Court restores former Carefirst CEO’s compensation 

Posted: 6:24 pm Fri, November 13, 2009
By Danielle Ulman
Daily Record Business Writer

A  Baltimore County Circuit Court judge found Friday that William L. Jews’ rights were violated when the Maryland Insurance Commission slashed his total compensation package in half.

In overturning Insurance Commissioner Ralph S. Tyler’s order, which found Jews should be paid half of his $17.97 million post-termination compensation package by his former employer CareFirst Inc., Judge Timothy J. Martin said Tyler’s actions were “arbitrary and capricious.”

“We are pleased with Judge Martin’s decision,” said Philip M. Andrews, an attorney representing Jews. “Mr. Jews is happy that the court saw things his way.”

Court records indicate an appeal has been filed.

Jews, the former CEO of CareFirst, was fired without cause in November 2006 after 13 years with the company and was to receive the $17.97 million severance package based on his employment contract, which was originally signed in 1998.

But Tyler wanted to review the payment under a 2003 Maryland law created after Jews tried unsuccessfully to convert the nonprofit CareFirst to a for-profit insurer and sell it to California-based Wellpoint Health Networks Inc.

The law said that executives could only receive payment that was “fair and reasonable compensation” for work that was “actually performed for the benefit of the corporation.” CareFirst’s board had shown a former insurance commissioner the details of Jews’ post-termination pay package in 2004 and there had been no objection then.

Tyler was the first to apply the 2003 statute.

After hearings in 2008, Tyler determined that Jews should receive half of his proposed total compensation package because Jews had abandoned CareFirst’s nonprofit mission in the attempted sale. The Wellpoint deal included $39 million in potential bonuses for Jews.

Martin said Tyler’s decision to cut Jews’ total compensation in half followed no formula or methodology. Although Martin acknowledged that Jews’ pay is “by any definition, very, very substantial,” he said that could not be the only determinant in the case.

The court rejected the commissioner’s legal conclusion that the law “authorizes him to consider whatever facts or circumstances he sees fit and appropriate to make and support his conclusion.”

Martin said Tyler’s findings were “merely inflammatory and quite personal in nature,” including comments that CareFirst’s board had “abdicated its responsibility,” that although Jews was terminated without cause, “the board had solid reasons for its action,” and that since CareFirst strayed from its mission, Jews’ compensation package should be cut.