BISMARCK, N.D. -- Blue Cross Blue Shield of North Dakota used premium payments to fund $15 million in employee bonuses, cover $35,000 for a retirement party and pay for other questionable expenses, according to a state audit released Tuesday.
Insurance Commissioner Adam Hamm said he ordered the company to make changes after insurance examiners found inappropriate or excessive expenses paid with policyholders' dollars. He said the nearly inch-thick report raised questions about compensation, travel policies, investments and severance packages.
Hamm said the report showed "a lack of judgment" by board members and senior management. It was the first audit of the nonprofit company since 2004.
"I expect and demand that those things won't happen again," Hamm said.
Company officials said Tuesday that changes were already being made when Hamm ordered the audit in March, following criticism of a sales managers' trip to the Grand Cayman Islands that cost $238,000. The company's chief executive at the time, Mike Unhjem, was fired later that month.
"The culture of this organization is very different than it was a few months ago," said board chairman Dennis Elbert.
The company provides health care coverage to more than 375,000 North Dakota residents and 75,000 nonresidents.
Hamm said that of the $418 million in the company's administrative expenses over the past five years, the audit found "millions and millions of dollars in excessive expenses."