When Dr. Lisa Bennett’s 3-year-old Golden exhibited signs of lameness and pain, the practice owner from Issaquah, Wash., examined the dog herself. She later had her relief veterinarian take a second look and about 20 radiographs.

The diagnosis was arthritis, which came with a recommendation for further diagnostics. But when Bennett submitted the claim to Pets Best Insurance — a policy she’s carried for years to cover her dog — she received a notice that sent her reeling.

On Dec. 2, Pets Best informed Bennett that her claim was denied. Guidelines from Aetna Insurance Company of Connecticut, Pets Best’s underwriter, now bar DVMs who purchase Pets Best policies to cover their own pets from being reimbursed for the medical care that they provide to them. While most major pet insurance companies do not impose such restrictions, the rule is widespread across other lines of insurance and designed to guard against fraudulent claims. It’s common in insurance programs for human medicine and the auto repair industry, Pets Best founder and President Dr. Jack Stephens says.  

Such details have done little to ease the shock and disappointment Bennett says she’s endured after spending years pitching Pets Best to her clients. She even stuck with the company after it aligned last year with the Group Health and Life Insurance Trust (GHLIT), the indemnity arm of the American Veterinary Medical Association (AVMA), in a move panned by critics as rife with conflict of interest issues and ethical violations.

Now with the sudden change of her policy conditions, Bennett feels like the victim of a bait-and-switch scam.

“I’m taking this personally,” she says. “I’ve listened for years to Jack talk about how insurance is good for the profession. It’s ironic that they’re now turning this around on us."

Industry examined

Pets Best ultimately paid Bennett’s claims because her services dates originated in October and policyholders were not notified of the restriction until December. Yet news of the policy change has driven members of the Veterinary Information Network (VIN) into a heavy debate about the ethics of such a rule as well as the merits of pet insurance and its ultimate impact on the profession.

As VIN Member Dr. C. Dan Jones puts it: “My main concern is that we as veterinarians truly have a conflict of interest if we’re out here promoting pet insurance, and we stand to benefit from it. You don’t see brochures for insurance companies in the offices of MDs.”

Attitudes about the impact of insurance on the veterinary profession or whether Pets Best’s rules should bend for practitioners run the gamut. Some see Aetna’s move to lump veterinarians in with doctors of human medicine as a sign that third-party payers will one day become as burdensome for DVMs as they are for MDs. Some in the veterinary profession have been scared off by pet health insurance, fearing that it will evolve into a managed healthcare debacle similar to that which plagues human medicine.

Others argue that pet insurance is needed considering that mounting education costs, rising medical standards and pricey equipment have pushed the cost of veterinary care upward, out of reach for many owners whose incomes have failed to keep pace.

Despite the differing views, many VIN Members consider it absurd to force veterinarians to pay colleagues for pet care. In a VIN discussion, Dr. Kathy Jordan writes: “As a solo practitioner, I do not wish to take my pets to another vet in the community — I trust my own judgment with my own pets. ... I provide emergency services for my clients and live less than 10 minutes from my clinic. The nearest emergency clinic otherwise is 45 minutes away. Not to mention the fact that I don't know the doctors there, and my pets are more comfortable with me, I am not going to drive that distance just to get another doctor to treat my pet.”

Stephens contends that while verifying veterinary medical claims, Aetna and Pets Best  uncovered instances that could be defined as fraudulent — claims filed for services never performed. “We don't want abuse, because that just hurts everyone. Unfortunately we're changing rules for the very few that abuse it,” he says.

Many veterinarians still consider the policy to be unfair, especially when Pets Best offers premium discounts for staff members and encourages veterinarians to pay for employee policies. (Pets Best does not discount premiums for policies purchased by individual veterinarians). It's not a far leap from treating your own pets to treating pets belonging to staff, they contend.

But to those who expect Aetna to give the profession a pass on the restriction, VIN Member Jones brings to light an alternate argument. 

“If a company has a policy in place with restrictions, how can it then let a select group of policyholders get by that restriction?” he asks. “So some Gallup poll says we’re more honest than MDs, and we expect them to believe that? That’s discrimination.”

Reputation at stake

Those who look to Stephens and his company to roll back the policy say the issue is more personal in nature. Stephens is a pet insurance icon, having pioneered U.S. indemnity programs for animals when he started Veterinary Pet Insurance, or VPI, with a group of investing veterinarians in the early 1980s. He left VPI in 2004, now corporate-owned and America’s largest pet insurance company, amid allegations of financial impropriety.

One year later and with his public image intact, Stephens launched Pets Best, a company that he claimed would work for the benefit of veterinarians. 

A large part of Stephens’ persona is tied to pet insurance, and as a veterinarian, he's been viewed as someone with integrity who understands the unique needs of the profession. For that reason, critics claim the issue is about more than a policy; it feels like a betrayal.

That kind of talk “hurts deeply,” Stephens says, recounting the many times that he’s gone to bat for the profession on issues such as term limits, staff discounts and adding behavior and heredity benefits to Pets Best policies.

He describes himself as a "thorn" in the side of Aetna, with a reputation for being argumentative.

“I win some, I lose some,” Stephens says. “I already have talked to Aetna. They're reviewing (the restriction). Either way, I support what we do because we're not harming anyone, we're simply protecting our business.”

Still, Bennett and others argue that Pets Best policies were sold without the restriction and that’s how they should remain. In a letter to Stephens, she writes: “I hope you will be able to change this outrageous new policy. I can't imagine you and your directors would allow this to happen had you considered all the implications. I know you might blame the insurance carrier. I believe that this is actually a negotiable issue you could manage.

"I've always trusted you,” Bennett adds. “Now I fear that you are the driver of the car that ran me over.”

Contentious arrangement

Such talk has opened old wounds, with VIN Members revisiting the controversy that erupted in July 2008, as Pets Best announced plans to enter into a triangular partnership with the AVMA GHLIT and Aetna, which underwrites policies for both entities.

The three-year agreement stipulated that GHLIT would grant Pets Best its exclusive endorsement in exchange for a cut of the company's policy premiums to cover marketing expenses.

At the same time, GHLIT started promoting the merits of pet insurance to veterinarians with the release of a white paper titled “Pet Insurance: Managing the Process to Promote Quality Medicine."

The deal quickly soured in the minds of many in the profession. Rumors circulated that the arrangement was unscrupulous, considering GHLIT CEO Libby Wallace is the daughter of former AVMA Executive Vice President Dr. Bruce Little, now a Pets Best board member.

Little did not respond to interview requests concerning Pets Best’s new policy stipulation or the GHLIT-Pets Best arrangement, but Wallace and other GHLIT insiders have long denied that nepotism played a role in the CEO’s hiring.

Still, detractors say the deal looks dodgy because GHLIT benefits financially from Pets Best premiums. In a poll conducted last spring by the VIN News Service, 70 percent of the survey's 1,700 DVM respondents stated that they were “very uncomfortable” or “uncomfortable” with the GHLIT-Pets Best partnership decision.

AVMA and GHLIT officials have publicly explained that although the membership organization ultimately governs GHLIT, the two groups operate autonomously. AVMA does not benefit monetarily from GHLIT and the membership body does not endorse specific pet insurance companies. 

Despite the clarification, critics maintain that a nonprofit like GHLIT has no business exclusively promoting private insurance, especially as allegations of unfair business practices have tarnished the deal’s reputation. What’s more, with the AVMA name in front of GHLIT, critics say it appears as though AVMA and its 78,000 member veterinarians, by extension, are in bed with a private insurance carrier.

Behind the scenes

Apart from such appearances, a lesser-known consequence of the Pets Best-GHLIT arrangement has proven even more important but didn’t manifest until Bennett experienced difficulties concerning her claim.

Dr. Carol McConnell, chief veterinary medical officer and vice president of underwriting for VPI, explains that prior to the GHLIT-Pets Best deal involving Aetna, all other underwriters in the pet insurance industry could be characterized as property and casualty companies.

When the GHLIT-Pets Best arrangement with Aetna surfaced, Stephens told the VIN News Service: “A lot of veterinarians are afraid that pet insurance will become controlling, dictating fees, services and diagnostics. With GHLIT involved, you know you’ll always have an alternative to that."

Those words now seem haunting.

McConnell, who was hired by Stephens roughly six years ago when he was at the helm of VPI, says that kind of promise is tough to keep considering that when it comes to insurance, it’s the underwriter — the company carrying the financial risk — that may pull the strings.

She adds that agencies like Pets Best are just the faces that consumers see. VPI, for example, markets and sells policies, but Nationwide Insurance, the company that has been the owner and underwriter of VPI for more than a decade, carries the financial risk of VPI policies in 49 states. Only in California does VPI underwrite its own policies.   

In insurance speak, policies are referred to as “the paper," McConnell says, and “whoever holds the paper holds the cards."

“My assumption is that Jack has to do what Aetna requests," she says. "I just think he got his hands tied on this one. That’s unfortunate when you don’t hold your own paper.”

Dr. Bill Craig, chief medical and underwriting director for PurinaCare Pet Health Insurance, adds that Aetna, as Pets Best's underwriter, dictates the rules for underwriting and claims.

“Aetna holds the cards because they are assuming the risk for Pets Best policies,” he says. “They are one of the largest insurance companies in the country. I assume that Aetna's concern is that the provider may charge a different fee and try to profit from their relationship. We haven’t been confronted with that type of situation.”

Craig explains that PurinaCare Pet Health Insurance is owned by Nestle Purina. Nestles Purina, in turn, is owned by Nestle SA, which carries the risk for the company’s pet insurance policies. 

When it comes to PurinaCare policies, "the buck stops with Nestle," Craig explains.  Dealing with Aetna, “it looks like Jack got painted into a corner,” he says.

Mending fences

GHLIT, in the meantime, is attempting to repair its image with critics after giving Pets Best its exclusive endorsement.

While Stephens expresses angst about the position he's now in — "It seems like all I do is argue. Even my own partners team up against me." — GHLIT's Wallace is working from her end to get a front-row seat at Aetna's decision-making table.

“We’re clearly having a conversation with Aetna and Pets Best to try and find a solution,” she says, shying away from conjecture that GHLIT could dump its relationship with Pets Best when the partnership ends in 2011.

“We entered into this arrangement cautiously, and we'll be doing a critical review of our contract. This has been a learning experience for all parties,” Wallace says.