Pointing to deception, mismanagement and flagrant attempts to profit from the proposed sale of CareFirst BlueCross BlueShield, Maryland Insurance Commissioner Alfred W. Redmer Jr. said yesterday that he will issue civil charges against the company and its top leaders for violating state insurance laws.
Among seven major violations detailed in a 50-page report released by Redmer yesterday were allegations that CareFirst Chief Executive Williams L. Jews willfully misrepresented facts about the proposed sale of the nonprofit to WellPoint Health Networks Inc. of California.
Redmer said he will formally issue orders and civil penalties against the insurer, Jews and other company leaders by the end of next week.
Executive Vice President David D. Wolf and board chairman Daniel J. Altobello will also be charged, according to the report.
The impending charges deliver the latest in a series of blows to Jews and key aides that began in March when then-Insurance Commissioner Steven B. Larsen rejected their plan to sell CareFirst to a for-profit insurer.
The General Assembly subsequently passed a law dictating sweeping reforms at CareFirst, and critics have been demanding the resignation of the company's top leaders.
Should the alleged violations prove true, they could wreck any chances of Jews remaining at the helm of the state's largest health insurer.
"This is fallout from some bad decisions they made. It is not uncommon in the business world for managers who make bad decisions to move on," Del. John Adams Hurson, chairman of the House Health and Government Operations Committee, said yesterday.
Hurson, a Montgomery County Democrat, described the insurance commissioner's charges as an effort "to assess the current management's part in what was a very inappropriate decision for the company."
CareFirst executives declined yesterday to discuss the insurance commissioner's action.
Instead, the company released a statement defending its actions, claiming that Redmer's charges were based entirely on allegations and conclusions reached in a report issued by Larson when he rejected the company's conversion plan.
At that time, Larsen sharply criticized the CareFirst board for ignoring its nonprofit mission and approving what he called an illegal $119.7 million bonus plan for top executives that would have been triggered had the deal been completed.
