Claiming his client “earned every penny of his compensation and retirement payments,” the attorney for former CareFirst CEO William Jews is applauding a Baltimore County judge’s decision to award the former executive his full $18 million severance package.

William Jews

On Nov. 10, Maryland Circuit Court Judge Timothy J. Martin ruled that Jews, who ran the Owings Mills, Md.-based insurer from 1993 until 2006, was entitled to the entirety of his post-employment compensation negotiated with the company. CareFirst and its companies operate in Maryland, Virginia and Washington, D.C.

Last year, Maryland Insurance Commissioner Ralph S. Tyler cut the severance package to nearly $9 million, citing a 2003 state law that limits compensation for non-profit health plan executive that which is “fair and reasonable…for work actually performed for the benefit of” the company.

Following Tyler’s determination, Jews filed suit in federal court and asked for a judiciary review of the Maryland Insurance Administration’s decision in state court, challenging its interference with a pre-arranged benefits and compensation agreement.

A ‘blurred’ role

In his opinion, Martin said that Tyler “blurred his role and overstepped his authority in his scope of inquiry and in the basis for his reasons” concerning the pay owed Jews.

Martin later wrote that to him, “the actions of [Tyler] fall so far beyond the limits of ‘legitimate governmental action,’ that no process could really cure the deficiency.” The judge said the matter before Tyler was whether the compensation package met the boundaries of state statute and the MIA expanded the probe into consistency with CareFirst’s not-for-profit mission and other details.

“This is uncalled for, not legislatively mandated, an unauthorized exercise of authority, arbitrary and unlawful,” Martin wrote. “To this court, both the procedural and substantive due process rights of Mr. Jews were violated.”

Andrew J. Graham, Jews’ attorney, told IFAwebnews.com his client is “very gratified by Judge Martin’s thorough and thoughtful decision.

“Multiple Maryland insurance commissioners over the years were fully apprised of the financial and other terms of Mr. Jews’ employment agreement, and not one ever claimed that the payments Mr. Jews was owed might, at the discretion of some later commissioner, be taken away from a dedicated CEO who had worked long, hard and effectively over a period of 13 years for the company,” Graham said.

Through a spokesperson, CareFirst declined to comment on the decision.

Appeal planned

In a statement, Tyler said the MIA planned to appeal Martin’s ruling.

“I am naturally disappointed by the position taken by the Circuit Court in this matter,” Tyler told IFAwebnews.com. “I believe my initial ruling upheld the letter and spirit of the law passed by the General Assembly regarding the compensation of executives of CareFirst.”

In his decision, Martin said that the court believed Tyler’s findings and comments in the case “are not only unsupported by the evidence provided by the MIA as required and reviewing the record as a whole, but unfortunately suggests a certain lack of objectivity and a want of impartiality on the part of the hearing officer [Tyler].”

Martin later expressed his “concerns” about how an MIA hearing on the matter was conducted and Tyler’s language in the hearing and case before him “unobjective, biased and quite personal in nature.

“There seemed to be a personal enmity found in the commissioner’s words which is not understandable and certainly inappropriate in the context of the circumstances of this case,” Martin wrote. “The sum of the money and the benefits proposed to be paid to Mr. Jews are indeed enormous but the amount alone cannot and should not be the sole fact which is determinative of his case under the circumstances of this review.”

One of the larger arguments in the case was the different interpretation of the state law’s “fair and reasonable” clause. As Martin points out in his decision, Jews argued that the clause meant “comparability” with other similar non-profit health services plans, while Tyler argued that just because it was comparable does not mean it meets the standard set forth by legislators as it also depends on “the facts and circumstances of the case.”

Martin called Tyler’s interpretation of the state law “far-reaching and quite sweeping” and “erroneous as a matter of law,” siding with Jews on the interpretation.

Martin also found fault with Tyler and the MIA’s evidence to meet their interpretation of the state law, specifically comparing lump sum payments to CEOs across the board versus weighing the details of various compensation packages. Martin said the MIA failed to provide evidence they looked at any other compensation packages other than Jews’, calling Tyler’s conclusions of law “erroneous” and having “no substantial, material and competent evidence supporting them.”