North Dakota Blue Cross Fires CEO on Salary Probe

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March 12, 2009 Thursday 02:10 PM EST

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North Dakota Blue Cross Fires CEO on Salary Probe

Fran Lysiak

OLDWICK, N.J.

Blue Cross Blue Shield of North Dakota's board of directors has fired President and Chief Executive Officer Mike Unhjem, saying a change in leadership is "necessary for the company to chart a new direction." The state insurance department, meanwhile, is continuing its investigation into the health insurer's compensation and bonus structures.

Tim Huckle, executive vice president of health operations, was named interim president and CEO, effective immediately.

"We recognize that we must rebuild public trust and believe this decision was a necessary first step in that process," said Dennis Elbert, board chairman of Blue Cross Blue Shield of North Dakota, in a statement.

An attempt to speak with Blue Cross wasn't immediately successful. The state's dominant health insurer received regulatory and public scrutiny after a Caribbean retreat for 35 employees and their guests cost the company $250,000.

Andrea Fonkert, a spokeswoman with the North Dakota Department of Insurance, headed by Commissioner Adam Hamm, said the department wasn't involved in Unhjem' firing, so couldn't comment on that. However, the department will be conducting a financial exam of Blue Cross Blue Shield, she said.

"We are moving forward with that investigation into the company's compensation and bonus structure," Fonkert said.

Unhjem's total compensation, including salary, bonus and "all other compensation," increased in 2008 to $664,431 from $523,769 in 2007, according to information provided by Fonkert. Hamm has said that he was stunned by the pay increase at a time when Blue Cross has been saying it's in deep financial trouble, she said.

Last October, the commissioner denied a 14.9% rate increase for Blue Cross Blue Shield's health insurance premiums for employee groups, saying the request is "unreasonable" in comparison to the premiums charged. In a statement, Hamm cited the insurer's ability to unilaterally change payments to health care providers and state law that requires that a rate be disapproved if the benefits provided are unreasonable in relation to the premium charged (BestWire, Oct. 13, 2008).

Huckle has been with Blue Cross Blue Shield for 23 years. Previously, he oversaw the medical management; actuarial and membership; provider relations and reimbursement; marketing; claims administration and member services; information services and development and business strategies divisions, Blue Cross said.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])

March 13, 2009