William L. Jews, the head of Blue Cross and Blue Shield of Maryland, sold his Lutherville home for $379,000 in cash last spring to the president of a Baltimore ambulance company that does business with the not-for-profit insurer.
Mr. Jews sold his property to Willie Runyon, a longtime friend who owns American Ambulance and Oxygen Service Co., after attempting to sell the home for about a year.
Mr. Runyon offered to buy the house March 17, nine days after Mr. Jews submitted a contract to buy a $1.1 million home on the southern fringe of Green Spring Valley, records show.
American Ambulance has been under contract as a participating provider of ambulance service for the Blues since 1985 and since Feb. 1 has held an ambulance contract for the insurer's four health maintenance organizations.
A Blue Cross and Blue Shield spokeswoman said she could not put a dollar figure on the amount of business American Ambulance did with the insurer, and Mr. Runyon would not comment.
Mr. Jews, Mr. Runyon and members of the Blues' board of directors said they saw no problem with the transaction.
Mr. Jews, 43, who is president and chief executive officer of Blue Cross and Blue Shield, said Mr. Runyon's purchase of his home was "a personal deal and has nothing to do with my company."
Asked whether he thought the arrangement presented a conflict of interest because of Mr. Runyon's business with the Blues, Mr. Jews said, "If it had been a conflict, I wouldn't have done it."
Mr. Runyon -- a politically well-connected businessman who came under scrutiny this year when he, his company and daughter gave a total of $95,000 to Gov. Parris N. Glendening's legal defense fund -- said he did not know how long Mr. Jews' home was for sale. The house is two blocks away from his own home, in the same development.
He declined to discuss the timing of the sale or specifics of the deal.
Mr. Runyon, 72, did say that he bought the house for his daughter, 20, who is to be married in May.
"It was a good buy, and I stole it," Mr. Runyon said. "If I couldn't have stolen it, I wouldn't have bought it."
Mr. Runyon, a multimillionaire who is a big contributor to Democratic candidates, paid the $379,000 Mr. Jews was seeking. The Blues president had dropped the price from more than $400,000 about six months before the offer.
Three years earlier, in February 1992, Mr. Jews paid $369,860 for the house and made substantial improvements to it. The property was valued at $465,490 by state assessors for this year, tax records show.
The amount Mr. Runyon paid was in keeping with the prices of other properties in the development -- known as The Fields at Seminary -- that have sold in the last three years, according to a list of comparable sales. The home also was on the market for an average length of time, the comparable sales showed.
Mr. Jews and Mr. Runyon settled on the sale of the house May 2, the same date the Blues president settled on his $1,075,000, seven-bedroom, nine-bathroom home on a secluded 2-acre, wooded lot off Park Heights Avenue. Court records show that Mr. Jews received a $900,000 mortgage on the property from First National Mortgage Corp.
J. Owen Cole, chairman of the Blues' board and retired president and chairman of First Maryland Bancorp, which owns First National Bank of Maryland, was on vacation and could not be reached for comment. Mr. Cole is still chairman of the banking company's executive committee, which approves major loans and reviews personnel changes.
Charles W. Shivery, vice chairman of the Blue Cross board and vice president and chief financial officer of Baltimore Gas and Electric Co., declined, through a BGE spokesman, to comment on the sale.
Jews' integrity praised
Other members of the 15-member board, some of whom were told of the sale by Mr. Jews, had little reaction to the transaction and made a point of praising the president's integrity.
"You've got a house on the open market and it's lower than the assessed value and it's been on the market for a while and it sells. Where's the conflict?" asked board member Beverly B. Byron, a former congresswoman from Western Maryland's 6th District. "And I am much more aware of conflicts, more so than people in the private sector."
Board member Dr. Morton I. Rapoport, president and chief executive officer of the University of Maryland Medical System, also said he saw nothing inappropriate about the sale.
"I am quite certain, knowing how the purchasing process is done, how contracts are done, that they're not done at the CEO level," Dr. Rapoport said. "There's a process that Blue Cross has that would evaluate the contract that was let with American Ambulance.
"I have known Bill Jews for many years; his integrity is unquestionable," he said, echoing the comments of other board members. "I just don't see how this is an issue."
Fred Guy, director of the Hoffberger Center for Professional Ethics at the University of Baltimore, said that on the surface, the sale "does not seem like a problem."
He added, however, that "it may be perceived with some suspicion that he has allowed him to get out of the house . . . that it could be perceived as more than a helping hand."
"It's a slow market, this guy's a friend, people sell to friends or family all the time; so what's wrong with that?" Mr. Guy said. "But, of course, has Bill Jews placed himself in the position of owing him a favor for buying his house?
"This is the kind of transaction may be perceived by the public as favoritism."
Mr. Jews was named president of Blue Cross and Blue Shield in February 1993. His annual salary is more than $600,000.
In the 1980s -- about when he and Mr. Runyon first met -- Mr. Jews took over the old Provident Hospital in Baltimore and helped build what is today Liberty Medical Center.
Mr. Runyon's name surfaced this year when Mr. Glendening disclosed a list of people who made contributions to help pay his legal costs resulting from the court challenge to the November election by Republican candidate Ellen R. Sauerbrey.
He and his company also each contributed $8,000 to the campaign committee for Mr. Glendening and his running mate, Kathleen Kennedy Townsend. Mr. Runyon gave at least $15,000 more -- in the name of Baltimore state Sen. Larry Young, then an employee of American Ambulance -- to finance the governor's inaugural festivities in January.
Questions arose this year about a potential conflict of interest between Mr. Young's employment at American Ambulance and his chairmanship of a Senate Finance health subcommittee. One of the questions concerned Mr. Young's dealings with officials of the Blues last year to help nail down American Ambulance's contract with the Blues' four HMOs.
Mr. Young confirmed in March that he, along with other American Ambulance representatives, met twice with Blue Cross officials last year to negotiate a contract to transport the company's HMO patients.
Mr. Runyon confirmed that Mr. Young resigned June 27 but declined to answer further questions. Mr. Young, a Democrat who had been on Mr. Runyon's payroll since November 1991, also declined to comment.
American Ambulance is under federal investigation for possible irregularities in Medicare billings.
Denying any wrongdoing, Mr. Runyon said this year that the U.S. Department of Health and Human Services' inspector general's office had asked for his records on reimbursements for ambulance service.