May 20, 2015 - Blue Shield of California was named as the Defendant in a wrongful termination lawsuit filed by a former chief technology officer (CTO). Aaron Kaufman, former CTO, claims he was fired one day prior to receiving a $450,000 bonus because he raised concerns about a costly contract. The former CTO claims that he repeatedly recommended that the insurer sign a fixed-price $1.6 million contract for a “Veritas data project”. He claims his repeated recommendations were denied by Blue Shield CIO, Michael Mathias, who instead opted in December 2014 for an open-ended $4.6 million contract through a different vendor.
Kaufman claims that at one point he was in Mathias’ office making the recommendation and that Mathias responded insisting that Kaufman leave his office and never bring up the $3 million cost savings issue again. According to Kaufman, Mathias did not provide an explanation for why he seemed beholden to the other, overpriced vendor.
Kaufman’s employment as CTO was terminated on March 11th. The company cited alleged violations of Blue Shield’s travel and expense policies. The termination was completed the day before Kaufman was due to receive his $450,000 bonus (earned as of December 31, 2014).
A spokesman for Blue Shield disagreed with the complaints made by Kaufman, but didn’t want to provide additional comments regarding the suit.
Recently, criticism that Blue Shield of California behaves like a for-profit insurer has been rampant. The group even lost their tax-exempt status. In 2014, the company posted $13.6 billion revenue. They hold over $4 billion in their reserves. A former executive, Michael Johnson, has called on Blue Shield to return about $10 billion in public assets to the state accord to recent stories in the media. The organization also faces heavy pressure to lower its premiums for Californians.