Fired Blues CEO gets $2.2 million severance

BISMARCK — Blue Cross Blue Shield of North Dakota says it will make a $2.2 million lump-sum severance payment to its fired president and chief executive officer.

Mike Unhjem had been the Blues’ top executive since 1991. He was fired Monday after the insurer came under heavy criticism for a Caribbean retreat attended by more than 30 sales employees and guests.

Blue Cross Blue Shield said in a statement Thursday that Unhjem’s severance was based on two years of salary and other benefits, including medical. In 2008, Unhjem was paid $1,078,559, which included his Blues compensation of $706,344 and $372,215 “because of his responsibilities to the other lines of business,” the insurer said.

Blue Cross Blue Shield said the severance was part of an employment agreement reached in 2007, a year after Unhjem was arrested for drunken driving.

The Blues said Unhjem, 55, was fired by the 13-member board this week for violating the terms of the employment agreement.

“Unhjem displayed errors in judgment over the past couple of years that damaged the image” of Blue Cross Blue Shield of North Dakota, the insurer’s statement said.

The statement also said Unhjem “met and exceeded company operational goals as related to customer satisfaction, ad-ministrative efficiencies and contract gains during his 18 years as president and CEO.”

Unhjem did not return telephone calls from The Associated Press seeking comment on Thursday.

Unhjem was hired by the insurer in 1986 as its attorney and vice president of corporate affairs. Earlier, he worked as a lawyer in Jamestown and served 12 years in the North Dakota state House.

Blues Chairman Dennis Elbert said earlier the decision to fire Unhjem was necessary to move forward and to rebuild public trust. He said the Blues got angry telephone calls from policyholders about a Cayman Islands retreat attended last week by Unhjem, marketing vice president Chad Niles, and 33 employees and their guests. The trip cost the insurer more than $250,000, or about $6,500 per couple, the company said.

The insurer said it has since scrubbed such trips. The last one came while it sought increases in three rate categories. Unhjem has said they are needed to cover the cost of claims.

Denise Kolpack, a Blues spokeswoman in Fargo, said the Caribbean trip was not the only reason for Unhjem’s firing, though she would not be specific.

“There were other issues that led to the board’s decision for Mike’s termination,” Kolpack said. “The Grand Cayman Islands trip was one of many issues but it was the final issue.”

“Operationally, we were a very successful company under his leadership but there were other issues that ultimately damaged the reputation of this company, and that’s why the board made the decision that it did,” Kolpack said.

A nationwide search will be conducted to find Unhjem’s replacement, Kolpack said. The goal is to have someone hired before next year, she said.

The insurer said it lost $28 million last year, including $9 million from operations.

The nonprofit company, which is the state’s dominant insurer, said it provides health care coverage to more than 375,000 North Dakotans and 75,000 nonresidents.

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