Opinion ID: 1951521
Heading Depth: 3
Heading Rank: 2

Heading: Integrity of GHMSI's Officers

Text: Petitioners contend that issues relating to the structuring of executive compensation contracts placed the integrity of GHMSI's officers in question, and that the DISR acted arbitrarily and capriciously and without substantial evidence in affirming the competence, experience, and integrity of those persons who would control the operation of the insurer. D.C.Code § 35-3703(g)(1)(E); see note 7, supra. Petitioners also complain that the DISR issued its order without analyzing the executive compensation contracts firsthand. The contracts about which petitioners complain were those executive compensation contracts that provided for severance pay in case of a change in control of GHMSI. In the order, the Commissioner stated that No evidence or testimony was introduced that would give the DISR any reason to question the integrity of GHMSI's officers. While the record contains some evidence that GHMSI's officers may have placed themselves in a position to profit greatly from the transaction, there is also substantial evidence that the officers' integrity is beyond question. Unhelpful to petitioners' contention is petitioner Newmyer's own testimony which, though attacking GHMSI officers' management abilities and GHMSI policies, was complimentary to GHMSI officers' personal integrity: We have known several members of both boards [GHMSI and BCBSMD] for years. I have known Larry Glasscock [Chief Executive Officer of GHMSI] through civic activities and gotten to know Bill Jews [Chief Executive Officer of BCBSMD] more recently. While I doubt that this testimony will make us better friends, I don't think for a moment that these guys are bad people. The health care industry is riddled with bad actors.... We don't think that the Blues are riddled with bad actors. The Commissioner was aware of the severance pay provisions in the executive compensation contracts, and concluded that the provisions did not adversely affect the GHMSI officers' integrity. To some extent, petitioners' own testimony provided evidence for this conclusion. In addition, to avoid future impropriety, the Commissioner imposed important conditions on the funding of those contracts in order to ensure that the integrity of the officers would remain intact, see, e.g., note 14, infra, and reserved the right to disapprove of the contracts in the future if they were later found to be inappropriate. On this record, we conclude that the Commissioner properly addressed the issue of GHMSI officers' integrity and based his decision on substantial evidence.