Top executives of Blue Cross and Blue Shield of Ohio stand to make millions of dollars in a proposed merger with Columbia/HCA Healthcare Corp.
The benefits were revealed in documents submitted last week to the Ohio Department of Insurance.
Under the proposed agreement between the Cleveland-based insurer and Nashville, Tenn.-based Columbia, most of the not-for-profit insurer's business would be shifted to a new for-profit company.
In exchange, Columbia would pay the Blues almost $300 million for its assets.
The merger is subject to insurance department approval, as well as review by the Ohio attorney general's office and the U.S. Justice Department, which would look at antitrust issues, said David J. Randall, the insurance department's deputy director.
Randall said he couldn't estimate when the department would rule, but the companies have said they expect the merger to be completed by year-end.
The deal would pay a few Blues leaders not to compete against the new venture. John Burry Jr., chairman and chief executive officer, would be paid $3 million for a decade-long no-compete contract. Kent Clapp, president and chief operating officer, and Jerome Rogers, the insurer's general counsel, also would have no-compete deals.
Burry will be paid up to $7 million for two consulting agreements. In addition, Burry, who had said he would retire this year, can earn up to $1 million for each new insurance deal he brings to Columbia. Burry was paid $1.6 million last year.
Blues spokesman William Silverman said the executives merely are being compensated for what they're worth.
"The fact is, in the marketplace, (Burry) is like a Michael Jordan on the subject of how you integrate insurance into healthcare," Silverman said.
Some critics of the deal say payments to top executives make it impossible for them to work in the best interest of the 1.5 million Ohioans who depend on the Blues for their health insurance coverage.
"There is no way they can analyze the fairness of this transaction on the behalf of Blue Cross," said Joshua Cohen, a Cleveland attorney who represents two policyholders in a lawsuit filed to block the purchase.