The 10th Amendment addresses the division of powers between the U.S. and the states. What issue(s) from the past or present can you think of that may cause states to clash with the U.S. Constitution?

A federal system has a number of advantages. A key one, as Supreme Court Justice Louis Brandeis noted in 1932, is that states can be “laboratories” of democracy. In particular, he argued, “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”⁴⁷ Another advantage, as the Supreme Court argued in Bond v. United States (2011), is that “By denying any one government complete jurisdiction over all the concerns of public life, federalism protects the liberty of the individual from arbitrary power.”⁴⁸ Other advantages, as one law professor has pointed out, are that federalism can accommodate a diversity of preferences in a heterogeneous society, that the most appropriate level of government can be utilized for a particular purpose, and that the states can compete and their citizens can move to places that have an attractive particular mix of public policies.⁴⁹

Constitutional Distribution of Powers

The U.S. Constitution distributes power between the national and state governments. It grants and denies powers. In some cases, powers are granted exclusively to the national government and in other cases exclusively to the states. There are also instances where powers are granted to both the national and the state governments. The same can be said for denied powers. Some are denied to the national government, others are denied to the states, and some are denied to both.

page 59

Division of Powers between National and State Governments

Figures 2.3 and 2.4 present a clear summary of the division of powers between the national and state governments. Although the division of powers may seem straightforward, these figures belie the true complexity of our federal system of government. It is complicated, and the meaning of each power has been subject to interpretation by the federal courts. If we examine four areas of the Constitution and the courts’ interpretations, we gain a much better understanding of American federalism. These four areas are the Necessary and Proper Clause versus the Tenth Amendment; the Interstate Commerce Clause; Equal Protection and Due Process Clause of the Fourteenth Amendment; and the power to tax and spend to promote the general welfare.

The “Necessary and Proper” Clause and the Tenth Amendment

Article 1, Section 8, paragraph 18 of the United States Constitution states that Congress shall have the power “To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” This seems to grant considerable power to the national government. However, the Tenth Amendment states: “The powers not page 60 delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” This seems to grant most powers not expressly granted to the federal government to the states, or that they would remain with the people. The meanings of these two sections of the Constitution were the cause of conflict early in the history of the Republic.

Tenth Amendment

Amendment of the U.S. Constitution that delegates or reserves some powers to the state governments or to the people

Van Hatten Consolidated has three operating divisions: DeMent Publishing Division, Ankiel Security Division, and Depp Advisory Division. Each division maintains its own accounting system but follows IFRS.

(a)

For each division’s revenue arrangements, identify the separate performance obligations, briefly explain the allocation of the transaction process to each performance obligation, and indicate when the performance obligations are satisfied.

Expert Systems
Case Study- 1: Diagnosing Heart Diseases by Signal Processing
 
Learning Objectives:
• Know the concepts behind and application of genetic algorithm
Agent-based simulation helps Analyze Spread of a Pandemic Outbreak
Auscultation is the science of listening to the sounds of internal body organs, in this case the heart. Skilled experts can make diagnoses using this technique. It is a noninvasive screening method of providing valuable information about the conditions of the heart and its valves, but it is highly subjective and depends on the skills and experience of the listener. Researchers from the Department of Electrical & Electronic Engineering at Universiti Teknologi Petronas have developed an Exsys Corvid expert system, SIPMES (Signal Processing Module Integrated Expert System) to analyze digitally processed heart sound.
The system utilizes digitized heart sound algorithms to diagnose various conditions of the heart.
Heart sounds are effectively acquired using a digital electronic stethoscope. The heart sounds were collected from the Institut Jantung Negara (National Heart Institute) in Kuala Lumpur and the Fatimah Ipoh Hospital in Malaysia. A total of 40 patients’ age 16 to 79 years old with various pathologies were used as the control group, and to test the validity of the system using their abnormal heart sound samples and other patient medical data.
The heart sounds are transmitted using a wireless link to a nearby workstation that hosts the Signal Processing Module (SPM). The SPM has the capability to segment the stored heart sounds into individual cycles and identifies the important cardiac events.
The SPM data was then integrated with the Exsys Corvid knowledge automation expert system. The rules in the system use expert physician reasoning knowledge, combined with information acquired from medical journals, medical textbooks, and other noted publications on cardiovascular diseases (CVD). The system provides the diagnosis and generates a list of diseases arranged in descending order of their probability of occurrence.
SIPMES was designed to diagnose all types of cardiovascular heart diseases. The system can help general physicians diagnose heart diseases at the earliest possible stages under emergency situations where expert cardiologists and advanced medical facilities are not readily available.
The diagnosis made by the system has been counterchecked by senior cardiologists, and the
results coincide with these heart experts. A high coincidence factor of 74 percent has been achieved using SIPMES.
What We Can Learn from This Application Case
Many expert systems are prominently being used in the field of medicine. Many traditional diagnostic procedures are now being built into logical rule based systems, which can readily assist the medical staff in quickly diagnosing the patient's condition of disease. These expert systems can help in saving the valuable time of the medical staff and increase the number of patients being served.

 

Based on the above case studies discussion answer the following questions:
1. List the major components involved in building SIPMES and briefly comment on them.
2. You are supposed to design an expert system to diagnose a patient of Novel Cornoa Virus (Covid-19). What will be its major components? Structure your idea about “Covid-19” expert Systems

Exhibit 2

Current statistics show that, about 5% of the patients who are infected with the Novel Coronavirus are in serious or critical condition, and need ventilators and oxygen facilities. Suppose this is the population proportion. (The questions related to this Exhibit are designed so that you can see how statistical analyses can be used to fight against pandemics.)

Question 7

Refer to Exhibit 2. Assume that in the City of Gotham, in the first week of outbreak, 256 citizens are tested positive for COVID-19. At least how many ventilators should be prepared to meet the possible demand. (Round up to the nearest integer that is larger than the result.)

Question 8

Refer to Exhibit 2. Suppose the No. 1 district of the City of Gotham has 8100 residents living in it. If you were the head of the health department of the No. 1 district. To cope with the possible all-infection outbreak of COVID-19 in your district, you prepared 600 ventilators. Assuming in the worst case scenario, what is the probability that your prepared medical equipments are overwhelmed by the serious conditioned patients who are in need of the ventilators? (Round up to nearest four decimal place.)

Question 9

Refer to Exhibit 2. In the first week of out break, the total number of confirmed cases in the No. 1 district of Gotham is 96. Out of these 96 cases, no one has developed serious conditions yet. But you want to use the normal approximation method to estimate a probability that, from these 96 infected patients, more than 10 cases develop a serious condition. Are you able to do so? Why or why not? If yes, please provide the probability value you estimated. (In four decimal places.)

Question 10

Refer to Exhibit 2. In the second week, the total number of confirmed cases in the No. 1 district of Gotham increased to 196. You want to use this sample of 196 cases and the normal approximation method to estimate the probability that, from these 196 patients, more than 19 cases develop a serious condition. Are you able to do so? Why or why not? If yes, please provide the probability value you estimated. (In four decimal places.)

Question 11

Refer to Exhibit 2. Suppose that you are the head of the health department in the City of Zion. You DO NOT know the population proportion of seriously conditioned cases among the people who infected with the COVID-19. But now you have a sample of 625 cases who tested positive of COVID-19, out of these 625 patients, 28 developed serious conditions. What is your estimation of the proportion of seriously conditioned patients? (Round to the nearest four decimal place.)

Question 12

Refer to Exhibit 2. Continue from Question 11. Construct a 88% confidence interval (CI) for the proportion you estimated in Question 11. What is the Lower Confidence Limit of your CI? (Round to the nearest four decimal place.)

Question 13

Refer to Exhibit 2. Continue from Question 12. What is the Upper Confidence Limit of your CI? (Round to the nearest four decimal place.)

Week 13 | Discussion 1: Empathy - The Misunderstood Skill

5757 unread replies.7878 replies.

In the classic novel, To Kill a Mockingbird, Atticus Finch says to his daughter Scout: “If you can learn a simple trick, Scout, you’ll get along a lot better with all kinds of folks. You never really understand a person until you consider things from his point of view – until you climb into his skin and walk around in it.”¹

Reference:

Empathy: The Misunderstood Skill

• When a person becomes defensive, we need a tactic or skill to diffuse the emotional response and translate the conversation to a problem-solving focus. This skill is empathy.
• Empathy is recognizing and labeling another person’s feelings and thoughts.
• This technique allows you to focus on facts, not on personality. Emotions are vented and dealt with so a discussion can continue constructively.
• Empathy is not agreement; it is a reflective technique to encourage open communication. The person witnesses you listening to him or her and will perceive you are trying to respond to his or her issues.

The Differences Between Sympathy, Empathy, and Apathy

• Sympathy: sameness of feeling; a feeling of approval of, or agreement with, an idea. “You poor thing, I know just how you feel, I had my report rejected, too.”
• Empathy: the ability to share in another’s emotion, thoughts, or feelings. “I see that you are concerned that the interview didn’t go well.”
• Apathy: lack of emotion or interest; unconcern or indifference. “It is ridiculous to get so upset over this.”

The Three-Step Process of Using Empathy to Influence Behavior

• Label the emotion – You seem annoyed about...
• Restate the content – You seem annoyed about your efforts going unnoticed.
• Create a transition sentence – You seem annoyed about your efforts going unnoticed. What steps can you take to publicize your work

Answer Part I - Use the following scenario to practice the three-step approach to empathy. Read the scenario, assume you are the team leader, and write an empathetic response using the three-step process.

Scenario

“Why are you giving me such a hard time about being five minutes late for our team meeting? Give me a break! You know that I have responsibilities at home, and it is hard for me to get here on time. I’m 40, and I have a wife and two small sons at home. Do you have to deal with sick kids? Do you have to arrange an emergency babysitter so you can get to class on time? Do you have to fight traffic to get here after working a full day? You would be much more understanding if you weren’t just a kid with no responsibility other than going to classes.”

Answer Part II - Once you have written your response, answer the following questions:

1. Did you find it hard to provide empathetic responses? Why or why not?
2. What step was the most difficult?
3. When would you most likely use the skill of empathy?
4. Can one make a mistake when using empathy?

Developmental Psychology

Reflect on the following case:

1. What do you see as the major problems Raul is exhibiting? (If you had to take a guess at a possible diagnosis, what would it be? Anything?)

2. Identify all the risk factors and identify all the protective factors affecting Raul's development.

3. What strengths or resources in Raul and his famlly would you emphasize as a way to improve his chances of a good developmental outcome?

Case Study: Raul Salazar -- 10-year-old boy

Raul Salazar, a 10-year-old boy, has just started the fourth grade. He was referred to the school's multidisciplinary team because of reports of difficulties in school and concerns about his home situation. Teachers are questioning whether he has a learning disability. They are also asking the team to determine whether he is an appropriate candidate for medications. He often does not follow instructions well. However, his current teacher is "surprised by his vocabulary." It is "much better than many of the other Puerto Rican kids in his class." However, his performance in school has steadily deteriorated. He especially has problems with reading and mathematics and on occasion comes to school with dirty clothing and falls asleep in class.

His performance in the third grade was average, but his records indicate that the teachers at the other school considered him to be a very anxious child. These teachers reported that Raul constantly moved in his seat and had problems with writing but did well in other fine-motor tasks.

Another fact that stands out in his school history is that his performance was better when he was attending a smaller parochial school for Grades 1 and 2.

Raul has two other siblings. He has an older brother who is 13, and a younger sister who is 9 years old. Raul's father works for the city of New York as a painter, and is mother is a teaching assistant. She completed two years of college but had to leave her education because she got pregnant with their oldest son.

Raul's mother's family moved to the mainland when she was eight years of age. Her father was a teacher and they were not very pleased when she "had to marry" Raul's father. Raul's father's family came from a poor rural area on the island. His own father had a history of alcoholism and left the family when Mr. Salazar was very young.

Mrs. Salazar reported to the social worker that she had serious problems with her nerves throughout her life and that they become worse whenever she is pregnant. Otherwise she felt her pregnancy with Raul had been normal. However, school staff learned that there had been some fear that she might lose Raul during the pregnancy, and this is why she was prescribed bed rest during the last trimester.

Mrs. Salazar's third child, her daughter Maria, was born prematurely, but Mrs. Salazar did not have any problems with her first pregnancy. She told the social worker that her daughter's premature status really hit the family hard because Maria required so much care when she finally came home.

Unfortunately, Mr. Salazar was released from his job shortly after Maria's birth, and he was out of work for 9 months. The mother reports this was possibly the most stressful period in her life. When Maria was about four months old, Mrs. Salazar had a seizure. Mrs. Salazar's doctor considered placing Mrs. Salazar on medication after she had that seizure; however, testing did not reveal any evidence of the presence of a seizure disorder. She reports a history of fainting and other seizure-like experiences when she was a teenager.

Mrs. Salazar says that she has always had problems with her nerves and has been very sickly throughout her life. She also told the social worker that "she was always the weakest one in her family." When Raul was about eighteen months old, Mrs. Salazar's closest brother was killed in a car accident. She reports not being able to get out of bed for weeks following the news of his death. Raul's medical records indicate that it was approximately around this time that he started banging his head in order to fall asleep.

This habit continued until he was about six years of age. He also developed some other habits that persist to this date. He still bites his fingernails very often. Raul's history also reveals that he was extremely frightened of the dark as a child and has an extreme startled response for which he is often teased by his brother and father.

The family moved to New York City one year ago, in order for Raul's father to take a job as a city-employed painter. The move is why Raul had to switch schools.

Raul's father is a strict disciplinarian. He told workers that he often loses his temper and yells at the children, but he says that he has never physically abused them. He reported to the social worker that he cannot tolerate the kids being noisy. When he comes home from his new job, his wife is often in bed, and things are a mess. Mr. Salazar is under lots of pressure at work. His supervisor does not like Puerto Ricans and gives him all the worst job assignments. The family no longer lives near other family members because they moved for Mr. Salazar to get his city job. Mr. Salazar told the social worker that the family is willing to pay for any services that will help his son do well in school.

Microsoft in 2005

As their 2005 fiscal year came to a close, Bill Gates and Steve Ballmer could reflect on the last year as well as the previous five years—with mixed emotions. Microsoft had slowed down after two decades of spectacular growth in revenues, profits, and stock price (see Exhibits 1, 2, and 3). Although Microsoft remained one of the most valuable and profitable companies in the world, its two core products, Windows and Office, had been experiencing anemic growth in revenues and profits. Moreover, competing software, such as the Linux operating system, and the rising popularity of search engines like Google, were posing new threats to Microsoft’s franchise.

On the positive side, Microsoft had the strongest balance sheet of any company in the world. Management was committed to aggressive reinforcement of its core businesses, including significant investments in new operating systems and Web services, as well as ongoing investments in new businesses, ranging from Xbox to Business Solutions. Perhaps most importantly, Microsoft had settled many of its public and private lawsuits on reasonably favorable terms by 2005 (see Exhibit 4).

One of the most daunting challenges was how to reposition Microsoft for modern times. When Gates started the company in 1975, he proclaimed that the mission of Microsoft was “to place a PC running Microsoft software on every desk and in every home.” When Gates reflected on Microsoft strategy with the casewriters in the mid-1990s, he further articulated this view:

We look for opportunities with network externalities—where there are advantages to the vast majority of consumers to share a common standard. We look for businesses where we can garner large market shares, not just 30%–35%. But at the same time, we are not a software conglomerate. The key to our business is building annuities, by tapping into the broad revenue streams that will rely on our software expertise.1[A1]

In 2005, 30 years after Microsoft was founded, the company had a new vision statement: to be “the worldwide leader in software, services and solutions that help people and businesses realize their full potential.” Gates remained the company visionary as well as its chairman and chief software architect. However, it was CEO Ballmer, Gates’s friend from his freshman days at Harvard, who was now leading the charge. While Ballmer was forcefully driving the company forward, the big question remained: Would these efforts allow Microsoft to repeat its previous spectacular successes, or would the future belong to a new generation of leaders?[A2]

The Early Microsoft Years (1975–1990)

Gates and his high school friend, Paul Allen, founded Microsoft in 1975, and the company’s first product was a condensed version of the BASIC programming language for the first personal computer (PC). Over the next few years, Microsoft developed numerous versions of other programming languages, becoming the leading distributor of software development tools. But Microsoft’s big break came in 1980, when IBM asked Gates to provide the operating system (OS) for its new PC. Rather than develop an OS from scratch, Gates bought an existing OS from a local programmer for $50,000 and tailored his new product, called MS-DOS, to work exclusively with Intel microprocessors—the “brains” of the IBM PC. By 1984, MS-DOS had achieved an 85% market share, pushing Microsoft sales over $100 million. When Gates took the company public in 1986, the stock price tripled within a year, making Gates a billionaire at the age of 31.

During the 1980s, Microsoft was already trying to expand beyond MS-DOS. As early as 1981, Microsoft began work on a graphical user interface (GUI) called Windows, shipping version 1.0 in 1985. At the same time, Microsoft worked with IBM to develop a totally new OS called OS/2. The first “killer apps” in the software industry—applications that everyone wanted—came from two of the larger independent software vendors (ISVs), Lotus and WordPerfect. Microsoft was originally seen as an imitator with second-rate products. Early releases were especially derided. Industry pundits joked about never buying a Microsoft product called “1.0.”

Ironically, Microsoft’s greatest success in the 1980s outside of its OS came from recognizing the potential of the Apple Macintosh and choosing to write applications for the Apple OS. While major ISVs largely ignored the Mac, Microsoft became the dominant supplier of Macintosh word processing and spreadsheet software. Microsoft’s familiarity with developing applications for the Macintosh helped it develop Windows, which used a Mac-like GUI that took the market by storm.

Application Software

Application software had a very different business model from that of OSes. While OSes were sold mainly through hardware OEMs, applications were sold through a myriad of channels, including computer companies, corporate site licenses, various retail channels, and after the mid- 1990s the Internet. The key for successful OS vendors was to build close relationships with ISVs to produce as many applications as possible on their OS. Though ISVs did not have access to the proprietary source code for the Microsoft OS, they did have access to “hooks,” called application program interfaces (APIs), by which they could take advantage of various OS features. Successful ISVs, in turn, competed on software features, customer service, shelf space/availability, and price. Since 1990, most PC application programs, which previously sold for hundreds of dollars, had by 2005 dropped to an average of less than $40.

Until the advent of Windows, customers would typically choose a software application and then stick with it. Training workers to use a new spreadsheet or word processor once cost up to five times as much as the program itself. For productivity application vendors, such as Lotus and WordPerfect, their large customer base and high switching costs led to very profitable operations. Over the 1990s, however, Lotus, WordPerfect, Borland, and others found their businesses under pressure. First, the cost of producing a major software program grew from a few hundred thousand dollars to more than

$10 million. Second, by providing standard interfaces and file formats, Windows reduced customers’ switching costs from five times to roughly twice the cost of the application. And third, after Windows took off, Microsoft itself became the world’s largest PC application vendor.

Microsoft’s success in PC applications began in the late 1980s when it pursued a new paradigm. To induce customers to switch from their favorite applications, such as WordPerfect and Lotus 1-2-3, Microsoft was the first to offer a bundle, or suite, of applications at a discounted price. Microsoft also began offering “competitive upgrades,” a sales program whereby Lotus 1-2-3 or WordPerfect customers could switch to Microsoft for a significantly discounted price.7 Part of Microsoft’s success with Windows applications was the result of competitors’ mistakes. While Lotus and WordPerfect matched Microsoft’s competitive upgrade pricing, they were initially reluctant to write for Windows and even slower to create their own bundles. As a result, Word and Excel were the best products on the Windows platform, and by the mid-1990s, Excel was outselling Lotus by 2 to 1 and Word soon dominated WordPerfect.8 Furthermore, as competitors played catch-up by increasing their Windows development efforts, they furthered the success of Microsoft’s Windows operating system. By 1995, many ISVs, except for Microsoft, had completely abandoned Macintosh development.

Microsoft’s stand-alone products ranged from Money (financial management) and Project (project management) to Flight Simulator (a popular computer game). However, specialized ISVs were able to dominate most of the niche application markets. For example, Intuit was the dominant provider of financial management and tax software, Adobe’s PageMaker was preeminent in desktop publishing, and Autodesk’s AutoCAD was the lead vendor in computer-aided design (CAD).

Applications software accounted for about one-third of Microsoft’s total sales in 2005, after peaking at around 60% in the mid-1990s. Microsoft had captured 90% of the market for productivity software applications in 1995. Its market share then rose to around 95% by 1998, with Corel’s WordPerfect Suite and IBM’s Lotus Suite carving up the remaining scraps. Yet despite Microsoft’s great success, application revenues were under pressure. Revenue from stand-alone versions of Word, Excel, and PowerPoint had been in a steady decline since around 1995 as the Office Suite gradually absorbed each of these individual markets. Microsoft acknowledged that this trend exerted a steady downward pressure on prices because Office sold for less than the sum of the individual programs. Second, upgrades (rather than new sales) were taking a larger share of revenue, and upgrades had lower margins than new products.9 Moreover, industry wisdom held that 80% of customers used less than 20% of the features.

USE THE ABOVE SCENARIO TO ANSWER THE FOLLOWING QUESTIONS

How did Microsoft use bundling to price discriminate? Use specific cited examples. How did Microsoft build revenues so fast? Be specific in your details. What are three big threats to Microsoft's success? Be specific and explain the details and impacts of each threat.

A: Bad News Letter: Problem with service Scenario: You own Keep it Green, a landscaping company that prides itself on environmentally sustainable practices. You won the contract to do the original landscaping for a newly developed commercial building owned by a local developer, Ed Jones. The contract is a fixed price, meaning that you agreed to a fixed plan of work for a set cost. You hope that if this contract goes well, you will be able to get additional work from this developer. Unfortunately, the project has run into problems. The project is running over budget as exchange rates have increased the costs of plants from your US supplier. You are also having issues with your crew. One person has quit unexpectedly and another broke her arm while biking. In addition, the client continues to revise the scope of the project, wanting to add and change elements of the design, potentially adding a lot of extra work and cost. Finally, delays in receiving building materials from a local supplier have put the project behind its planned completion date. You are excited about this project because the develop is committed to landscaping design that is suitable for the climate and environmentally friendly, not requiring chemicals for maintenance. The innovative design could make you and the client a contender for a local urban development award. The developer is currently bidding on 2 more commercial development projects in the city. Instructions: 1. Write a short paragraph or two explaining your Goal for the letter, and analyzing both Audience Need and Barriers facing this communication. 2. Write a formal letter. You should include letterhead and other features to make the letter as professional and ‘real’ as possible.

B – Persuasive memo: Making a Case
Scenario:
You recently took on a summer internship with Tourism world. You have noticed that the marketing strategy for US as a destination is heavily focused on travelers associated with sports and sporting events. However, you think that the marketing material is not well-suited for this target audience.
Sports and sporting event visitors tend to be under-50 and often bring family. This group is environmentally-conscious, interested in local organic food, conservation, and health. In contrast the marketing material aimed at this group emphasizes the city’s conference centers, local restaurants and bars, as well as evening activities. Little is said of the area’s extensive outdoor trails, local farms and markets, and cultural and historical activities.
You have recently completed two years of study at college. You are excited about what you have been learning in your marketing classes. In addition, you have been developing your skills in writing for online platforms and graphic design.
Your manager, James Bernard, designed the original material and is quite committed to its value, adopting the position that whatever worked in the past is sure to work in the future. But you know that times are changing and younger people need to see a different side of California that is not just a highway with hotels and conference centers.
Write a memo to your manager proposing what you think might be some effective changes to the focus of the marketing material. Outline the problem, present your solutions and think about audience and barriers.
Instructions:
1. Write a short paragraph or two explaining your Goal for the letter, and analyzing both Audience Need and Barriers facing this communication.
2. Write in memo form and aim to make the document as professional as possible.

State and explain the three specific ethical finance issues regarding this situation Trigon Blue Cross/Blue Shield (Copayments) When most people are told they owe a coinsurance payment on a medical bill, they simply grimace and write a check; not Gerald Haeckel, a retiree from Richmond, Virginia. He wanted proof that he was not paying more than the 20 percent portion that his health insurance policy required. When his insurer, Trigon Blue Cross/Blue Shield, balked, the retiree besieged state and federal officials with demands for an investigation. Gerald’s problem with the insurer-provider negotiated discounts began when he became confused by a bill sent by Trigon Blue Cross/Blue Shield. The bill was for Gerald’s wife’s lumpectomy, which is an outpatient surgery to remove a tiny breast tumor. Trigon’s benefits- explanation form stated that the surgery had cost $950, that Trigon paid 80 percent, or $760, and that Gerald owed a 20 percent copayment of $190. But then Gerald received a list of charges from the surgery center indicating that Trigon’s share of the bill had been more than halved to $374 because of a “contractual adjustment.” Gerald assumed that a mistake was made in the surgery center’s statement because if it were correct his $190 copayment would exceed a third of actual cost, instead of the 20 percent called for in his insurance policy. Ultimately, Gerald’s scrutiny of the $950 surgery bill led to a surprising discovery. Although insurance companies frequently complain about being duped by fraudulent policyholders and providers, Trigon and dozens of other health insurers and managed care companies stand accused of a scheme to siphon off millions of dollars from their policyholders. How does the alleged scheme work? For surgery priced at $1,000, the typical plan might call for the insurer to pay 80 percent, or $800, which leaves the patient with a $200 copayment. But if the insurer has negotiated a 50 percent discount from the provider and does not pass any of it along to its policyholders, the patient’s $200 copayment becomes 40 percent of the $500 actual bill, and the insurer’s portion drops to only $300. Trigon’s responses to Gerald’s queries stirred up more questions than they answered. Norwood H. Davis, Trigon’s CEO, assured Gerald that he did indeed owe the $190, and added that the details of any Trigon’s provider discounts were “proprietary.” In another letter, Norwood made a distinction between Trigon actually paying its $760 share of the bill and “discharging” it. Norwood added that although Trigon might try to persuade a provider to accept less than its $760 portion of the bill, a policyholder, such as Gerald, was free to try to persuade the provider to accept something less than the required $190 copayment. Gerald, who by that point was incensed, replied “suggesting that an individual policyholder negotiate with a provider for price concessions borders on the insulting!” and he threatened to take the matter up with state regulators. At a time when consumers are expected to take more responsibility for their own healthcare, undisclosed discounts raise questions about the accuracy and honesty of information provided by the insurers and employers. Indeed, providers often are contractually prohibited from disclosing discounts. The insurance industry argues that hiding discounts is not widespread. The Chicago-based Blue Cross/Shield Association notes that no court has ruled for plaintiffs in a discounts-related case. It adds that none of its affiliates that settled such cases admitted to wrongdoing. Furthermore, Blue Cross/Shield executives argue that the discounts benefit policyholders by reducing premiums. In some situations, they add, employers who share in the savings ask that discounts not be disclosed to their own employees. “We’re not lining our pockets with anything because there is nothing to line our pockets with,” said Joel Gimpel, a Blue Cross/Shield Association attorney.