Blue Shield sued by a for­mer exec

Los Angeles Times - - BUSINESS - By Chad Ter­hune chad.ter­hune@la­times.com

A for­mer ex­ec­u­tive at Blue Shield of Cal­i­for­nia has sued the health in­sur­ance gi­ant, con­tend­ing he was wrongly fired right be­fore he was due a $450,000 bonus.

Aaron Kauf­man, the in­surer’s chief tech­nol­ogy of­fi­cer since 2013, sued Blue Shield on Mon­day in Los An­ge­les County Su­pe­rior Court for wrong­ful ter­mi­na­tion and breach of con­tract.

In his suit, he said the San Fran­cisco health in­surer and his boss re­tal­i­ated against him af­ter he raised ques­tions in De­cem­ber about award­ing a $4.6-mil­lion con­tract to a ven­dor for a “Ver­i­tas data project.”

Kauf­man al­leges that wasn’t a fixed rate and the un­named ven­dor would get a “blank check” to bill Blue Shield far in ex­cess of that amount.

Kauf­man fa­vored an­other ven­dor at an ex­pected cost of $1.6 mil­lion. But Blue Shield’s in­for­ma­tion chief, Michael Mathias, dis­agreed, ac­cord­ing to the com­plaint.

In mid-March, Kauf­man said in court doc­u­ments, Mathias got him fired one day be­fore Blue Shield was sched­uled to pay his 2014 bonus of $450,000. His an­nual salary wasn’t dis­closed.

“Mathias re­tal­i­ated against Kauf­man be­cause he had the courage to stand up to Mathias’ fi­nan­cial im­pro­pri­eties,” the suit said.

The com­plaint said Kauf­man was re­spon­si­ble for run­ning Blue Shield’s $34-mil­lion tech­nol­ogy group.

In a state­ment, Blue Shield said “Kauf­man is a for­mer em­ployee who left the com­pany on March 10, 2015. We dis­agree with the com­plaint and have no fur­ther com­ment at this time.”

The in­sur­ance com­pany’s cor­po­rate spend­ing and ex­ec­u­tive com­pen­sa­tion have drawn more scru­tiny of late since it came to light that state of­fi­cials qui­etly re­voked Blue Shield’s tax-ex­empt sta­tus in Au­gust.

The Times re­ported last month that the Cal­i­for­nia Fran­chise Tax Board yanked Blue Shield’s ex­emp­tion from state in­come taxes af­ter con­duct­ing a lengthy au­dit.

Blue Shield is protest­ing the state’s de­ci­sion, but in the mean­time it has paid $62 mil­lion in back taxes for 2013 and 2014. Re­gard­less of the out­come on its ap­peal, the in­surer said it in­tends to re­main a non­profit health plan.

Blue Shield is Cal­i­for­nia’s third-largest health in­surer.

Kauf­man and his at­tor­ney couldn’t be im­me­di­ately reached for com­ment.

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