The landmark consumer protection law, the Fair Credit Reporting Act (FCRA) was passed in 1970. The FCRA, which went into effect in 1971, originally exempted disclosure of medical information by data-gathering organizations such as the Medical Information Bureau (MIB), although it did direct disclosure to consumers of information that would be detrimental to a person’s credit rating. In 1973, the U.S. Senate Banking Committee, Subcommittee for Consumer Credit, held hearings on the use of medical information for insurance underwriting.

During these hearings, the Senate subcommittee chairman, Senator William Proxmire, questioned Joseph C. Wilberding, executive director and general counsel of the Medical Information Bureau (MIB). Mr. Wilberding testified that the individual consumer files collected and exchanged by MIB, “included data on sexual deviation, drug addiction, alcoholism and such hazardous hobbies as auto racing and flying.” (Source, “Insurance Data Called Faulty“, The New York Times, October 4, 1973.)

That consumers are largely unaware of the MIB’s existence cannot be blamed on individual apathy or misinformation. The Medical Information Bureau (MIB) was purposefully hidden by its employees. Mr. Wilberding also testified that “applicants for health insurance policies were “not told” that medical information would be made available to the 700 companies that support the data bank, and insisted that applicants “shouldn’t be told.”

When pressed by Senator Proxmire for a reason, Mr. Wilberding said that telling the applicant about the existence of the MIB, “could possibly interfere with the sale of the policy by the salesman, and would result in more paperwork.” And MIB’s evasion was widespread; until the Pennsylvania Insurance Commissioner threatened MIB member companies in the state in 1974, insurance agencies consulted MIB without telling applicants about the files.

Even today, the MIB remains secretive by steadfastly refusing to release its list of underwriting codes, even amidst controversy over its use of non-medical codes such as alcoholism, criminal activity, sexual deviance, sloppy appearance, drug use, marital status, and homosexuality.

Based, in part, on the information revealed during these hearings, Congress amended the Fair Credit Reporting Act (FCRA) to close the loophole on disclosure of medical information. The FCRA now provides additional consumer protections by  requiring data-gathering organizations such as the Medical Information Bureau (MIB) to reveal their role in insurance underwriting.

For more information about the testimony of Joseph C. Wilberding, former executive director and general counsel of the Medical Information Bureau (MIB), see the report “Insurance Data Called Faulty” published by The New York Times.

INSURANCE DATA CALLED FAULTY

Medical Information Banks Scored by Ex-F.B.I. Agent

By Richard D. Lyons for The New York Times. October 3, 1973.

WASHINGTON, Oct. 3 – An F.B.I. agent turned consumer advocate said at a Senate hearing today that “at least 40 percent” of the information compiled by insurance companies on the health risks of applicants for policies was “defective and erroneous.”

John E. Gregg of Jekyll Island, Ga., said he had become “so hacked off” at the practices of the insurance companies he had worked for after leaving the Federal Bureau of Investigation (F.B.I.) that “I quit and began crusading for my customers.”

Mr. Gregg told a hearing of the Consumer Credit subcommittee of the Senate Banking Committee that policies were routinely denied to applicants on the basis of faulty information that had sometimes been gathered by “deceitful” means.

He urged passage of an amendment to the Fair Credit Reporting Act that would allow consumers to look at the health records in the medical data banks so that old information could be updated and erroneous entries could be corrected. The act, which went into effect in 1971, specifically exempts disclosure of medical information by data-gathering organizations although it does direct disclosure to consumers of information that would be detrimental to a person’s credit rating.

15,000 Members Cited

Mr. Gregg described himself as the unsalaried chairman of the Policyholders Protective Association International, which he said was “a citizens’ movement dedicated exclusively to the welfare of small, individual insurance consumers, medical patients and health care users.” He said  the association had 15,000 members in a dozens states.

“Insurance companies in general have lost respect for their own customers,” Mr. Gregg testified, adding that “Nowhere is this more evident than in the industry’s utter disregard for the personal privacy of human beings.”

He charged that much of the information stored in data banks by health and accident companies was “low-grade rumor and hearsay.”

Mr. Gregg also charged that other records had been distorted through the “ineptness or ignorance” of insurance salesmen, sometimes with the solution of applicant, and that in other cases the information had been “altered or jimmied” by the companies.

No Way of Knowing

Mr. Gregg, who wrote a book entitled “The Health Insurance Racket and How to Beat It,” said the “insurance consumer has no way of knowing what is being used against him.”

The effect of such information, he said, is to put many applicants, “on the industry’s clunker list of moral hazards and undesirable risks.”

Mr. Gregg singled out for attack the Medical Information Bureau (MIB) of Stamford, Conn., one of several insurance data banks that make available to hundreds of insurance companies the information gathered on an insurance applicant by one company.

“The millions of consumers who have secret information stockpiled in the M.I.B. storehouse should be given an absolute right to know if it is hurting them,” he said. “They should have a procedure for testing the accuracy of M.I.B.’s data about them and an opportunity to correct it if it is wrong.”

‘Wouldn’t Do Any Good’

Joseph C. Wilberding, executive director and general counsel of the Medical Information Bureau (MIB), disagreed with Mr. Gregg. He told the hearing that enactment of an amendment to the act to enable a consumer to see and correct data on him “would be expensive for us and the company (holding the consumer’s policy) and wouldn’t do the individual any good.”

Mr. Wilberding insisted that the pertinent information “is in the hands of the [insurance] company.”

Under questioning by the subcommittee chairman, Senator William Proxmire, Democrat of Wisconsin, Mr. Wilberding said that the data bank contained information on 11 million persons. He said the files included data on sexual deviation, drug addiction, alcoholism and such hazardous hobbies as auto racing and flying.

Mr. Wilberding said applicants for health insurance policies were “not told” that medical information would be made available to the 700 companies that support the data bank, and insisted that applicants “shouldn’t be told.”

When pressed by Senator Proxmire for a reason, he said that telling the applicant “could possibly interfere with the sale of the policy by the salesman, and would result in more paperwork.”

The article “Insurance Data Called Faulty” was originally published by The New York Times on October 4, 1973.

The Federal Trade Commission says the Medical Information Bureau (a/k/a, MIB Group, Inc., a/k/a, MIB, Inc., a/k/a, MIB Solutions, Inc.) is the nation’s largest insurance reporting agency. As MIB Inc. describes it, “MIB’s basic purpose is to detect and deter fraud and misrepresentation in connection with the underwriting of life and health insurance and claims. MIB Inc. helps keep the cost of insurance down for insurance companies and for consumers by preventing losses that would occur due to fraud or omissions.”

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