- The Washington Times - Tuesday, July 15, 2008

ANNAPOLIS (AP) | The former chief executive officer of Maryland’s largest health insurer should receive about half of an $18 million severance package, because the amount is inconsistent with the insurer’s mission as a nonprofit, a state official ruled Monday.

Maryland Insurance Commissioner Ralph S. Tyler, who explained his ruling in a 65-page statement, decided that CareFirst BlueCross BlueShield could pay former CEO William L. Jews nearly $9 million.

“A post-termination payment of $18 million is simply too much money to pay the departing CEO of a nonprofit company,” Mr. Tyler wrote in a summary of reasons for his ruling. “Eighteen million dollars is nearly seven times Mr. Jews’ total gross compensation in 2006.”

Mr. Jews could appeal the ruling in court within 30 days. His attorney, Andrew Graham, did not return a call seeking comment.

Mr. Jews joined the nonprofit in 1993 after its chief executive left under criticism of mismanagement. As CEO for 13 years, Mr. Jews was credited with restoring the company to fiscal health and more than doubling its membership.

But he also was criticized for trying to convert CareFirst into a for-profit operation and sell it for $1.3 billion in 2002.

CareFirst has nearly 3 million members and more than 5,400 employees in the District, Maryland and Northern Virginia.

Mr. Tyler described Mr. Jews’ tenure as “a decidedly mixed one - a record of great achievements and great failures.”

“Notable failures were the failed conversion transaction … and the fact that the company, under Mr. Jews’ leadership, strayed significantly from its nonprofit mission,” Mr. Tyler said. “These failures had no adverse impact on his compensation.”

The effort to turn CareFirst into a for-profit company and publicity about compensation practices resulted in legislation limiting compensation at the insurer to “fair and reasonable.” Despite the law, Mr. Tyler concluded, CareFirst’s board “failed to act to restrain the CEO’s compensation.”

Mr. Jews stepped down in November 2006. Since then, he has received more than $2.2 million in salary and benefits. Mr. Tyler’s order requires the severance package be reduced by what he has received since his departure.

Mr. Tyler noted that Mr. Jews received more than $16.5 million in compensation and an additional $1.6 million in deferred payments from 2001 to 2006. Mr. Tyler’s decision was made after hearings that stretched over four days and included 10 witnesses.

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