Blue Cross Blue Shield exec walks out with $11 million severance package

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Folks in Massachusetts are boiling over the disclosure on Tuesday that the former chief executive of Blue Cross Blue Shield walked away with an $11 million separation package after he abruptly quit last year.

Cleve Killingsworth is smiling all the way to the bank with $11 million.

The non-profit company booked a massive $149 million loss in 2009, prompting the executive to resign his post.

The largest insurer in the state, serving 3 million customers, Blue Cross Blue Shield paid Cleve Killingsworth severance and bonuses totaling $8.2 million last year, and plans to pay an additional $1.8 million this year and $925,000 in 2012.

Ethan Rome of Health Care for America Now, a Washington D.C.  advocacy group said, “These numbers are unconscionable and people should be outraged.”

“If you lose $149 million and then you get paid $11 million for doing it, it is very clear to people where their health-care dollars are going. And it is not for health care.”

A spokesman for the company said the compensation agreement was signed in 2006 when times were much better and that during Killingsworth’s five-year tenure, three years were the best the company had ever experienced.

However, critics of the executive said that Killingsworth had a reputation for clashing with executives in the organization, spent too much time out of the office and had difficulty containing runaway costs.

Blue Cross Blue Shield board member Paul Guzzi said, “The Board understands and is sensitive to the community’s interest and concern about executive compensation. With the full support and urging of our new President and CEO Andrew Dreyfus, we have significantly reduced the CEO’s compensation and benefits.”

In the state capital, Sen. Mark Montigny, has pushed for legislation capping non-profit salaries at $500,000. “This is a nonprofit in a very sensitive industry that is unable to keep their costs under control.  I have a real concern about this kind of parachute. It’s disproportionate, and I don’t think it’s justifiable.

One union leader, John Zuccaro, who represent municipal workers called the news “troubling.”

“Our members are paying a 50 percent increase in their premiums this year, and have had their wages frozen,” Zuccaro said. “I don’t see that same type of partnership coming from the insurance companies.”

Killingsworth’s predecessor, William C. Van Faasen, who ran the company for 13 years, received a severance payment of $16.4 million when he retired in 2006.

Information from: Boston Herald

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