In granting its former President and Chief Executive Officer Ronald A. Battista a $3.1 million severance package, the board of directors of Blue Cross & Blue Shield of Rhode Island met its contractual obligation to him.
That $3.1 million is an exceptionally generous severance package for an outgoing executive – particularly for a nonprofit like Blue Cross.
I can accept the rationale that the current board of directors had little option but to satisfy the terms of the agreement that Battista, who had worked for Blue Cross for three decades, had reached with his employer. Had the board opted to renege on an existing agreement, a protracted legal battle would have surely ensued – the cost of which would have been passed along to Blue Cross subscribers.
But what remains unacceptable is an apparent insistence on the part of the state’s largest health insurer to conduct business out of the public’s eye – the very public upon which its existence is dependent.
In May of this year, Attorney General Patrick C. Lynch said he requested that Blue Cross “disclose the exact financial terms of Mr. Battista’s employment contract and of the separation deal.” In a June 16 response to the attorney general, James Purcell, acting president and chief executive officer of Blue Cross, promised to provide this information “as soon as we have finalized negotiating the terms of Mr. Battista’s separation from Blue Cross and Blue Shield of Rhode Island.”
But the attorney general, who is working on behalf of the public at large, said he never did get that information.
“When I find out about these details in the newspaper, however, three months after I’ve been waiting to get them from Blue Cross and after Mr. Purcell himself has three times asked for more time, it only heightens my concerns about the way that Blue Cross conducts itself and the way in which it is regulated,” said Lynch.
To hear Blue Cross tell it, the insurer was getting picked on during the last legislative session.
Bills calling for increased regulatory efforts, including specific proposals that would force health insurers to explain in more detail why they should be allowed to increase rates and maintain deep reserve pools, were characterized as unfair by the insurer.
But legislators were responding to public outcry.
Besides, legislative efforts to reform the health insurance industry here is long overdue. And those reforms that lawmakers approved in this latest legislative session should be seen as a beginning, not an end.
Business owners can no longer endure premium increases of 15 percent or higher, year after year. Health insurance premiums are unquestionably the single-biggest obstacle to running a successful business. In recent years, they have caused many business owners to do what had been unthinkable – stop contributing to health benefits.
In a press release issued immediately after Battista stepped down on May 6, Frank J. Montanaro, the chairman of the insurer’s board of directors praised the outgoing executive.
“During his tenure, the company went from big losses to being financially healthy and stable,” said Montanaro.
That may well be true. Most people will tell you that Battista indeed did a terrific job working on behalf of Blue Cross.
But there are two sides to every story. There are scores of small-business owners in Rhode Island who will tell you that while Blue Cross has been getting financially healthy, health insurance premium increases have been making them sick.
Battista’s severance package should have been brought to the public light soon after the state’s attorney general asked to see the details contained within it. Blue Cross should have complied with the attorney general’s request, if for no other reason, but as a symbolic gesture of a renewed sense of openness with its subscribers and the public at large.
Lynch was justifiably perturbed by the situation, even if he was not surprised that Blue Cross kept him out of the loop, so to speak.
“Nonetheless, in the future, the best prescription for Blue Cross will be to show as much regard for its obligation to its subscribers – hundreds of thousands of hard-working Rhode Islanders – as it does to its highly paid, former executives,” said Lynch.
Blue Cross should have learned some valuable lessons from the events of this past spring. At the very least, the insurer should have learned to be as upfront with its subscribers as possible.
With all the money they’ve been paying in premiums, they deserve at least that.
