North Dakota Blue Cross Fires CEO After Subsidiary Loses $51M Developing Maryland’s Obamacare Exchange

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BISMARCK, N.D. (AP) — The company that does business as Blue Cross Blue Shield of North Dakota fired its president and chief executive officer on Monday, days after the state’s dominate insurer reported nearly $80 million in financial losses in 2013.

Paul von Ebers had been the Blues’ top executive since 2009. He succeeded former CEO Mike Unhjem, who was fired amid criticism over a Caribbean retreat for the insurer’s employees.

The bulk of the company’s financial woes stem from a subsidiary — Noridian Healthcare Solutions — that lost $51 million developing a health exchange in Maryland, as part of President Barack Obama’s new federal health care law, Blues spokeswoman Andrea Dinneen said.

The Maryland exchange, which was supposed to allow residents to sign up for health insurance under the federal program, crashed as soon as it opened last October. Maryland’s health secretary testified to a U.S. Congressional committee last month that the state made a mistake buying off-the-shelf software that was “defective and deficient.” Maryland has since decided to ditch the original software and adopt technology developed by Deloitte Consulting.

Fargo-based Noridian Mutual Insurance Co. said its 13-member board unanimously voted to fire von Ebers. The company said Chief Operating Officer Tim Huckle will serve as interim president and CEO.

There is no immediate plan to advertise for a permanent replacement, Dinneen said.

Board chair Ann McConn said in a statement that “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.”

Messages left for McConn and von Ebers were not immediately returned on Monday.

The company’s statement said it was “unable to discuss the nature of the termination due to confidentiality.”

The nonprofit provides health care coverage to 416,000 North Dakotans and 96,000 nonresidents.

The company on Thursday reported to state insurance regulators a year-end loss totaling about $80 million. The sum included an underwriting loss last year of about $25 million, and cash reserves fell from about $272 million to $199 million, the company and state insurance regulators said.

North Dakota Insurance Commissioner Adam Hamm said he expected von Ebers’ dismissal after the company’s poor financial performance.

“It’s not a surprise when they had their worst financial year on record,” Hamm said.

Von Ebers had been working as a consultant for Blue Cross Blue Shield of Illinois when he was hired from a field of 43 applicants for the North Dakota job five years ago. He took the position after Hamm ordered the company to make changes when regulators found inappropriate or excessive expenses paid with policyholders’ dollars.

Most of the criticism was aimed at sales managers’ trip to the Grand Cayman Islands that cost $238,000 as a reward for employees and guests and came at a time when the company was seeking rate increases. Unhjem, the former CEO, was fired shortly after the trip became public. He died the next year of carbon monoxide poisoning at his Fargo home. Police said no foul play was suspected.

Von Ebers was paid about $573,000 last year, state records show. The company would not comment on a severance payment for him.

Unhjem was paid $1.08 million at the time of his dismissal. He was given a $2.2 million lump-sum severance payment when he was fired.

(© Copyright 2014 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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