Mike Unhjem has been the Blues’ top executive since 1991.

The insurer said its 13-member board voted to fire Unhjem on Monday. The company said Tim Huckle, executive vice president of health operations, will serve as interim president and CEO.

Blues Chairman Dennis Elbert said the decision to fire Unhjem, 55, was necessary to move forward and to rebuild public trust.

“There’s been a lot of positive change and many good things under his leadership, but it became apparent a change of leadership was needed,” Elbert said.

Elbert said he and other board members have fielded angry telephone calls from policyholders about a Cayman Islands retreat attended last week by Unhjem, marketing vice president Chad Niles, and 33 employees and their guests. The trip cost the insurer more than $250,000, or about $6,500 per couple, the company said.

Unhjem later said the company “should have more adamantly questioned the appropriateness” of the retreat.

Elbert said the insurer has since scrubbed such trips, which came at a time when it is seeking increases in three rate categories. Unhjem has said they are needed to cover the cost of claims.

Unhjem was hired by the insurer in 1986 as its attorney and vice president of corporate affairs. Earlier, Unhjem worked as a lawyer in Jamestown and served 12 years in the North Dakota state House.

Unhjem, in a statement, said he felt privileged to have worked for the company.

“Working together, we accomplished many great things, and I am proud of our collective successes and the positive impact we have had on the health care system in North Dakota,” he said in the statement.

Elbert said a nationwide search will be conducted to find Unhjem’s replacement. The insurer hopes to have someone hired before next year, he said.

Elbert would not say if Unhjem will get a severance package. He said Unhjem’s contract will be honored, but he would not disclose the details of the contract.

Records show Unhjem’s total compensation has increased 61 percent, from $412,371 in 2006 to $664,431 last year. Unhjem’s bonus, which is included in the compensation package, tripled in three years, from $90,245 in 2006 to $285,909 in 2008.

The insurer said it lost $28 million last year, including $9 million from operations.

The nonprofit company, which is the state’s dominant insurer, says that it provides health care coverage to more than 375,000 North Dakotans and 75,000 nonresidents.

The trip last week prompted Insurance Commissioner Adam Hamm to call for an audit of the company’s spending.

Hamm said Elbert called him on Tuesday morning and told him that Unhjem had been canned.

“Obviously, it was a decision that was up to the company to make … that they believe is necessary to right the ship,” Hamm said.

The Insurance Department will continue to pursue a “targeted financial examination” of the company.

“The wheels are in motion and the department is moving ahead,” Hamm said.

Elbert said the Caribbean trip was not the first time Unhjem’s leadership had been questioned, though he did not give specifics.

“The board obviously has addressed a number of leadership issues and leadership challenges,” he said.

An audit of the Blues in the early 1990s questioned travel expenses for its top executives and board members.

The audit found Unhjem charged the company for an $800 helicopter ride in Hawaii and $280 for one day’s taxi fares in New York City in June 1992. He eventually reimbursed the company for both bills.

Three years ago, Unhjem was arrested for drunk driving and fined $500 after pleading guilty. A judge stayed a 90-day jail sentence for two years.

Police in Moorhead, Minn., said Unhjem was pulled over in March 2006 while officers were investigating a possible break-in at a home. A man reported an intruder who drove away in a black sport-utility vehicle matching the description of Unhjem’s SUV.

These actions will go a long way toward giving stressed policyholders, more than 50 percent of North Dakotans, faith in the Blues.

The rising cost of health care, including health insurance premiums, has North Dakotans in low and middle incomes struggling financially, sometimes making the choice to go with less or without insurance that they really need.

Meanwhile, Blues sent members of its sales staff on a week-long Caribbean retreat. The cost: $250,000-plus. This for a health insurance provider that lost $28 million last year, and whose CEO received a $285,909 bonus in 2008. Further, the insurer wants a 13.8 percent increase in premiums.

North Dakotans expect this kind of excess from Wall Street, but not from the state’s majority health care provider, based in Fargo. It’s embarrassing, and people are angry about it.

There appeared to be a disconnect between the work ethic of policyholders and the Blues’ desire for perks.

True, the retreat for top sales people was booked in 2007 before the national financial meltdown, employees on the trip were taxed on its value and the Blues said they will not be making trips to the Caribbean in the future.

But moves like the Caribbean trip make policyholders wonder about the Blues’ judgment, and efforts to keep costs in line and to offer polices with the best possible premium price. It becomes a matter of trust or, rather, lack of trust.

North Dakota Insurance Commissioner Adam Hamm has started a “targeted financial examination” of the Blues, in particular, executive pay and bonuses. That seems prudent, although Hamm and the Blues have been feuding since his appointment to the commissioner’s job.

North Dakota needs its Blue Cross Blue Shield to be smart about costs and premiums. The policyholders need to have confidence that the insurer has their best interests at heart. A change of leadership goes toward that goal.

Although insurance premiums for BCBSND are stiff, they compare favorably with other states, including Montana and Minnesota. North Dakota average premiums are seventh from the lowest in the nation.

Blue Cross Blue Shield of North Dakota, under fire for a weeklong Caribbean retreat attended by more than 30 sales employees and guests, says it will end such trips. Insurance Commissioner Adam Hamm is calling for an audit of the insurer’s spending.

Blues Chairman Dennis Elbert said Thursday the decision to halt future retreats was made by the board and management.

“Obviously, this has gotten the board’s attention and we’re taking it very seriously,” Elbert said. “As we move forward, there will be no more incentive trips.”

The Caribbean trip was booked in 2007, “when times were significantly different,” he said.

Blues CEO Mike Unhjem said in a statement that the trips have been used as compensation for 18 years.

“Given the current economic conditions, we should have more adamantly questioned the appropriateness of this trip,” Unhjem’s statement said.

Unhjem, marketing vice president Chad Niles, and 33 employees and their guests took part in the Cayman Islands retreat. The trip, which began on Monday and ends on Friday, cost the insurer more than $250,000, or about $6,500 per couple, said Denise Kolpack, a Blues spokeswoman in Fargo.

The Blues trip came after the insurer reported huge losses last year but a big pay increase for Unhjem.

Kolpack said the insurer lost $28 million last year, including $9 million from operations. She said the company now has a hiring freeze, and has cut expenses by more than $3 million.

Records show Unhjem’s total compensation has increased 61 percent, from $412,371 in 2006 to $664,431 last year. Unhjem’s bonus, which is included in the compensation package, tripled in three years, from $90,245 in 2006 to $285,909 in 2008.

Hamm told The Associated Press today that he has called for a “targeted financial examination”‘ of the company, which is North Dakota’s dominant insurer. He has denied three recent rate increase requests by the insurer.

He said he has fielded many telephone calls and e-mails this week “from a mixture of extremely angry and confused policyholders” questioning the Caribbean trip and Unhjem’s pay boost.

“Policyholders want answers,” Hamm said.

Hamm said the financial examination by his agency would review company’s executive pay and bonuses and “a whole host of issues focused on the expenses of this company.”

Hamm, who took over the agency in October 2007, said he did not know the last time a similar audit had been done.

“I don’t think this is going to sit well with policyholders, especially in this economic climate that we’re all in, where folks are struggling,” Commissioner Adam Hamm said Wednesday. “For Blue Cross Blue Shield to pay for a trip to the Cayman Islands on the policyholders’ dime - I don’t think it will sit well, and rightly so.”

Blues spokeswoman Denise Kolpack said 33 employees and their guests, along with North Dakota Blues President Mike Unhjem and marketing vice president Chad Niles, took part in the trip. She said it began Monday and ends Friday.

Kolpack said the annual retreat is meant to reward the insurers’ top sales representatives.

“It’s really an award for achieving their sales goals,” Kolpack said. “It’s considered part of their salary and they pay taxes on it.”

Kolpack estimated the trip cost the Blues more than $250,000, or about $6,500 per couple. She said employees were allowed to bring one guest. Unhjem went alone, she said.

Blue Cross Blue Shield of North Dakota is the state’s dominant insurer. Hamm and the Blues have been at odds over premium rate increases since last year, when Hamm denied them.

The insurer has said it lost $6.7 million - or about $950,000 a month - in premium revenue since August in its bank depositor group, which represents individuals, because rate increases were not approved by Hamm. Unhjem says the higher rates are needed to cover the costs.

While the insurer has struggled to cover the cost of claims, records show Unhjem’s total compensation has increased 61 percent, from $412,371 in 2006 to $664,431 last year. Unhjem’s bonus, which is included in the compensation package, tripled in three years, from $90,245 in 2006 to $285,909 in 2008.

An audit of the Blues in the early 1990s questioned travel expenses for its top executives and board members. The audit found Unhjem charged the company for an $800 helicopter ride in Hawaii and $280 for one day’s taxi fares in New York City in June 1992. He eventually reimbursed the company for both bills.

Former insurance commissioner Glenn Pomeroy said then that the audit revealed a “country club mentality” among Blue Cross executives.

Hamm, who has been North Dakota’s insurance commissioner since October 2007, said he was unaware until recently of the insurer’s annual retreats. He said no such thing happens at his agency.

The bill, introduced by Sens. Potter, JoNell Bakke and Tom Fiebiger and Reps. Kari Conrad and Dwight Wrangham, calls for prohibiting elected officials from appearing in public service announcements or promotional messages using public funds. It also would prohibit public officials from placing names on public documents in larger type size than used to print their agency’s name.

Potter’s bill remains in the Senate Judiciary Committee after a Jan. 28 hearing.

The genesis of this specific bill started in August when Potter, during a particularly contentious race for insurance commissioner between Adam Hamm and Jasper Schneider, indicated he would introduce such legislation after the appointed state insurance commissioner, Hamm, appeared in a television ad.

At the time, the Tribune editorialized that any proposal for such legislation should be DOA if it gets to the Capitol. That remains our opinion.

We believe Potter is an effective legislator who has a lot to say about a lot of things and brings a certain balance and energy to his elected position. We commend him for that.

Nor is Potter shy about what he believes; more should be as honest and outspoken.

“These ‘talking head’ ads are widely regarded as ineffective, unless the purpose is to build name identification for the talking head,” Potter said. “If you want a PSA to be effective, it needs to focus on the issue, not on making a politician a celebrity.”

After Gov. John Hoeven’s budget surplus kickoff address to the Legislature, Potter said this: “I didn’t hear anything about our relationship with the native people of North Dakota. While so much of the state is doing really well, we know there are some pockets of poverty in North Dakota.”

His candor and interest on that topic is welcome.

But he’s still wrong about SB2275.

“If the tax commissioner (Cory Fong) believes that people should file their taxes electronically, he can create an ad that encourages people to file their taxes electronically,” Potter said. “He doesn’t not need to appear in it.”

Attorney and lobbyist Jack McDonald (not an elected official) disagrees. “It certainly is more of an incentive, and more attention-getting” if an elected official appears in an ad, McDonald said. “We just don’t think this is a problem.”

Hamm says there’s a 30-day waiting period before a policy becomes effective, and it’s imperative that people who might be at risk of spring flooding act quickly.

Hamm says homeowner’s policies don’t cover flooding. Flood insurance is underwritten by the National Flood Insurance Program. And Hamm says that since not all floods are declared disasters, people should not count on federal disaster aid to bail them out.

The insurance department, at least in part, denied the Blues’ request to raise its premium rates for individual and groups rates by 14.8 percent and 14.9 percent, respectively, last year because of the contract language that has now changed, Insurance Commissioner Adam Hamm said.

Hamm said the department will now go forward with studying the Blues’ rate increase requests and will issue its decision in the coming weeks.

“They took themselves to the edge of the cliff with that decision in May 2008,” Hamm said of the Blues’ contract language that let them reduce payments to health care providers. “To their credit, they’ve now stepped back from the edge of the cliff and removed that contract language that allows them to change payments whenever they want.”

The Blues appealed the insurance department’s denial in November, resulting in an administrative hearing. An administrative judge is expected to make a recommendation in the coming weeks, which could come before or after the insurance department makes a decision to approve or disapprove the Blues’ rate increase requests, Hamm said.

Denise Kolpack, spokeswoman for the Blues, said the company’s financial reserves were about $236 million in 2007, and dropped to about $200 million by the end of 2008.

Hamm said the department has monitored the Blues’ financial health throughout the negotiations, and that the company, the largest insurer in North Dakota, is in good shape.

Crystal Gayle Just, formerly an insurance agent at an office in Bismarck, reported four pieces of jewelry stolen to the West Fargo Police Department in August 2008.

She also filed a claim with her insurance company for one item of jewelry. Police later discoved that she had pawned a piece of jewelry that she had reported stolen, according to reports.

Just was convicted of one count of false information to law enforcement, and sentenced on Jan. 12 to 12 months unsupervised probation and 25 hours of community service.

Adam Hamm, state insurance commissioner, said incidents like these are reviewed by a legal team on a case-by-case basis before making the decision to revoke a license.

“In this case, given what she was convicted of and what she did - at the core, the fraudulent insurance claim - the appropriate action was to revoke her insurance license,”Hamm said.