Dr. Kenneth W. Smith, A. M. Schmidt and Marsh & McLennan on Rising Sickness Claims at the Manville Plant (1956)

Three one-page letters of June 1956 about the "A & S" (accident and sickness) insurance for workers at J-M's Manville, New Jersey, plant. On June 18 Dr. Kenneth W. Smith, J-M's medical director, told A. M. Schmidt, J-M's insurance manager, that benefits paid had risen to a loss ratio of 111.4 percent and suggested asking the insurance carrier to review the cases: if it could point to "one or more types of diseases or accidents" causing the losses, the medical department might be able to help. Schmidt passed the request almost word for word to the insurance broker Marsh & McLennan the next day, and on June 21 Stephen J. O'Neill of Marsh & McLennan replied that he had sent it to Norman Williams of the Travelers.

What it shows

J-M's medical director was watching the cost of the plant's sickness insurance and wanted the carrier to find out which illnesses were driving it. The fact also describes later letters (August and September 1956) in which Smith asked why Travelers was paying sickness benefits to workers with asbestosis, an occupational disease, and Travelers explained that it advanced such payments and J-M reimbursed it when a claim proved occupational; those letters are not in this file.

In Johns-Manville's chronology

Johns-Manville's own chronology of what the company knew describes this document as follows:

Dr. Kenneth Smith writes to A.M. Schmidt, 6/18/56, that there has been a recent increase in the A&S benefits paid out at the Manville plant. The loss ratio there is 111.4%. Dr. Smith believes that Travelers should be able to help J-M improve this insurance picture. He suggests that J-M contact Travelers for help. Perhaps Travelers can review the cases and inform J-M if one or more diseases/accidents are causing such a loss. Pursuant to Dr. Smith's request, A.M. Schmidt contacts Marsh/McLennan (6/19/56) and then Marsh/McLennan contacts Travelers (6/21/56).

Letter from Kenneth Smith to A.M. Schmidt, 8/28/56, in which Smith writes that Schmidt had given him a list of claims indicating that J-M's experience at Manville plant was very poor (loss ratio 118%). Smith notes that he has observed that Elsie Mesaros was being paid a health and accident compensation by Travelers but that her illness was related to occupational exposure. He referred to another asbestotic individual on the list of claims submitted earlier in the year to whom Travelers paid insurance benefits for 23 weeks. "Asbestosis is universally recognized as an occupational disease. Therefore, I wonder if you could find out why Traveler elected to pay benefits for these claims rather than refusing them, because the employee should receive benefits under the workman's compensation laws."

In a letter dated 8/29/56, Schmidt wrote to S.J. O'Neil at Marsh & McLennan asking the same question in almost the same language. F.G. Chapman, (Travelers Examiner) writes to Underwriter Daly about Schmidt's letter to O'Neil. Chapman replies on 9/12/56, stating that it has been a longstanding practice at Manville for Travelers to advance payment on a claim of possible occupational origin. It has been a satisfactory arrangement with J-M making reimbursement if the claim was found to be occupationally related.