Former Blue Shield executive sues insurer over dismissal, $450,000 bonus

Blue Shield

Consumers protest against Blue Shield of California in October over its opposition to a rate-regulation ballot measure at the company’s El Segundo office. On Monday, a former executive sued the insurer, alleging wrongful dismissal.

(Bob Chamberlin / Los Angeles Times)

A former executive at Blue Shield of California has sued the health insurance giant, claiming 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 chief information officer, 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,” according to the suit.

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 long-time 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.

Twitter: @chadterhune

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