Denouncing DWI ‘cover-up,’ insurance commissioner calls on Blue Cross NC CEO to resign

News & Observer (Raleigh, NC)

Sep. 25--RALEIGH -- North Carolina's top insurance regulator is calling for the leader of Blue Cross Blue Shield of North Carolina to resign in the wake of the CEO's arrest on charges of driving while impaired and misdemeanor child abuse.

In a news conference Wednesday in Gastonia, N.C. Insurance Commissioner Mike Causey accused the insurer of attempting to cover up the nature of Blue Cross NC CEO Patrick Conway's arrest.

Conway, 45, was charged after a June 22 accident. His two daughters were in the car, according to police. A video provided to The News & Observer Tuesday appears to show Conway weaving between lanes for several miles on Interstate 85 before sideswiping a tractor-trailer.

Causey and top insurance regulators in Washington state and Oregon told the N&O that they didn't learn of the arrest until news outlets reported it on Sept. 18 -- nearly three months after it happened. Blue Cross NC called Causey on Thursday, Sept. 19, but was not forthcoming about Conway's arrest and didn't provide details of his behavior while interacting with a police officer, Causey's office said.

"I can deal with the criminal charges, even as disturbing as they are," Causey said at a press conference Wednesday. "What I cannot accept is the cover-up, the misrepresentation of facts, the lack of respect for oversight and regulation of the company and lack of respect for law enforcement officers who are only doing their duty."

"As a result of this lack of leadership and governance by the CEO and Board of Directors, I am today asking for the resignation of Dr. Patrick Conway as CEO for Blue Cross Blue Shield," Causey said, adding that the request "pains" him because Blue Cross has a good reputation.

"But there is no path forward for this office to have a trusting, confident and reliable working relationship with the chief executive officer at Blue Cross Blue Shield of NC," he said.

Wednesday, Blue Cross didn't respond to Causey's new comments or answer the N&O's questions related to the issue.

Police report on arrest

Blue Cross board Chairman Frank Holding Jr. has said the board was satisfied Conway could stay in his role after going through a substance abuse assessment and a 30-day inpatient treatment. He has said the company didn't speak publicly "out of respect for the legal process underway in Randolph County, Dr. Conway's right to due process, and medical privacy concerns and obligations."

But on Wednesday, Causey said the Blue Cross NC board had misrepresented the arrest. According to a confidential police report revealed Tuesday by WRAL, Conway denied wrongdoing and later became "belligerent" at the police station.

The police report quotes Conway saying: "'You had a choice. You could have let me go. You don't know who I am. I am a doctor, a CO of a company. I'll call Governor Cooper and get you in trouble,'" WRAL reported and the N&O confirmed Wednesday. (The governor "was not involved in this incident in any way," Cooper spokesman Ford Porter told the N&O Tuesday.)

Causey said in an interview that he didn't learn of Conway's behavior until he personally requested a copy of the Archdale police report late Monday afternoon. Causey said he was originally led to believe it was a routine arrest -- while the police report showed it was not.

Causey said he did not believe board members had seen the extended police report. Though he added, "I can't imagine if you were a supervisor of a CEO, why you wouldn't immediately get the full facts from the police department and see what happened.

"It appears to me the CEO lied to the board and it appears to me that somebody ... kept this from the Department of Insurance."

Conway, for his part, has apologized for the incident. His attorney, Thomas Walker, released a statement to the N&O Tuesday saying Conway is "deeply ashamed and embarrassed" about the pain he caused family and co-workers.

"He knows his conduct was unacceptable and not consistent with who he is as a person. He has never had an incident like this before," Walker said, noting that Conway "voluntarily and successfully completed 30 days of inpatient substance use treatment. He's committed to continuing to handle this appropriately going forward and will do so."

Possible penalties?

On Tuesday, Blue Cross NC said it was suspending a merger with Cambia, an Oregon-based insurer. The two companies announced their intentions to form a partnership in March, potentially covering around 6 million people with about $16 billion in combined revenue, the N&O previously reported.

The merger would need to be approved by Causey, a Republican, and several regulators in other states where Cambia operates.

Brad Hilliard, a spokesman for Oregon's Division of Financial Regulation, said its commissioner, Andrew Stolfi, was disappointed that Cambia and Blue Cross NC kept information around Conway's arrest confidential.

"Blue Cross Blue Shield of NC had an obligation to inform the division within two business days of Dr. Conway's arrest and the allegations against him," Hilliard said in an email. "These facts constitute a material change in the affiliation application pending before our states and there is no excuse for the failure to inform our offices."

Hilliard said the Division of Financial Regulation, which approves insurance mergers in Oregon, was not notified of the charges until last Thursday. Asked if Oregon will levy punishment against Blue Cross or Cambia, Hilliard said the division is "looking into it."

"This is a unique situation, and it will take time to review the matter before a decision is made," he said.

"We are concerned by the failure of both Blue Cross and Cambia to act in a transparent and responsible manner," he added. "If the parties decide to restart their affiliation proceedings these events and any future actions will be considered during our formal review."

Causey also said North Carolina has a similar statute that requires notification within two business days if there is a "material change" to a merger application. He added that he believes the arrest would be considered "material."

"It goes to the integrity of the CEO and their leadership ability, the CEO's state of mind and a host of other things," Causey said. "This CEO was slated to lead this combined entity if it ever got approved."

The Department of Insurance said its attorneys are exploring what possible penalties might be associated with breaking that statue -- though Causey said he can't speak about what those penalties could be at this point.

The state of Washington's top insurance regulator expressed dismay at the handling of Conway's arrest.

In a letter to the board of Cambia, Washington Insurance Commissioner Mike Kreidler said he was "deeply troubled" by the lack of communication from Blue Cross NC and Cambia around the arrest.

Krieidler, a Democrat, said he learned only about Conway's June arrest on Sept. 19, the day most news reports were published about the allegations. He said he learned about the arrest after Cambia CEO Mark Ganz asked for his personal cell phone number "to communicate an urgent message that could not wait until normal business hours."

"Both the board and CEO share the responsibility to deal with my office in a straightforward and honest fashion. Secrets are not permissible," he said in the letter to the board of directors.

"Your behavior in this matter must, and will, be taken into account as my office considers the Cambia/Regence's request for a merger," the letter concluded.

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