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Former CareFirst CEO William Jews will receive entire $18M severance

William L. Jews

Former CareFirst Inc. CEO William L. Jews will receive his entire $18 million severance package after the state’s highest court on Monday declined to hear an appeal from the Maryland Insurance Administration.

The Court of Appeals’ decision ends a legal battle that began nearly three years ago when Ralph S. Tyler, then the state’s insurance commissioner, ordered Jews’ compensation to be cut in half. Jews was ousted in November 2006 after leading CareFirst for 13 years.

Tyler reviewed the payment under a 2003 Maryland law created after Jews tried, unsuccessfully, to convert CareFirst into a for-profit insurer. The law said CareFirst’s executives can receive “fair and reasonable” payment for work “actually performed for the benefit of the corporation.”

Tyler found the severance payment did not meet the nonprofit’s mission to “provide affordable and accessible health insurance.”

Jews filed for a court review of Tyler’s ruling, and a Baltimore County Circuit Court judge restored Jews’ payment in full in 2009, finding no formula or methodology to support Tyler’s decision.

The Court of Special Appeals upheld the ruling in January, faulting the lack of “substantial evidence” to support the 50 percent reduction. The Court of Appeals affirmed.

“We are disappointed by the court’s decision not to grant this review, but will move forward protecting consumers’ interests,” Karen Barrow, a spokeswoman for the insurance administration, wrote in an emailed statement.

Steve Ruckman, a spokesman for the Office of the Maryland Attorney General, said lawyers for the state “stand behind” their legal arguments.

Jews’ $18 million severance package, based on a 1998 employment agreement, was almost seven times his total annual gross compensation at the time of his termination.

The package includes nearly $10 million from the company’s supplemental retirement plan and nearly $3 million for three years’ base salary.

Jews, who was represented by Kramon & Graham P.A. in Baltimore throughout the litigation, expressed gratitude for the resolution in an emailed statement.

“I remain filled with fond memories of the wonderful associates who made the team at the CareFirst,” he wrote. “I continue to wish them well.”