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N.D Blue Cross Blue Shield fires leader after $73 million loss

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N.D Blue Cross Blue Shield fires leader after $73 million loss
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FARGO – Blue Cross Blue Shield North Dakota fired its president and chief executive officer, the company announced Monday.

Paul von Ebers’ termination, voted on Friday by the insurance giant’s board of directors, comes days after the company announced a dismal financial year. The Blues lost nearly $73 million in 2013, according to records submitted to the North Dakota Insurance Department.

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Of that, $51 million was attributed to subsidiary Noridian Healthcare Solutions, which sustained heavy losses from a contract to build the bungled Maryland health care exchange.

In an interview with The Forum on Thursday, the day of its financial filing outlining those losses, von Ebers conceded the company had a bad year, but he struck a note of optimism.

The company would recover in part by doubling down on cutting administrative costs, he said, and the first few months of the year showed the company was on track to run in the black in 2014.

The very next day, the Blues’ 13-member board unanimously voted him out. His termination was effective immediately.

“The board felt it was necessary to make a change at the CEO position in order to ensure confidence in the future financial direction of our organization,” Ann McConn, president of the company’s board of directors, said in a statement.

The statement also said the board would not further discuss the nature of von Ebers’ termination, citing personnel confidentiality. McConn and several other board members did not return requests for comment, nor did von Ebers.

Von Ebers came to the company after more than 20 years with Blue Cross Blue Shield divisions in Iowa and South Dakota. He took over in 2009 after public furor over a sales staff trip to a luxury resort in the Grand Cayman Islands culminated in the dismissal of then-CEO Mike Unhjem.

In his final year with the company, von Ebers made nearly $573,000 – a base salary of $371,000 and more than $200,000 in bonuses, according to the company’s financial records. Company spokeswoman Andrea Dinneen said the company could not disclose any details on a severance package, again citing personnel confidentiality.

Unhjem’s firing in 2009 came with a $2.2 million severance package.

The Blues’ chief operating officer, Tim Huckle, will serve as president and chief executive officer in the interim. The board of directors has no immediate plans to launch a national search for a permanent replacement.

North Dakota Insurance Commissioner Adam Hamm said he wasn’t surprised that the Blues fired von Ebers after what Hamm called their “worst financial year on record.”

“A big part of that … was caused by this bad decision to get involved with building the Obamacare exchange in Maryland,” said Hamm, a Republican and vocal critic of the Affordable Care Act. “Change at the top is going to be inevitable. It really is that simple.”

And despite a nearly $73 million loss and now a change in leadership, Hamm said he’s confident the tumultuous year for the state’s largest insurer won’t have an impact on North Dakotans. He renewed his promise that Blue Cross Blue Shield won’t be allowed to hike insurance rates to offset the losses in Maryland.

“This is a big company in the state of North Dakota. They’ve had change in terms of CEOs before,” he said. “Life will go on for this company.”

Kyle Potter, INFORUM

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