February 15, 2016

Zenefits Scandal Further Proves the Importance of Compliance

Travis Good, MD

Co-founder & Chief Technology Officer

Healthcare is completely different from any other industry so is it possible to take everyday shortcuts to achieve the desired entrepreneurial results? If you ask one of the latest Silicon Valley sweethearts, [Zenefits][1], as of late, the answer is an astounding no. As Zenefits’ COO [David Sacks][2] states, “Compliance is like oxygen. Without it, we die.” With the immediate resignation of [Parker Conrad][3], former Zenefits’ CEO, we will see if Zenefits’ will be given the kiss of life as compliance becomes a newly adopted core pillar to the organization.

As of earlier this month, BuzzFeed released a report that discovered over eigthy percent of the Zenefits insurance deals in just Washington through at least August 2015 were sold by unlicensed brokers. Along with Washington, there is evidence of similar behaviors in at least seven other states, dating back all the way to summer of 2014. With this event just adding salt to the wound after a shaky financial year for Zenefits, further devaluation can be anticipated from the already 48% decrease the company faced in 2015.

When all is said and done, the biggest risk shown is the relationship Zenefits has with the various state insurance companies. The multitude of policies that corresponded to unlicensed employees were backed by major insurance providers, including Blue Cross, United HealthCare and Aetna. The clients of Zenefits don’t have to worry too much about these policies going away, as many legal professionals are currently stating. This issue is going to fall between these unlicensed agents and the insurance companies as to how these violations will be handled.

One thing that can be taken away from Zenefits’ misconduct is the ever-important need for compliance. Compliance is not just another checkbox to-do item. Compliance must be ingrained in an organization’s culture even when not on top of mind. Thankfully, that’s where Datica comes in. More than just ensuring out customer’s complete compliance, we become a partner to every single one of them. We believe in an improved healthcare and will do whatever it takes to make that a reality.

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