Harvard Pilgrim CEO resigns due to unspecified misconduct

In the midst of merger talks with Partners HealthCare, Harvard Pilgrim Health Care's long-time CEO, Eric Schultz, abruptly announced his resignation due to unspecified behavior that he said violated the not-for-profit health plan's code of conduct.

"I recently exhibited behavior that was inconsistent with my personal core values and the company's core values and code of conduct," Schultz said in a June 12 letter to employees at the Wellesley, Mass.-based plan. "During the past eight years as your leader, I was committed to fostering a workplace culture that was inclusive, welcoming and rooted in integrity and respect. I made mistakes, and I'm truly sorry."

Harvard Pilgrim, Massachusetts' second-biggest plan with more than 1.2 million enrollees in Connecticut, Maine, Massachusetts and New Hampshire, announced that Michael Carson has been named president. Carson, who was hired last year as chief business growth officer, will assume responsibility for the plan's operations.

Last month, Harvard Pilgrim confirmed that it was in talks with Partners HealthCare, Massachusetts' dominant health system, that could lead to a merger.

Schultz's resignation "has no impact on our discussions with Partners HealthCare," Harvard Pilgrim spokeswoman Joan Fallon said. "Those discussions are ongoing."

The company declined to comment on the nature of Schultz's behavior or provide additional details. Schultz, who joined Harvard Pilgrim as CEO in 2010, was paid $2,387,962 in 2016, according to the company's IRS 990 filing.

Schultz reportedly had been under a company investigation for at least three weeks, according to employees who spoke on background to WBUR News.

He previously served as CEO at the Massachusetts health plan Fallon Health and had held executive roles at Cigna.

Schultz' departure comes a week after Athenahealth CEO Jonathan Bush resigned following accusations of "numerous physical altercations" with his now ex-wife and inappropriate conduct with a female employee.

A merger between Harvard Pilgrim and Partners would create one of the largest combined insurance and delivery systems in the country. Partner already owns a much smaller insurer, Neighborhood Health Plan.

Barbara Hoey, a partner at the law firm Kelley Drye who represents employers in workplace harassment cases, said there often are good reasons for a company not to publicly disclose the nature of the alleged misconduct in cases like this. For example, the allegations may be hotly disputed, the victim may want the matter resolved quietly, or the company may not want to go through a public spectacle.

"Leaving it hanging carries its own cost," Hoey said. "There will always be speculation. But the people who know the facts have made a decision that it is better it not be disclosed. I have to respect that."