D.C. plan officials' travel costs criticized by U.S. investigators

January 27, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

WASHINGTON -- When Joseph Gamble retired in November as president of the Blue Cross and Blue Shield plan serving the Washington area, his co-workers commissioned a $30,000 work of art depicting miniature passports, a Concorde jet and golf clubs.

It was appropriate, since Mr. Gamble spent more than half his days in 1990 away from the office -- entertaining in China, Singapore, London, Paris and Dublin -- at subscriber expense. When in the United States, he drank from a $1,000 private wine stock at Morton's of Chicago, a restaurant in Tysons Corner, paid for by a subsidiary he directed.

The tale of Mr. Gamble's life at the helm of the Washington Blues was offered yesterday as part of a congressional staff report outlining the problems that have plagued the plan that serves 1.4 million in Washington, Maryland and Virginia.

According to the report, the non-profit health insurance plan lost $118 million over the past seven years on for-profit subsidiaries and reduced health benefits to its subscribers while charging them twice as much for their policies. All this while Mr. Gamble and other top directors wined and dined at some of the world's most luxurious resorts.

Travel expenses since 1985 for the company's three top executives totaled $1 million, including $891-a-night hotel rooms and $66,000 worth of supersonic jet travel for Mr. Gamble. All but two of its 45 subsidiaries, including one that sold insurance for lost baggage and interrupted travel, were money-losers.

The D.C. plan is the third of the country's 72 Blues plans to be investigated by the Senate Permanent Subcommittee on Investigations. According to testimony before the committee, the three Blues plans -- in Washington, Maryland and West Virginia -- were wrought with similar problems: poor financial management, intentional defiance of state regulators and extravagant spending by executives.

"I think they're over the moon, frankly," D.C. Insurance Superintendent Robert M. Willis replied, when asked by committee chairman Sen. Sam Nunn, D-Ga., whether travel, country clubs, and other expenses were typical for the insurance industry.

Mr. Willis, the District commissioner, said he has hired the Arkansas law firm of Mitchel, Williams, Selig, Gates and Woodyard, the former law firm of Hillary Clinton, to help him oversee the Washington Blues. The law firm specializes in the rehabilitation of insurance companies.

The D.C. plan, formally known as the Blue Cross and Blue Shield plan of the National Capital Area, is a subsidiary of Group Hospitalization and Medical Services Inc. The company was chartered by Congress and jointly regulated by Maryland and Virginia.

In November, Virginia insurance commissioner Steven Foster, who is also president of the National Association of Insurance Commissioners, called in top officers of the plan and said he was prepared to declare the plan insolvent under Virginia law. In response, the Chicago-based Blue Cross and Blue Shield Association provided a $15 million cash infusion.

According to the committee report, the D.C. Blues' subsidiaries served as "private playgrounds" for top executives. Many new companies began without even an audit or a complete financial review of the company. Moreover, top executives of the plan misled trustees into thinking the off-shoot companies were successful, according to the staff report.

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