ninth Avenue office on Tuesday afternoon. She wore a crème-colored blazer adorned with a flag pin and donned oversize sunglasses. A string of pearls hung around her neck. The labor attorney from Sarasota, Fla., passed out materials from the advocacy group Protect U.S. Workers. "Protect U.S. Workers is dedicated to victims who were displaced by foreign workers, advocates who want America to protect and care for the American workers and for those who fear for the future of the American dream of Americans," read a pamphlet passed out at Tuesday's protest.

At an Orlando, Fla., rally earlier this year, Blackwell introduced Republican presidential candidate Donald Trump, and is now running for a vacant seat in the Florida House of Representatives, the (Sarasota) Herald-Tribune reported earlier this month.

In an interview, Blackwell said she sets up conference calls to answer workers' questions and reviews their severance agreements for free. She pays out-of-pocket for plane tickets to protests; and plans to be in Chicago later this week to protest in front of Abbott Labs. Blackwell said she plans to create a nonprofit to further her work and attract private funding.

“I just do this because when you know what I know and see what I see and what I hear every day, all day long, it's awful,” she said. “I do it because I care and I love this country.”

Meanwhile, Emblem employees are being asked to share information about how the company operates with both its existing workers and Cognizant staff, which the company insists doesn't represent one-to-one training of a worker's replacement. "It truly is a knowledge transfer, it's not training," an Emblem spokeswoman said.

"Anatomy of a layoff: How an embattled New York health insurer broke the news" originally appeared on the website of Crain's New York Business.