Former Blue Shield of California exec files wrongful termination suit
A former chief technology office (CTO) with Blue Shield of California has filed a wrongful termination lawsuit against the increasingly embattled insurer, saying he was fired one day before he was due to receive a $450,000 bonus because he raised concerns about a costly contract.
The suit, filed in Los Angeles County Superior Court, alleges that Blue Shield CIO Michael Mathias repeatedly rejected CTO Aaron Kaufman's recommendation that the insurer sign a fixed-price, $1.6 million contract for a "Veritas data project" and in December 2014 opted instead for an open-ended $4.6 million contract from another vendor.
On one occasion in January 2015, the suit alleged, "In a terse tone of voice, Mathias instructed Kaufman to leave his office, to never raise this $3 million cost-savings issue with him again." The suit added that Mathias "could not explain why he was beholden to this single overpriced … vendor."
Kaufman--represented by attorney David Peter Cwiklo of Woodland Hills, California--was terminated as of March 11 for alleged violations of Blue Shield's travel and expense policies, according to the suit. He was terminated one day before he was due to be paid a $450,000 bonus earned as of Dec. 31, 2014, the suit said.
Blue Shield spokesperson Clinton McGue told Courthouse News Service, "We disagree with the complaint and have no further comment at this time."
Blue Shield of California recently lost its tax exempt status amid criticism that it behaves like a for-profit insurer. The company posted $13.6 billion in revenue in 2014 and holds more than $4 billion in its reserves.
Former executive Michael Johnson has called on the insurer to return approximately $10 billion in public assets to the state, FierceHealthPayer previously reported, and the organization also faces pressure to lower its premiums.
Kaufman's lawsuit does not ignore the controversy: "As a 'not-for-profit' corporation Blue Shield was expected to work for the public good to warrant its exemption from paying California state corporate taxes. In fact, Blue Shield's tax exempt status allowed [it] to act like a for-profit corporate insurer, reaping billions of dollars in profits, providing [its] executives with multi-million dollar salaries, charging its members rates similar to what for-profit insurers charged their members."
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