Ex-CEO of Blue Cross got $1.15M payout after stepping down

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PROVIDENCE, R.I. (WPRI) – Blue Cross & Blue Shield of Rhode Island awarded its former CEO a seven-figure payout in 2017, even though he had left the company the year before, Eyewitness News has confirmed.

Regulatory filings show Peter Andruszkiewicz, who served as Blue Cross’s president and CEO from May 2011 to May 2016, was paid $1.15 million in 2017 despite departing from the insurer’s top job the previous spring. While he received no salary, he was awarded a $781,000 bonus and a $371,000 severance payment.

In an email, Blue Cross spokeswoman Gail Carvelli said Andruszkiewicz earned the $781,000 bonus by “meeting certain metrics for his 2016 performance” during the five months he worked there that year. Records show the nonprofit insurer lost almost $35 million in 2016, its third annual loss in four years, lowering its reserves by 9%.

Asked how a bonus was earned in a year Blue Cross lost money, Carvelli said it was based on “a balanced scorecard that looks at a number of different metrics, not just a single one tied to financial performance.” She said the payment was part of a “company-wide incentive plan.”

Carvelli also said Andruszkiewicz’s bonus and severance payments were both “in accordance with his employment agreement.” She added, “The amount paid was in line with the compensation structure of similarly sized, health care-focused companies.”

It was the fourth straight year that Andruszkiewicz earned more than $1 million, filings show. Blue Cross paid him $1.6 million in 2016, including an additional severance payment of $432,000 and a bonus of $727,000. He made $1.3 million in 2015 and $1.1 million in 2014.

The 2017 payment to Andruszkiewicz meant Blue Cross cut seven-figure checks to two chief executives that year: Kim Keck, his successor, was paid $1.4 million. Her compensation included a $525,000 bonus and a $50,000 sign-on payment. The company posted its first profit in three years in 2017, her first full year at the helm.

The chairman of the Blue Cross board of directors, Randy Wyrofsky, received $18,750 for his service on the board in 2017, according to the filings. The company’s 17 other directors each earned between $10,000 and $12,500.

Executive compensation at Rhode Island’s dominant insurer has caused controversy in the past. Former Blue Cross President and CEO Ronald Battista was forced to resign in 2004 after negative coverage of his pay and benefits. He was given a severance package that topped $3 million.

Blue Cross is currently awaiting a decision from the state health insurance commissioner on its request to increase rates next year. The company is seeking average hikes of 10.7% for individuals; 10.6% for large employers; and 5.7% for small employers. A spokesperson for the commissioner said a decision is expected “very soon.”

Aaron Regunberg, a Democratic candidate for lieutenant governor, quickly criticized Blue Cross over the pay packages, and argued it shows the state needs to move to a single-payer health system.

“Every day I meet Rhode Islanders who are struggling to pay outrageous health care bills,” he said. “It feels like each year, insurance costs more and covers less. So why is Blue Cross seeking 10% rate hikes while handing their top executives immoral payouts of millions of dollars?”

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