Blue Cross & Blue Shield of Rhode Island last week agreed to pay $20 million and undertake ethical reforms to avert potential criminal charges against the company in the ongoing influence-peddling investigation known as Operation Dollar Bill.
The agreement between the company and the U.S. Attorney’s Office for the District of Rhode Island was announced Dec. 13. by U.S. Attorney Robert Clark Corrente.
Blue Cross did not admit to wrongdoing as part of the agreement. But Corrente said, “Blue Cross acknowledges and accepts responsibility for the conduct of its executives.” The names of those executives were not released, so it was not immediately clear whether the conduct in question involves four senior executives that left Blue Cross Dec. 11.
Blue Cross agreed to pay the U.S. Attorney’s office $20 million out of company reserves, and to not take any rate increase to recoup that payment. The money will be used to establish a trust fund at The Rhode Island Foundation, the earnings and interest from which will be used yearly to fund projects “geared to improving the quality and affordability of health care for everyone in Rhode Island,” Corrente said.
In addition, the insurer agrees to submit to the oversight of an ethics monitor for two years. If Blue Cross complies fully with the terms of the agreement, it will not face criminal charges for the conduct of the executives, Corrente said, adding that the agreement covers only the insurer, not any individuals.
James E. Purcell, president and CEO of Blue Cross, said that the company had working with Corrente’s office from “the very beginning” of the investigation, but that the actual agreement came together recently.
“It’s been a long, difficult process. By this agreement, we’re accepting responsibility for what our former employees have done,” Purcell said. “We’re cooperating fully with the ongoing investigation and now we’re focused on the future.”
However, while the company looks to put the investigation behind itself, Rhode Island Health Insurance Commissioner Chris Koller said that he is not convinced that Blue Cross has adequately addressed the issues raised in the investigation.
“The illegal activities of the Blue Cross executives were a gross betrayal of the company’s mission and the public trust,” Koller said. “I remain concerned that Blue Cross has not sufficiently addressed the culture of indifference to public interest that led to today’s settlement.”
Koller did, however, add that the settlement agreement “charts a path to better governance, public accountability and community investment.”
Corrente said the investigation involving the company focused on the dealings between Blue Cross and former state Sen. John Celona, who pleaded guilty in August 2005 to federal mail fraud charges and was sentenced to 30 months in prison; former House Majority Leader Gerard M. Martineau, who pleaded guilty last month to federal corruption charges and “a former president of the R.I. Senate,” whom the U.S. attorney declined to name.
“Between 2002 and 2003, Blue Cross executives were lobbying former Senator Celona on a variety of matters,” Corrente said in a statement. “Some Blue Cross executives, at Celona’s request, caused the company to pay roughly $75,000 to a communication company to produce a cable TV program, which Celona hosted. The communications company paid Celona more than $13,000.
“From 1998 to 2003, while Blue Cross executives were lobbying former Rep. Martineau on a variety of matters, some Blue Cross executives caused Blue Cross to pay $175,500 to The Upland Group, which was Mr. Martineau’s sole proprietorship, to purchase paper bags.
“With respect to the former Senate president, from 1997 to 2003, while Blue Cross executives were lobbying him on a variety of matters, some Blue Cross executives caused him to be paid monthly commissions in excess of $400,000 as an insurance broker for one of Blue Cross’ pharmacy clients.”
The announcement of the settlement came two days after four top executives left Blue Cross. Matthew T. Brannigan, Scott A. Fraser, Brian K. Jordan and the recently promoted Lynne A. Urbani had left their jobs at Blue Cross as of Tuesday last week, the company said.
Company spokeswoman Kim Keough last week would not say whether their leaving was tied to the federal investigation. However, she said that it would be “inaccurate to qualify” the departures as firings.
“As a company policy we do not discuss the details of the departure of any employee. That’s all I can say,” Keough said. •
