CareFirst CEO fined $250 for lobbying

Ethics panel cites him for technical violation

November 08, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

The State Ethics Commission has fined CareFirst Chief Executive Officer William L. Jews $250 for failing to register as a lobbyist before holding a series of dinners for legislators last winter to convince them why the nonprofit health insurer should have become for-profit and sold itself to a California health giant.

The dinners, which were held at Ruth's Chris Steakhouse in November and December last year, were conducted under a company campaign to meet with legislative delegations and community groups to explain the benefits of a conversion and sale.

Jews, who waived a formal hearing, settled the violation last month by paying the fine in an agreement he signed with Jill B. Martin, staff counsel for the ethics commission.

"Internal and external lawyers agreed that he wasn't doing any direct lobbying, but questions were asked when we had a series of meetings with county delegations," CareFirst spokesman Jeffery W. Valentine said yesterday. "There was no legislation regarding us before the legislature at that point. But Mr. Jews did not make a filing, so the ethics commission came in and determined that it was a technical violation. The money has been paid."

Those dinners, Jews said in the agreement he signed, "did qualify as lobbying and acknowledges his failure to timely file a lobbyist registration." Jews should have registered as a lobbyist on behalf of CareFirst BlueCross BlueShield for the period between Nov. 25, 2002, and Oct. 31, the agreement said.

Opposition to the conversion and sale was fierce after CareFirst announced its plan in 2001 to sell itself to WellPoint Health Networks in California for $1.37 billion.

In March, then-Insurance Commissioner Steven B. Larsen rejected CareFirst's plan as not in the public interest. Larsen's report accused executives of failing to negotiate a fair price for the company and giving themselves a bonus package that was key to its sale and selection of partner in the deal. For example, Jews stood to receive up to $39.4 million if the sale were completed.

Outrage over the Larsen findings prompted reform legislation, which was approved unanimously by both houses of the General Assembly. The bill, which was later signed by Gov. Robert L. Ehrlich Jr. despite an intense lobbying effort by CareFirst to have it vetoed, calls for the replacement of CareFirst board members and forcing the insurer to remain a nonprofit organization.

CareFirst is the largest health insurer in the state, covering about 2 million Marylanders and more than a million other people in Washington, Virginia and Delaware.

The ethics fine Jews paid, however, has nothing to do with two other CareFirst probes.

In July, state Insurance Commissioner Alfred W. Redmer Jr. said he would bring civil charges against CareFirst, Jews and other officials for apparent violations that included deception, conflicts of interest, mismanagement and flagrant attempts to profit personally from the proposed sale.

A month later, the U.S. attorney for Maryland, a federal grand jury and the FBI subpoenaed extensive records from CareFirst in a separate investigation that was prompted by Redmer's report.

"This just sounds like he didn't register as a lobbyist even though he conducted business with legislators that would be defined as lobbying," said House Speaker Michael E. Busch. "I don't think he did anything ethically wrong with those dinners, but he or CareFirst's lobbyists should have disclosed it on their year-end report."

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