Legislators take aim at Blues board Panel votes limits on service length

February 12, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

ANNAPOLIS -- Half of the directors of Blue Cross and Blue Shield of Maryland would be forced to leave the insurer's board when their terms expire next January, under an amendment approved by a House committee yesterday.

The amendment, to House Bill 238, also limits directors to two terms, in effect ensuring that all current directors would be replaced within three years.

The board members at Blue Cross, the state's largest health insurer, have been criticized for lax oversight of the company, which has suffered from large financial reversals in recent years and questionable management decisions.

"We believe this board has great culpability [for what happened], and we believe there are a lot of talented people in the state of Maryland who can serve on the board," Thomas P. Raimondi, associate deputy insurance commissioner, told the House Economic Matters Committee. "Two three-year terms is enough, and they should move on," he said.

Eight longtime board members, including chairman Frank A. Gunther Jr., Shirley F. Phillips, Albin O. Kuhn, and M. Thomas Goedeke, will complete their third terms during 1994. Under the amended bill, only board members who have not yet served nine years could be reappointed.

In other action on the bill yesterday, the House committee voted to give Insurance Commissioner John A. Donaho independent authority to remove directors after a warning for actions that have a "detrimental" impact on the company's business.

Department Secretary William Fogle Jr. had sought final approval, which he already has when it comes to similar provisions to remove bank directors. But lawmakers decided the commissioner's independence should be preserved.

The committee also amended the bill to narrow the group of Blues officials who would be legally responsible for reporting a potential insolvency to the commissioner. The previous version of the bill had identified as many as 50 people who might have such responsibility; the amendment reduced the group to directors, the chief executive officer, chief financial officer and the treasurer.

The bill is expected to be approved by the committee today and moved to the full House.

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