Battered by a report from a consultant to the state insurance commissioner condemning proposed executive bonuses as illegal and excessive, CareFirst BlueCross BlueShield should "consider 'sacrifice' to get beyond [the] issue - such as taking merger bonus off the table," according to an internal CareFirst "crisis communications plan."
A CareFirst spokesman, Jeffery W. Valentine, said the plan to kill the merger bonuses "hasn't been dropped, but hasn't been adopted, either."
He said the report - the version obtained by The Sun was dated Sunday night - "represents brain-storming - portions may be implemented, and portions may be tweaked."
The report by consultant Jay Angoff, a former Missouri insurance commissioner, was released last week. It charged that CareFirst's board had failed to meet its legal duties when it approved merger bonuses and "unreasonable" severance payments should the company be sold. CareFirst executives stand to pocket $119.6 million in bonuses, severance and tax benefits - including $39.4 million for Chief Executive Officer William L. Jews.
The CareFirst crisis plan says the consultant's report "precipitated a potential communications crisis" that led employees to "suspect motives of senior management" and "could provoke extreme reform measures" from legislators.
As for advocacy groups which already oppose CareFirst's plan to sell itself, the latest report "provides additional ammunition to distort the issue," according to the plan.
Regulators are considering whether to allow CareFirst to convert to for-profit operation and sell itself to WellPoint Health Networks Inc. of California. Maryland Insurance Commissioner Steven B. Larsen has hired experts, including Angoff, to review the transaction.
Another consultant has said that the $1.3 billion purchase price is too low, probably by hundreds of millions of dollars. The money would be paid to foundations or other public purposes in Maryland, Delaware and the District of Columbia.
Valentine said such communications plans are routine. "Like any well-prepared corporation, CareFirst seeks to anticipate any contingency and plan accordingly," he said. He said the concerns about employee morale reflected surveys the company takes and "elevator talk." He declined to identify the plan's author or authors.
The plan also suggests consideration of an independent panel to review CareFirst's deal, but said such a review is "dangerous - depending on what is found. Company has to agree to accept findings."
It also recommends that CareFirst officials and "legitimate third parties" work to attack the Angoff report, which CareFirst says is inaccurate and unfair, and to direct focus to potential benefits of CareFirst's deal.
"People have lost sight of the $1.3 billion that could go to addressing unmet health care needs," Valentine said.
The bonus plan, he added, "really is a distraction, and we need to get back to the main story of what would be the impact."
Jews has defended the bonuses as needed to keep key executives in place through a transition.
In April, he said, "If there's anything I'd like you to really get and understand, it's this: None of us entered into this transaction believing that money for us, individually, was a factor."
WellPoint spokesman Ken Ferber declined comment.