Blue Shield executives got $24M boost in pay in 2012
Nonprofit insurer Blue Shield of California boosted pay to its executive employees by $24 million in 2012--an increase of 64 percent from the previous year, according to a confidential state audit reviewed the Los Angeles Times.
The insurer won't disclose who received additional compensation or how much they received. But Blue Shield's former public policy director, Michael Johnson, said senior officials told him the company paid former CEO Bruce Bodaken about $20 million as part of his 2012 retirement package, the Times reported. That amount was in addition to Bodaken's annual pay.
The audit, which was performed by the California Franchise Tax Board, criticizes Blue Shield for stockpiling "extraordinarily high surpluses" of $4 billion and failing to offer more affordable coverage as a nonprofit insurer.
"What is Blue Shield trying to hide? This raises so many red flags," Frank Glassner, chief executive of Veritas Executive Compensation Consultants in San Francisco, told the Times. "Blue Shield owes policyholders an explanation for how it spent this money."
California Insurance Commissioner Dave Jones said he will investigate Blue Shield's decision to withhold executive pay from its regulator filing, saying the exclusion "raises very serious and troubling questions with regard to whether Blue Shield misled the Department of Insurance."
The Times' reporting about questionable compensations comes when Blue Shield's nonprofit status is already being scrutinized. In March, the state revoked its tax-exempt status, FierceHealthPayer previously reported. And Blue Shield is looking to acquire Medicaid insurer Care1st, a $1.2-billion deal that has already been questioned.
Blue Shield says there has been no wrongdoing. "We disclose executive compensation in full compliance with all regulatory requirements while at the same time respecting our employees' privacy," Blue Shield spokesman Steve Shivinsky told the Times. "Many factors contributed to this one-time increase in officer compensation that affected a large number of employees, including severance, pension, deferred compensation, accrued vacation, merit increases, incentive pay, benefits and relocation expense reimbursement."
To learn more:
- read the Los Angeles Times article
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