True Blue:

A Health Insurance Colonoscopy

by Cynthia Gaffney

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True Blue: A Health Insurance Colonoscopy
“I taught college once at a tiny Catholic girls college in Dubuque, Iowa. And the power struggles...were as vicious as
anything in (Machiavelli’s) Medieval Florence.”
Games of Thrones author, George R.R. Martin Interview for a BBC Documentary on Machiavelli

The Backdrop
From 1998 to 2009, I developed and maintained the internal and external websites for Blue Cross Blue Shield of
Montana (BCBSMT). By chance, BCBSMT was a significant “under the radar” political petri dish during this period,
spanning the first dot com bubble though the Patient Protection and Affordable Care Act also known as the ACA
or Obamacare.

From a health insurance perspective, BCBSMT was notorious nationally, at the time, for its exceedingly high admin-
istrative costs (14%) and annual rate hikes (30%+) with a statewide uninsured rate hovering above 20%. Montana
was the only Northern State in that category, just one notch better than Mississippi.

This narrative has gnawed at me since I left BCBSMT in 2009, but the question of whether to use real names froze
my tongue. After attempting a few fictionalized versions, I realized that documenting the hypocrisy of this parasitic
industry was my only worthwhile goal. Full names are used for those with titles and available press exposure. For all
others, just first names are used. A big thanks to Wendell Potter for his book Deadly Spin. It gave me the courage
to appreciate the importance of saying what I saw. For those inclined to dismiss my statements as “old news”, just
realize that Blue Cross and Blue Shield of Montana continues to pay out millions of dollars annually in retirement
compensation to most of the individuals mentioned. And some of these executives are now in even more promi-
nent seats of national power.

Though BCBSMT was a small player at the time, what took place there is an accurate reflection of the US health
insurance industry as a whole. The ineptitude and cronyism are merely multiplied in the larger organizations, espe-
cially since becoming conglomerates. Power, of course, is the ultimate goal. As an actuarial friend once explained to
me: Think of insurance as Government subsidized gambling on a grand scale. (Aleatory Contracts) Then add legal
“insider trading” bonuses in the form of negotiated contracts with providers and drug companies. Guarding this
advantage in a morass of legal jargon are the many lawyers that dominate health insurance “Leadership” positions.
At the time, BCBSMT also held an understated political significance on the national scene because of Montana’s
Senator, Max Baucus, who chaired the Senate Committee on Finance. Baucus and his assistants, Michelle Easton
and Elizabeth Fowler, were responsible for crafting the Affordable Care Act (Obamacare). And, indirectly, that is
why I got to have a dinner conversation with Tim Murphy, the person responsible for implementing RomneyCare
in Massachusetts in 2007. A Republican plan that eventually became the model for Obamacare, Murphy mentioned
several times in our discussion that he didn’t see how Massachusetts could afford to continue supplementing the
rising cost of RomneyCare coverage.

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Accidentally Admitting an Anarchist
I was raised in a working-class family in Butte Montana. Notorious for its well-documented history of corruption
at all economic levels, theft and often murder went unnoticed in Butte except when revealed by the occasion-
al stool-pigeon. Both of my parents were first generation US citizens. Their most evident desire for me, which I
fulfilled, was to get a good education, but I never aspired to climbing a corporate ladder. Even if my parents had
been tempted by a crooked opportunity, they wouldn’t have had the mental or physical energy for it. Those resourc-
es were consumed over lifetimes of tragic health situations. In their own years growing up, they saw relatives and
siblings suffer painful, untimely deaths. During my childhood, they experienced cancer, debilitating strokes, and a
life changing accident that left my sister paralyzed at the age of fifteen. I witnessed their fear of being excised from
a health plan after reaching its coverage limits and could not have imagined milking the healthcare industry as an
unbridled cash cow.

Over nearly twenty years in the San Francisco Bay Area, I did corporate and commercial media production for
clients such as Kaiser Permanente Health Plan and The Lawrence Hall of Science. I was not naive about insider
favoritism in the corporate world and had friends in San Francisco who climbed to VP levels with no outstanding
qualification other than a ruthless obsession with corporate politics. At the headquarters of Kaiser Permanente
Health Plan, I saw examples of cronyism, repeated cycles of bogus initiatives, and worked with production crews
that joked about padding expenses on the Kaiser Gravy Train. There were plenty of opportunists at Kaiser, but the
grimy bottom feeders were kept in check by the majority of gifted and sincere others above them. Blue Cross and
Blue Shield of Montana was an entirely different story.

In 1995, to escape a way-too-long term relationship and better situate myself for single parenting, I moved back
to Montana. As a long-time supporter of Single Payer/Universal Health coverage, I was not a typical BCBSMT
employment candidate. There were not many well paid jobs in the State, though, especially for a woman in media
production. And I had enough challenge in my life at the time. Working at BCBSMT provided a measure of finan-
cial security with the bonus of doing interesting Web work at the inception of the industry. At first, I even harbored
the bright-eyed notion of being able to influence positive change from within the organization. When friends asked
me why I worked at BCBSMT, my joking but apologetic reply was always, “I got a job at Blue Cross because of
Blue Cross.” Health insurance coverage was an unexpected financial burden of life in Montana. As a freelance pro-
ducer in California, I bought affordable “good enough” health coverage for myself and young son through Kaiser
Permanente and that was just one reasonable option among many. In Montana, Blue Cross Blue Shield was the only
option.

Health Insurance plans are packaged for either groups or individuals. Because of scale, retention, and an early em-
phasis on employer based coverage, group plans are very profitable. The opposite is true for individual plans which
is why some insurers did not even offer them. At BCBSMT, individual plans were substantially more expensive with
less benefit. My first lesson about legal protections for the industry came from a BCBSMT sales rep who shook her
head in dismay when I asked about the price/value difference between coverage in California and Montana. After
giving me a lecture about Montana’s sparse and unhealthy population, she ended with the following punchline, “Of
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course...by LAW...ALL Blue Cross Blue Shield companies are REGulated and BOUNDed by STATE LINES.” In
practice this means that insurance companies and State regulators get to operate in a private legal playground free
from outside distraction.

There is no giant nationwide Blue Cross Blue Shield healthcare corporation. The Blue Cross Blue Shield Associa-
tion, headquartered in Chicago, is not a healthcare company. It is an investment company, staffed with lawyers and
marketers, whose main objectives are to make money and protect the “BLUE” brand. In closed meetings, executives
actually refer to themselves as “brand police” defending against enemies like “Blue Paws” veterinary clinics, a favor-
ite trademark case they often cited in brand training sessions.

Welcome Aboard the Ship of Fools

This is how I became a BCBSMT employee. Hustling an income from independent media work in Montana was not
easy and writing a fat check for worthless insurance every month was making me sick. So, I decided to get regular
employment with benefits. By chance, BCBSMT had an opening I was well qualified to fill. After a month of inter-
view panels, tests, and reference checks, BCBSMT hired me as a technical writer, a job requiring a blend of skills
from English major to programmer. My first week of work was spent “on-boarding”, one of first corporate-speak
terms I learned to use without laughing.

Technical writers were associated with the IT department. My supervisor wasn’t much older than me but was a
lifelong BCBSMT employee which was a typical scenario there. Jokes about job security came up in water cooler
conversations throughout the company. After 15 years of employment, those who had no further advancement am-
bitions took an unofficial “on the job retirement” and simply hung around until reaching official retirement age. The
optimal “on the job retirement” arrangement was to be salaried and solely responsible for an arcane never-ending
task. According to written HR policy, salaried employees got paid even when they didn’t set foot in the workplace,
a practice that started there well before the dawn of telecommuting. In an attempt to rein in the company’s exceed-
ingly high administrative costs, this policy was altered slightly in 2002, requiring that salaried employees make an
actual physical appearance in a BCBSMT building for at least one hour each work day. My supervisor, Sue, told me I
had to be seated at my desk ten minutes before the 8 a.m. start time. As part of my on-boarding, she placed a thick
employee manual on my desk and opened it to the employee dress code. Professional business attire had to be worn
at all times unless exception was granted from Senior Leadership during the company picnic, for example, or as a
reward for meeting some corporate goal.

Guidelines for the men were pretty simple. No shorts or jeans. A tie was recommended. Women, however, had de-
tailed rules. Pantsuits were allowed but dresses/skirts were preferred. No tops could be sleeveless or have a “reveal-
ing” neckline. The list went on about footwear and hygiene.

In addition to pages of dress code and grounds for dismissal, there was a typical corporate organizational chart in
the manual. I am not a fan of hierarchies so gave it a quick glance when an anomaly caught my eye. Out of the five
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people at the Senior Leadership level, two of them had the same unusual last name, Cladouhos. Tom Cladouhos
was Vice President of Information Technology (IT). Sherry Cladouhos was Vice President of Member Services. A
husband and wife were responsible for the two largest departments with the biggest budgets in the company. Power
Couple arrangements were not only allowed at BCBSMT, they were encouraged. In the prevailing corporate culture,
Tom and Sherry were rock star role models.

After on-boarding all morning, Sue gave me a short writing assignment for a compensation policy and told me
to get details from the Underwriting department. Corporate dress code was still calling up memories of Catholic
grade school when I entered Underwriting and was greeted by a woman wearing what can best be described as a
classic sex worker uniform, complete with a studded choker and stiletto pumps. It was not Halloween and she was
not alone. There were two other women in similar uniforms standing beside her, comparing manicures. These were
women who would not risk injuring their nails rifling through stacks of insurance policies.

My confusion must have been obvious because one of them asked if I needed help. I told her this was my first day
on the job and I was looking for someone with the last name of M-------. She then asked, “Do you want Dave or
Cheryl?” I said I wanted the M-------that managed underwriting. Rolling her eyes, she said, “Oh, you want Dave.
Cheryl’s his wife. She handles large groups. Same division but a whole other department.” She then introduced her-
self as Denise (my pseudonym) and took me to Dave’s office where I spent over an hour while his three assistants
continued swapping personal grooming tips. Dave and his “Girls”, as others called them, were one of many BCB-
SMT employee policy exceptions. A variation on the stool-pigeon scenario, the idea was that those privy to the right
company dirt got to plant their own gardens. Dave and his entourage were master gardeners. In the next few years,
Denise, Dave’s head “Girl”, would be given a sudden promotion and hefty settlement after being publicly groped by
the Corporate Medical Director. More on that later.

Sue’s office was tucked into a hidden corner, safe from the scrutiny of “her people”, as she called us, and everyone
else for that matter. The first few days, she came by my desk at 7:50 a.m. to make sure I was “ready to work ten
minutes early”. By my second week, with on-boarding completed, Sue was hardly ever in the building. When she did
show up, her time was spent exchanging manila folders with “her graphics and printing people”. Actual assignments
were never openly discussed and this is why.
As one of the many BCBSMT employees, including VP Sherry Cladouhos, who were hired right out of high school,
Sue had long ago earned her “on the job retirement” status. Excluding a handful of those with corporate ladder
aspirations, the company was managed by a salaried, mostly absentee staff. In Sue’s case, her “real job”, as she called
it, was the Longbranch Saloon, a restaurant/tavern in Clancy Montana that she owned with her common-law hus-
band. Sue had “her people” in graphics and printing doing all the menus and promotional material for her restau-
rant while on the job at BCBSMT. When that work was done, they’d go on to things she needed for the National
Records Management Association of which she was a long-standing member and rotating president. BCBSMT
financially sponsored Montana chapter activities for the Association that usually took place at Sue’s Longbranch
Saloon.

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Deborah, Sue’s favorite graphics person, also had her own design business on the side. Sue bought laptops and extra
software licenses for Deborah that benefited her business. In return, Deborah did pro bono work for Sue. And this
situation was not unique. When I started in 1998, Alan Cain had been CEO for nearly twenty years and, like all of
his minions, he benefited from this reciprocal backscratching environment. But that was about to be inconveniently
disrupted.

Leveraging Competition
Rather than dwell on the surrounding graft, I took a shot at creating my own job description. Two emerging fields
of digital communications, video production and Website development, were essentially non-existent at BCBSMT.
So I proposed ways that these tools could improve in-house training. Because of ongoing competition between
departments for funding and headcount, Sue saw this as an opportunity to usurp the existing HR department pro-
gram. As an added benefit, she could use me and the video equipment at her Records Management events. As soon
as she sent an authorized purchase order to the finance department, video production opportunities came out of
the woodwork. Then I turned to the Website.

From my experience as a woman in both media production and the computer world, I knew that acceptance barri-
ers for me in IT would be high and wide. In Montana, there was an additional obstacle. Except for those motivated
by personal reasons, no one with ambition and IT talent would consider a career move to Montana. So IT was filled
with two basic brogrammer types: The first was the local boy who was hired right out of high school, trained on the
job in one particular software, and would not hesitate to destroy any agent of change. The second, even more ob-
structive, was the out-of-State hired computer guy whose dream job was to kick back and watch the lights blink on
a mainframe. These guys would not be hired in any real world, competitive IT position. In Montana, however, at a
time when telephones could still be considered a luxury, these bros ruled the roost. Most of them devoted their full
attention to hunting and fishing, often delving into sideline work as outdoor guides. The best attended IT meetings
were those that involved vacation scheduling during hunting season.

The two men at the head of Network Systems, which controlled the Web server, seemed to have gotten their jobs
simply because of size. Chuck Jaeger and Sheldon Boe were both enormous, over six feet tall with blonde hair and
blue eyes that easily conjured Nazi comparisons except that Chuck Jaeger was morbidly obese. This is not a judg-
mental exaggeration. He enjoyed throwing his weight around. In meetings where someone challenged his opinion,
Jaeger used his body as a metaphor for obstruction by standing in the doorway, blocking it completely until he won
his point. Chuck was the obstacle I had to work around to get a real Website on-line.

When I was hired in September 1998, BCBSMT did have a one-page site that should have been embarrassing to the
company even at this early stage of the Internet. Through freelance work I had already used many of the earliest
Web design tools. One called NetObjects was included with IBM’s Lotus Notes Domino Server, an email system
that IBM more or less gifted to BCBSMT. Montana was an attractive, under the radar, location for beta testing en-
terprise software. The rationale seemed to be, if something worked in Montana, it would probably work anywhere
in the world. But if it failed, no tech reporter was likely to hear about it. BCBSMT had lots of unopened software
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gifts in its closet. NetObjects was part of the pile.

One of my first clients in Montana was an Internet Service Provider (ISP) called Internections. It was a loosely run
family business that relied on a home-schooled adolescent son and his buddies for technical support. As a 40+ year
old woman in a posse of male teen-age hackers, I had to be self-sufficient so learned to reboot a server, update
permissions, re-direct URLs, ping packets, etc., on my own. From the code on the rudimentary BCBSMT Website,
I knew it was being hosted on the Lotus Notes email server, a situation that was not recommended because of its
vulnerability to intrusion. After mentioning this to Chuck Jaeger and his sidekick, Chuck M (the Two Chucks), I had
my first experience with the weight of Jaeger’s despotic thumb. Then one morning a few weeks later, the BCBSMT
Website greeted visitors with a crimson red page that screamed “FUCK YOU” in big black type. While scrambling
to port the site over to a secure Microsoft host, the Two Chucks blamed “the Chinks” for the intrusion. There was
no press release about the hack but, thanks to a playful foreign programmer, the company did adopt a basic level of
Web security.

Learning the Rules of Monopoly

To gain some ground with Website development, I reminded Sue about my coding skills, and for corporate political
reasons, her eyes lit up. BCBSMT was on the verge of a rare transition of power, particularly in the IT department.
CEO, Alan Cain, was about to retire and his anointed heir was Tom Cladouhos. Anyone close to Tom would likely
have a seat on the arriving Senior Leadership gravy train. My boss, Sue, and her boss, Dick, were already in line for
tickets. There would be a transitional year or two after Cain retired so that CFO, Terry Scenar, could hold the CEO
title. A lightweight accountant with influential family ties, Screnar was never destined to hold the CEO seat for
long. But in order to maximize his retirement package, he had to occupy it for a short term. Cladouhos was Cain’s
groomed choice for a successor. The fact that Cladouhos would then be his own wife’s boss did not seem to be a
problem.

Due in part to the failed Clinton health initiative, there was also a growing national trend of non-profit and “not-
for-profit” (a special tax category just for Blue Plans) health insurance companies consolidating as “for profit”. The
consummation of these lucrative deals passed large bonuses onto those in Senior Leadership seats. Backstabbing a
path to these positions became a full time blood sport at BCBSMT.

Sue and Dick were on the hunt for anything that would elevate their position on the impending changes to the orga-
nizational chart. Dick, in particular, was awkwardly transparent about his desire to “make a splash/hit a home run”
as a final boost to his stagnant career. A controlled explosion of aging executive frustration, Dick was a lifelong
insurance man in his early 60s but looked more than ten years older. Though he had a vague Director of Special
Projects title, Dick’s office was located in prime real estate territory next to Tom’s, and this was his last hope of
making it his own.

Even after ten years at BCBSMT, Dick remained a Cincinnati dress shirt and tie kind of guy. Next to the denim,
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plaid, and horse shit covered riding boots of a “real” Montana man, Dick was a fastidious sore thumb. Despite a
degree electrical engineering, he did not impress anyone as being computer savvy. As a young 1960s Goldwater
supporter in Cincinnati, he got his first job out of college with Blue Cross Blue Shield where his stiff white shirt
was a glowing sign of compliance. Spending many hours in the right golf carts, he glad-handed his way up the ranks
through buddies on the course. His primary career aspiration, which he would state with all sincerity, was to garner
as many “perks” (perquisites) as possible before retiring. No one in IT bothered to show Dick any respect, including
Tom.

Driven by his insatiable appetite for perks, Dick seized any opportunity to fatten his retirement package. Supporting
my suggestion to build a new Website gave him a reason to bid for Tom’s distracted attention so Dick became an
Internet advocate. He had NetObjects installed on my desktop and granted me permission to re-design the Website.
First reaction from Chuck Jaeger seemed promising. He said the current site was taking time from his more import-
ant work so he was happy to get rid of it. Then at my first meeting with both Chucks, I asked about the process
to migrate my code up to the Web server. In reply, “Server” Chuck just snorted, handed me a stack of duplicate
paper forms and said, “Fill these out when you want your girlie code moved up. We’ll get to it when we have time.”
Attempting to soften his attitude, I mentioned that speed was one of the biggest advantages of the Web. Members
could have updates available to them within seconds rather than days. “Ain’t gonna happen,” said Server Chuck.
“That’s all there is to say about it.”

Nearly Perked to Death

Thanks to Dick’s desire for a perk “splash”, I was invited to make presentations about the Internet at Senior Lead-
ership meetings. What grabbed their attention was the fact that the Websites of other Blue plans were now making
BCBSMT look like an amateur in a high-stakes poker match. In making my case for the Web, I researched appli-
cations and analyzed BCBSMT business processes that could benefit from or be replaced by Web services. IBM
later used my report as the framework for their $100,000 e-business analysis that corroborated my results. In three
months, I launched a clean professional Website and thus became the de facto (without title) corporate Webmaster.

As health insurance companies realized the economic benefits of the “emerging tech frontier”, such as reduced
employee overhead, slogans like “Empowering Consumers” and “Online Solutions” became buzzword tag lines on
every Public Relations and cost-cutting initiative. Among the Blue Plans, the highest profile ROI (Return on Invest-
ment) customer Web service was a search-able on-line Provider Directory. Soon after launching the new Website,
Senior Leadership discovered that Blue Plans across the country, including Wyoming, had just such a directory. So
they wanted one too, especially because BCBSMT’s inordinately high (14%+) administrative costs were getting un-
flattering press attention. A new high tech tool was a way to demonstrate commitment to reducing expenses.

The BCBSMT Sales division had been haphazardly devising and revising insurance “products” for many years, all
with vague names like Healthy Choice and Blue Advantage. This created a blind crap shoot for BCBSMT mem-
bers trying to find a provider that accepted their particular version of coverage. The elaborate but mostly ineffec-
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tive solution was to print and mail every member a voluminous directory that was outdated before it reached their
mailbox. So monthly updates were also sent creating piles of loose-leaf paper only good for recycling. Printing costs
alone were around $20,000 with an undisclosed amount for maintaining a year-round staff to service this monster.
Transitioning to an on-line version was a double win, making BCBSMT appear to be tech savvy while generating a
PR headline about reduced administration costs. Everyone with a self-serving interest in having an on-line Provider
Directory became my de facto boss and Dick began pressuring me to produce something. This was my introduction
to the proverbial catch-22 of having all the responsibility with none of the authority.

I am not a database programmer, but my freelance experience taught me the basic requirements for database appli-
cations. The first task was assembling the right team. I could build the presentation layer which is what appears on
the screen, but a database coder and an administrator would have to connect, sort, and display the search results.
A young programmer who went through the new employee on-boarding process with me said he was up for coding
the database but his boss would not agree to “share” him as a resource. After weeks of lobbying VPs who were de-
manding the Directory, he was allocated on a limited part-time basis for the project. Then the real iceberg appeared
on the horizon, securing a database administrator who could untangle the morass of data sources that comprised
the printed version of the directory. Here is the short story of this technical challenge. The company’s long history
of fast and loose sales practices created many proprietary databases that did not interact with each other. All Blue
plans had sloppy data issues, but Montana was over the rainbow in this regard. Whenever a group plan wanted
special benefits or pricing, a whole new insurance product was made just for them. Generations of Montana State
Insurance Commissioners approved almost any plan that BCBSMT presented to them. Explaining these crucial
details to Senior Leadership was a lesson in futility. Every meeting with the upper echelons revolved around the
same question, “If Wyoming and the Dakotas have an on-line Provider Directory, why can’t we?” Exhausted from
spinning on the corporate hamster wheel, I decided to plea for help from my bosses, a situation which in itself had
become awkward.

Technically, Sue was still my boss but her boss, Dick, was now directly assigning me work. I’d started reading cor-
porate advice books and knew it was considered bad organizational etiquette to circumvent a direct boss. (Although
this can also be a success strategy for ambitious young white guys.)

When I laid out my quandary to Sue, she glazed over, so I proceeded to Dick. Meeting behind a closed door in his
office, I mapped the situation on a white board, showing all the data bottlenecks. Rather than offering practical solu-
tions, he became agitated and started repeating, “We have to make a splash!” When I pointed out that the project
required, but lacked, serious technical commitment from the data admin department, he started yelling about how
I had to find a temporary work-around like downloading all the data into Excel spreadsheets every day. This was an
absurd approach for even a temporary enterprise-wide application. The depth of his ignorance astounded me and
I didn’t know how to respond. Infuriated by my silence, he stood over me and yelled, “WE HAVE TO MAKE A
SPLASH!!!” I felt like I’d fallen into the Twilight Zone.

After a sleepless night, I decided to ignore corporate etiquette and talk directly to Tom. Though he had been con-
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veniently absent from Senior Leadership meetings where I’d been grilled about the lack of a search-able Directory,
this situation was his to handle. Tom was seldom physically present at BCBSMT. Even his friends outside of the
company were amazed at how he got away with being an absentee VP. Having a VP wife was a handy way to keep
updated without being present. Sherry attended every Senior Leadership meeting and took detailed notes. She was,
quite literally, Tom’s in-house Admin Assistant.

Tom happened to be in his office that morning and his door was open. With notes in hand, I told him about the
Provider Directory situation and ended by describing the tense atmosphere I experienced in Dick’s office. That may
have gotten his attention as a potential HR legal problem. By the next day, a database admin named Frankie was
assigned to the project full-time. Within two months, we had a reliable Provider Directory online that cut tens of
thousands of dollars from the annual budget. For me, this was a lesson in how little the corporate Leadership knew,
or even wanted to know, about how the company was actually functioning.

In 1999, Alain Cain stepped down as CEO of BCBSMT with a half million dollar a year lifetime guaranteed retire-
ment income plus perks, lucrative consulting contracts, and paid membership on influential corporate boards. His
successor, Terry Screnar, was a barely competent accountant who blatantly cheated at golf. Before every corporate
tournament, hours of administrative time were spent ensuring he was only paired with those who would graciously
overlook his petty obsession. Screnar was also looking to make a splash during his short CEO tenure. In fact, he
and some buddies on another corporate board started their own Web venture called APS Healthcare which was a
useless but expensive employee mental health “Wellness” application. BCBSMT was its first customer.

The Splash of a Boiling Ocean

Crazed with Web IPO fever, arrogant, but ignorant, Montana executives were easy prey for high profile tech sharks.
IBM, Microsoft, Oracle, Anderson Consulting, all lined up for a turn at sucking on the BCBSMT cash cow. Even
Enron and Goldman Sachs made appearances because of their involvement with the Montana Power/Touch Amer-
ica bankruptcy scandal. CEO Alan Cain was a long time board member of the Montana Power company, a success-
ful eighty-five-year old electric utility that greed-stricken sycophants destroyed in the failed Touch America fiber
optic telecommunications venture.

During an afternoon in a golf cart, IBM’s regional marketing director convinced Mr. Scenar that Big Blue was his
ticket to a big splash. Before discussion with any of his peers, Screnar agreed to a $100,000 e-business consulting
contract with IBM. The joke circulating through BCBSMT soon after was that Screnar would never again be al-
lowed to play golf without a chaperon. For 100 Grand, three IBM consultants led a week of brainstorming, brain
mapping, and brain numbing sessions requiring lots of sticky notes and colored markers. The main consultant, a
young woman, began each session by cheer leading us with slogans like think outside the box and the Net has no bound-
aries. To balance the perils of so much froth, she’d suddenly adopt a schoolmarm demeanor, warning us about the
futility of trying to boil the ocean! IBM’s final recommendations relied heavily on the research and conclusions I’d com-
piled months earlier, which they acknowledged. At least my work had been validated.
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By the time IBM was packing up their sticky notes and markers to leave Montana, Mr. Scenar had appointed two
“e-business executives”: Joe Fleming, a dedicated BCBSMT Yes!!! man with some education in business applica-
tion development; and Dana Walker, a retired luxury resort owner whose only qualification was being Alain Cain’s
bosom golf buddy. Cain created a position for Walker so they could play golf and attend conferences together on
the company expense account. Nothing else was expected of Dana. He was simply expensive executive baggage.
During a digital marketing conference at the Association headquarters in Chicago, I came upon this same pseu-
do-executive/golf buddy arrangement. The national Blue Cross Blue Shield Association Director of e-business was
a long-time golf cart crony of the CEO. He used an oversize titanium driver as a pointer during his opening pre-
sentation and concluded by proudly admitting he knew nothing about technology so was hoping to learn something
from us. Those who had to work with him confirmed this was not a joke.

The new e-business executives then set about hiring an e-business team. To summarize many murky details, the
majority of resulting team members were hired for personal/ political reasons that trumped qualifications. I had
to apply for the job I’d essentially created. Though I did get it, a high-strung network systems man name Scott also
applied and felt righteous in his anger when he was passed over. Scott worked out his revenge soon after.
Re-labeled a “Web specialist”, Joe and Dana had me sit in on some of their discussions about candidates for other
positions, and I learned how arbitrary that process was. There were two business analyst positions that needed to
be filled with well-qualified people. Analysts have a critical role in gathering the right requirements for a successful
application. Joe and Dana each chose their winners just days after the positions were posted. Joe chose a woman
named Kathleen who had reported to him for many years in Customer Service. Kathleen was a serious detail person
and a welcome addition. In contrast, Dana chose a woman named Samantha because he said she was “bouncy”. He
winked as he presented this as her sole qualification. It was obvious that Kathleen would be the only functioning
analyst.

An e-business manager position was automatically filled, without application, by one of Dana’s golf buddies, Tom
Burgess, who was the son of a well-known academic/sports figure at a local Catholic College with close ties to
BCBSMT. His sister was a director in the BCBSMT sales/marketing department. Mr. Burgess already held an Exec-
utive Director title for the Caring Foundation, a BCBSMT funded children’s health charity. Other than showing up
at fundraising dinners, his only Caring Foundation responsibility was organizing an annual golf tournament. He had
no background in any kind of technology and had no desire to learn. In fact, he was angry about his new position
because, from his perspective, it was a demotion from his previous Executive Director standing. His way of con-
tinuing to exert Executive Director type authority was to argue and obstruct regardless of the proposal. His friend
Dana would back him completely while they polished their clubs in his office. I’d never experienced such an abso-
lute no win situation.

Killed by Concern
The first e-business project was building a (1999) state of the art online customer service application. Though Joe
had hired another of his in-house associates, Marvin Drake, as a competent business minded counterbalance to Mr.
12
Burgess, I quickly came face to face with the reality of being the only “techie” on the team. To be successful, an en-
terprise level project such as this requires the cooperative involvement of every process and technology that already
exists in a company. At BCBSMT, it instead became the perfect mechanism for stalling and eliminating threats to
the status quo. Creating an Alice in Wonderland world of corporate bottlenecks, other IT divisions adopted useless
chains of management approvals and priority queues. It was the complete opposite of the rapid application devel-
opment principles that were fueling the Web. Our Leader, Mr. Cladouhos, simply ignored the in-fighting.
When I asked my e-business bosses for advice about improving cooperation, they told me I needed to “build rela-
tionships” with the other IT divisions, educate them into being stakeholders. So I opened my proposals with bullet
points about exciting new career opportunities in digital healthcare, customer service, and communications. When
nothing changed, Joe “coached” me to take more initiative, be more assertive, and demonstrate my capability. So
I built mock-up applications to earn their respect and allay their concerns. Then Joe told me he was getting com-
plaints, from Scott in particular, that I was being too aggressive. He ended by asking me if I’d ever worked with men
before. Dumbfounded, I realized I was working in a world of fun house mirrors and there was no logical way to
navigate through it. So, psychologically, I stepped outside the circus, read books like The Prince and The Art of War,
and developed a personal exit strategy.

With polite persistence and some unexpected luck, the BCBSMT Website slowly progressed toward being a worth-
while online service for members. As competitors, and even other Blue plans, began boasting about how their web
tools cut expenses and improved service, BCBSMT Leadership did not want to appear backward by comparison.
Marketing, Customer Service, and the Public Relations departments all began demanding their piece of online ca-
pability. A history of company politics already had those departments pitted against IT for budget dollars, and that
competition now escalated into uncensored insults. Even Tom Cladouhos’s absentee management style was openly
called into question. Then an unexpected corporate embezzlement scandal gave e-business its best argument for
building accountable digital solutions.

One of the Web services that customers, especially group plans, most requested was online billing and payment.
Even the Sales and Marketing departments were advocating for this as groups threatened to leave for the benefits
of a more tech savvy competitor. In spite of the outcry, the company Controller, Joe Donohoue, refused to con-
sider any kind of electronic payment system. “For the sake of the company,” he’d say with a Cheshire grin, “it’s just
too much of a security risk.”

Marvin and I researched options through Wells Fargo that avoided any direct contact with internal BCBSMT net-
works. Pleased with the Wells Fargo solution, Marketing joined us in lobbying to implement even a simple demon-
stration project. We suggested trying it for registration payments during the Governor’s Cup, an annual BCBSMT
sponsored foot race.

No matter how safe and non-threatening our proposed solutions were, Mr. Donohoue remained immovable. He
first waved us off with annoyed condescension, then grew visibly agitated as his arguments dissolved. Near the end,
he resembled the caricature of a joint puffing addict in Reefer Madness with dark circles around his eyes. A local
13
newspaper eventually announced the reason. Joe Donohoue had embezzled over $100,000 from BCBSMT in just a
few years. The fact that the company could not bury this story from the Montana press was a testament to just how
serious Mr. Donohoue’s crime was. ( Blue Cross official arrested on embezzling charge ) His deep “concern” for the
welfare of the company was nothing more than his own concern about covering his tracks. He obstructed digital
payments for BCBSMT’s entire membership in order to maintain an old school embezzlement scheme, complete
with a shell company and fake hand typed invoices.

Donohoue’s son and mine were on the same soccer team so we saw each other in social situations outside of work.
He and his family were considered distinguished community members, bedrock models of Main Street Montana.
His wife, also a CPA, was head of a prestigious local accounting firm yet claimed to have no clue about her hus-
band’s side ventures even though he owed more than $30,000 in unpaid taxes.

With Mr. Donohue in handcuffs, e-business got the go-ahead to take online registration payment for the Governor’s
Cup race. Hoping to divert attention from the embezzlement headlines, BCBSMT announced this development in
splashy press releases. Taking online race registration payments was a rudimentary first step, but it broke ground
for eliminating an entrenched array of absurd business practices. BCBSMT’s chaos ridden process for approving
provider referrals was one such example.

When a provider wanted to refer a patient to another practitioner for a second opinion or further tests, etc., the
provider’s office staff would have to fill out a 4-part (white, pink, blue, yellow) carbonless form. Keeping the white
copy, provider staff then mailed the remaining three copies to the BCBSMT main office in Helena where the pink
copy was peeled off and stored. The remaining two copies were consolidated into boxes with other forms and then
delivered by truck to the referral authorization office located a hundred miles away in Great Falls. The forms were
then processed by hand and given a BCBSMT acceptance/denial decision. The blue copy was peeled off and stored
in Great Falls while the final yellow copy with the referral decision was placed in another big box and trucked back
to Helena. Finally, a combination of the Provider and Customer Service departments mailed the decision outcome
to the provider.

Even in the best of circumstances, this was a two-week process. Given the reality of common mishandling and
erratic Montana road conditions, approvals often stretched into months because of lost forms, contested decisions,
outdated policy coverage, or simply being unable to decipher the ghostly handwriting on the last yellow copy. Mean-
while, real life patients with inoperable cancer or intolerable pain waited in limbo to get a second opinion that was
recommended by their own physician. This corporate merry-go-round started many years earlier when separate Blue
Cross and Blue Shield companies in different parts of Montana were combined into one. Job Security, a mantra at
BCBSMT, was the only reason it continued.

14
The Ascension of Angles
Despite the need to replace its outdated processes and the demonstrated success of completed e-business projects,
technology again got set on a back burner as Leadership took an abrupt political pivot. Battles for alignment with
Tom Cladouhos, assumed heir to the throne, hit fever pitch as Terry Screnar edged closer to claiming his retirement
package. Behind closed doors in the Boardroom, though, an alternative future was taking shape, that of selling
BCBSMT to one of the new “for profit” Blue Plan conglomerates.

Blue plans have a long legislative history with being non-profit or not-for-profit. They even have their own special
section of federal tax code. Federal laws about operating within State boundaries allowed health insurance compa-
nies to dominate individual State markets. Montana was a prime example. BCBSMT was essentially the only insurer
in the State. To create the illusion of competition, it encouraged and even helped create a few small plans such as
New West Health. When these small plans inevitably collapsed, BCBSMT bought them out and started a new cycle.
During the Clinton era, restrictions were loosened on for-profit mergers across State lines and consolidation became
the future of US health insurance. According to in-house company lore, BCBSMT was on the verge of a merger
in the 90’s but the buyer backed out because of Montana’s small customer base. So, the company set about making
itself financially attractive by acquiring and/or forming an array of lucrative for profit subsidiaries. In addition to
various partnerships with the Federal Government, BCBSMT owned regular indemnity companies such as Com-
bined Benefits Corporation and Western States Insurance which the majority of Montanans do not immediately
recognize as BCBSMT subsidiaries.

With the scent of profitable subsidiaries and increasing profits hanging in the air, the BCBSMT Board of Directors
hired Peter Babin, an executive insurance lawyer specializing in corporate mergers, onto the Leadership staff. If the
Board’s real intention in hiring Babin was to make him CEO instead of Tom Cladouhos, it wasn’t obvious when he
was first hired. What was clear from the beginning was that Peter and Tom were not likely to be friends. Standing
well over six feet tall with a patrician bearing in tailored three piece suits, Peter Babin was imposing without even
saying a word.

Peter Babin June 2001 Press Release excerpt:

“Having 20 percent of our fellow Montanans uninsured is an unsatisfactorily high number,” said Peter Babin, Executive Vice Presi-
dent and Chief Operating Officer of BCBSMT. “Working with a group of physicians and hospitals, we hope to make health care and
health insurance more affordable for many of our state’s uninsured.”

Suits Are in the Cards

Peter immediately began building his own trusted cohort of past associates. The first was Richard Miltenburger.
Hired as the new Marketing Director, Richard looked like an easy fit among the predominant ultra religious tenor of
Senior Leadership. He had eleven kids, all home schooled and uniformly blond. Together, they could have been mis-
taken for the Von Trapp family, some of whom actually do live in Montana. But Mr. Miltenberger also had a relaxed
Louisiana drawl and owned a stable of Kentucky race horses which were brought to Montana at company expense.
15
Indeed, due to its size, his whole family was a huge expense from insurance coverage to travel costs when they all
accompanied him to conventions and sales incentive trips as far away as the Caribbean.

For reasons probably related to information gathering, Richard made an effort to befriend me. He introduced
himself as an insurance executive with the heart of a history professor. But his father owned a chain of shipping
insurance companies so Richard felt obligated to enter the world of underwriting, a victim of wealth and influence.

Our discussions revolved around academic subjects but questions about IT always slipped in. Richard said that
Peter was not happy with the overt nepotism at BCBSMT. In particular, he was astounded that the Tom and Sherry
Cladouhos VP situation was allowed to flourish. Indeed, the whole company was an incestuous nest. It was nearly
impossible for Babin to know all of the blood or marriage ties which could impact his primary objective, complet-
ing a lucrative merger with himself at the top of the pile. In a corporate merger, the C and VP level title holders re-
ceive substantial negotiation rewards on top of regular salaries, consulting contracts, and long-term perks. As CEO
in charge of the merger, Babin could be given a million dollar bonus. Feeling assured of his own impressive share
of the spoils, Richard often praised Peter’s negotiation skills with an infatuated look in his eyes. But that was before
Mr. Babin was hit head on by old time Montana collusion. At the end of his short CEO tenure, Peter was wander-
ing the halls of BCBSMT in shocked “deer in the headlights” bewilderment.

Always An Excuse for a Party

In 1999, confident that he would soon be CEO, Mr. Cladouhos’s absentee management style blossomed just as fear
of the Y2K bug reached its height. Teams of third party coders, mostly from Pakistan, were crammed into every
spare corner of the department while actual BCBSMT programmers set up their own personal Y2K consulting
companies with outside clients. Employee family members were hired as temporary “disaster recovery” consultants.
Tom’s full-time vacation status made it nearly impossible for him to direct what was actually happening in IT and his
Leadership peers did not pressure him for any worthwhile analysis. I saw this myself while attending many rounds
of Senior Staff meetings. Tom’s trite response to questions about vague results from technology initiatives was that
he was allowing solutions to “bubble up”, a metaphor of ferment best fitted to work in a brewery which was how
IT often smelled. As though contemplating the day when Tom’s keg would finally be tapped, his fellow Senior Lead-
ers would wistfully nod their heads then move on to the next agenda item.

There was one thing that did capture Tom’s attention in 1999 and it wasn’t the Y2K bug. Health insurance com-
panies like to party. For expense purposes, they refer to these parties as “conferences” though, in reality, they are
nothing more than subsidized executive vacation/job fairs. In addition to national Blue Cross Blue Shield Associa-
tion events, there are Internal and External Operations conferences that each of the individual State/Territory plans
host on a revolving basis. There is blatant competition between plan CEOs to host their conference at the most
extravagant golf-course resort available. The year 2000 was BCBSMT’s turn to host the Internal Operations Con-
ference. Tom spent much of the ‘99 Summer and Fall scouting suitable venues for the conference in Montana only
to conclude that there was nothing suitable in Montana. No hunting lodge large enough, no golf course sweeping
16
enough. So, Blue Cross and Blue Shield of Montana awarded its trove of corporate convention dollars to the Coeur
d’Alene Resort in Idaho. Leading the planning effort was Tom’s dutiful personal assistant, Patricia, a former high
school English teacher who worshiped her boss like a god. She asked me to produce a video opening and closing
for the conference. Along with another IT staffer, I was also assigned to handle technical media on-site. Building
on the theme of a bright new Millennium, Patricia made it her personal mission to emphasize Tom’s leadership as
a technical visionary and to ensure that this conference exceeded all others. Her particular target was the Minnesota
plan which hosted the previous conference and left the crowd gob smacked by their technical wizardry. My duty was
to blast the Minnesota plan off their pedestal. After viewing their “wizardry”, I knew this assignment was going to
be a piece of cake and might even earn me a decent raise.

The Coeur d’Alene Resort is Idaho’s most expensive adult playground outside of Sun Valley. Protruding slightly
into Coeur d’Alene lake, the majority of its rooms have sunken entertainment areas with gas fireplaces and a wall
of windows overlooking the water. Its primary claim to world-class fame is the 14th Hole Floating Green, an artificial
island just offshore from the main course. Their advertising is headlined with this quote from Golf Digest: The
Coeur d’Alene is what every resort should be. It’s not just upscale, it’s posh. You aren’t just pampered here, you’re spoiled. It’s not just an
escape, it’s an experience...

Over the five day conference, there were formal breakfasts, lunches, and cocktail hours followed by even more for-
mal banquets in tents with chefs, flaming entrées, and flashy motivational speakers. Most attendees stayed lubricated
with the abundant alcohol. I’d already witnessed several Senior level consumption spectacles where expensive wine
and aged scotch were poured onto a corporate tab. But the Internal Operations Conference was a binge fest. The
fact that I was recording it on video got immediate attention on the first day.

In order to produce a video montage of the week as part of the closing event, I brought the corporate camera and
editing equipment with me. From the start I saw it would be difficult to cover anything outside of the so called
“training workshops” without including a beer can, wine bottle, or cocktail glass in the scene. Actually, I was excit-
ed about documenting the booze consumption until Mike Wagner, who handled BCBSMT’s government funded
contracts such as TriCare and Medicare, grabbed my shoulder and “suggested” that I avoid any sign of the alcohol
by asking me questions like, “You’re not showing any alcohol, are you? You know that Federal contracts don’t allow
alcohol, don’t you?” So, no booze shots were included in the final edit.

There were two motivational/entertainment speakers during the week. The first was Vince Poscente on opening
day. He arrived on a private jet about 30 minutes before he was scheduled to take the stage. Without time for re-
hearsal, he handed me a binder full of DVDs with detailed cue sheets and headed backstage for his introduction.
His motivational sales story was about how he went from being a recreational skier to becoming a contestant in the
1992 Olympic speed skiing competition when it was a demonstration sport. While Vince jumped around the stage
waving his fists, I followed every rant on the cue script, bringing up video, sound effects, and promotional stills. At
the end of his contracted hour, he headed straight to his next gig and was paid $5000.

17
The real hard-core motivational headliner, though, was Connie Podesta. Connie’s performance was scheduled to
close the conference but she and her husband arrived on the first day with all hotel and meal expenses covered.
“What a perfect mini-vacation for us,” she said. “We love golf!”

The topic of her talk was “relationship building and getting along with co-workers”. Her secret formula was to keep
things ultra simple by labeling everyone she met as a circle, a square, or a squiggle. Hurling rapid fire, slightly sugges-
tive jokes about how to handle these three personality types, especially the squiggle, she worked the stage in stiletto
heels with material better suited for a Catskills nightclub than a corporate business conference. Besides the paid
vacation for two, Connie got $12,000 for this hour of giggly shtick. I saw the invoice.

My video production did raise the technical wizardry bar beyond that of any previous conference. Some of the right
people even noticed, including Tom since he was getting compliments that would be expected from something a
California plan would produce. Back at the office, though, the conference media success did not endear me to my
fellow IT co-workers. Being a woman was damning enough but demonstrating competence on the job was a death
sentence regardless of gender. Here is just one example. To beef up capability for routing data to the Website, BCB-
SMT needed an Information Architect. This was a new, well-compensated position and many of the IT inner circle,
regardless of qualification, applied for it assuming that one of them would get the job. But an actual Information
Architect applied with qualifications so outstanding it was impossible to avoid hiring him. And he was a nice Cana-
dian to boot. In preparing to optimize the company’s data architecture, he first did a thorough analysis of all data
sources and discovered an incompetent rat’s nest which he described using more polite but accurate terms. His com-
petence secured his corporate demise. Between fictitious delays and direct obstruction, the Canadian Information
Architect was soon discouraged enough (and it is not easy to discourage Canadians) to move on to better footing in
California.

Health is in the Eye of the Beholder

In the lofty echelons of Senior Leadership positioning, Peter Babin was clearly threatening Tom’s CEO ascendancy.
On September 11, 2001, when Empire Blue Cross was suddenly wiped out at the World Trade Center, it was Pe-
ter who happened to be in New York with Terry Scenar for an executive meet and greet. The BCBSMT Board of
Directors seemed to have decided to place the company on the auction block and having an acquisition lawyer like
Babin as CEO was more advantageous than an absentee VP like Cladouhos. In 2001, Babin first took on the ambig-
uous title of President and began aggressively bringing his own people, such as Richard Miltenberger, into the fold.
His next hire came on the heels of what appeared to be an ideal opportunity to signal Tom to retire.

Dr. Jim Crichton had been BCBSMT’s Medical Director on part-time basis for many years. Jim had a patronizing
side, but most people saw him as a plain-speaking country doctor, born and raised on a ranch in Deer Lodge, Mon-
tana. If he thought something about a story just didn’t add up, he said so.

Though there was a sizable age difference between them, Dr. Crichton idolized Tom Cladouhos. Together they were
18
more than just best friends. They could have been mistaken for father and son. Given all the free time and excessive
compensation that Tom enjoyed, he often took expensive, athletically demanding vacation expeditions, and Jim was
usually with him including to the top of Mount Everest.

Since being Medical Director was a part-time figurehead position at BCBSMT, Dr. Crichton only had a small office
hidden around a corner from the elevator shaft. His primary occupation was visiting with friends who dropped by
to chat. After sharing some of my personal writing about Montana with him, I got to be included on his guest list.

The Medical Director’s main responsibility was to review controversial claims and determine BCBSMT’s payment
obligation under associated insurance contracts. After review, a determination letter was sent to the subscriber with
an image of Jim’s signature printed at the bottom. Unless an usually high-profile lawsuit was involved, Jim did not
actually review any of these claims himself. That voluminous work, including the letter writing, was handled by the
Underwriting and Customer Service departments. Jim had little or no idea what medical care was being granted or
denied under the authority of his reproduced signature.

Though every employee had a direct telephone line and assigned extension, we were not allowed to give those ex-
tension numbers out to anyone. There were logical reasons for this, such as the fact that angry, frustrated subscrib-
ers often threatened the overworked, underpaid largely female Customer Service staff. For various other reasons,
some as simple as convenience, this policy was either ignored or subverted. If a determined subscriber was cagey
enough, they could ferret out direct numbers to Customer Service reps and sometimes made it all the way to the
Leadership level.

Once, after receiving a denial determination for a legitimate claim, a subscriber navigated all the way to Dr. Crichton
himself to discuss the obvious mistake. True to his no nonsense country doctor persona, Jim agreed with the sub-
scriber and did not hide the fact that this was the first time he’d heard about the case and had not made this deter-
mination himself. The subscriber was shocked and ended the conversation by threatening to involve the press.
The subscriber’s complaint was effectively fire-walled by cronyism. Helena’s largest newspaper, the Independent Re-
cord, was almost a branch of BCBSMT’s Public Relations department. Indeed, there were virtual hallways between
BCBSMT, all statewide news media, and most departments of Montana State government. As an added internal
precaution against further Jim Crichton type fiascoes, a new company policy mandated that ALL incoming calls to
BCBSMT had to be routed through the main switchboard. Forwarding a call internally would result in immediate
dismissal. Replacing Jim Crichton was Dr. Mary Albright, a part-time Science Fiction writer who was content to
hole up by herself in Jim’s closet office and never answer the phone. With the abrupt departure of his friend, Tom
Cladouhos saw the handwriting about his own future on the wall.

Caught in a Corporate Avalanche

Figuring that more impressive sales figures would help attract buyout suitors, Peter created a new Corporate Med-
ical Director position and hired one of his long-time colleagues to fill it. Dr. Roy Arnold was an ex-military man
19
with notable credentials. As Corporate Medical Director, his primary duty was negotiating optional alternative product
plans usually given to Senior level executives as additional perks with their “Cadillac” health coverage. The fluffiest
alternative options included a mail-order vitamin supplement plan, a consulting concierge physician service, and the
puffiest of all was an elective plastic surgery benefit. Soon after the Montana Insurance Commissioner approved the
plastic surgery option, Leadership women with Cadillac plans at BCBSMT began taking extended medical leaves and
returning with lifts, tucks and augmented breasts. Silicone implants became a must-have career enhancement among
ambitious Leadership ladies. These new perks cast Dr. Arnold in a bright corporate limelight, enough to blind his
peers to some of his obvious addiction issues. Alcohol consumption during work hours was quite common at BCB-
SMT. In fact, it was almost expected in Montana so Roy Arnold’s habit was ignored until he started passing out in
large meetings with his head on the conference table, an image I witnessed myself. In combination with his Alabama
Hound Dog sexual reputation, Dr. Arnold did not foster much corporate trust in Peter Babin’s character judgment.

In building website content for Dr. Arnold’s new alternative plans, I developed a working relationship with him so
was not surprised when he invited me to a housewarming party at his new house on Lake Helena. It was scheduled
on a Saturday afternoon but when I arrived there were no other cars around. At first, I thought I’d mistaken the
time or date but soon realized that I was the housewarming party. At the front door, his arm immediately slipped
around my waist. He directed me through the house in a manner scripted to end at a specific objective, an oversize
powder blue master bedroom filled with an oversize powder blue king bed. On cue, his eyes locked onto mine as
though conveying a message I was supposed to intuit. Maneuvering for a polite escape, I squirmed from his grip
and suggested we go for a walk. Without missing a beat, he vise-gripped my hand and we marched into the woods
around his house. After a tense thirty minutes of exhausting small talk, I excused myself and left without re-visiting
the powder blue bedroom. On Monday morning, I sent him an email expressing polite concern about the appear-
ance of having an inappropriate relationship within the company. He wrote back saying that, to the contrary, a
relationship with him could elevate my status. Luckily this discussion was soon moot, as Dr. Arnold’s personal life
became the subject of company-wide ridicule.

If it was simply a matter of being discovered on Match.com, Arnold’s profile would probably have generated noth-
ing more than gossip. But it was the photo that lit a wildfire panic throughout the corporate suites. Using the screen
name, Avalanche (after his company owned Chevy truck) his Match.com photo was taken on a BCBSMT issued
laptop in his BCBSMT office with a BCBSMT security badge in plain view around his neck. The profile was initially
discovered by a low-level employee, so there was no executive firewall to stop the “Avalanche” from cascading to
every desktop in the company. Once it hit the upper echelons, Dr. Avalanche disappeared from Match.com along
with all instances of his photo on internal company networks. Arnold probably got his hand slapped behind closed
boardroom doors, but his downfall was set in motion. His final public fiasco took place at the annual employee
picnic which included retirees, family members, and a smattering of politicians. Arnold’s drinking at the picnic was
already getting attention when he staggered up to Dave’s head Girl, grabbed both her breasts and while squeezing
them asked, “Are these real or did you buy ‘em?” In the Crisis Control aftermath, Dave’s Girl proved to be a skilled
negotiator. Along with an undisclosed cash settlement, she was given a promotion and title overseeing an unneces-
sary department. Dr. Arnold disappeared into an obscure pharmaceutical project while hunting for his next employ-
er. 20
The Corporate Garage Sale
By 2003, Peter was CEO, Chairman of the Board, and every other title needed to rule the BCBSMT world. His only
rival, Tom Cladouhos, retired with a generous package called the Benefit Restoration Plan, originally contrived by
fellow execs at Montana Power.

Billings Gazette Babin Story:

Under the Benefit Restoration Plan, an executive who meets the qualifications will receive 100 percent of the annual average of his or
her top five years of salary for life. Counted toward the 100 percent are the Blue Cross pension, Social Security payments and a contri-
bution of 5 percent of the person’s annual salary for five years. After the individual dies, his or her spouse is entitled to 75 percent of
the benefit for life. The plan was put in place in 1992, well before Babin joined the company.

Helena IR Story:
Former CEO Alan Cain started the Blue Cross Blue Shield of Montana retirement plan in 1992. He also served on the board of
directors of the Montana Power Co., which had its own plan. Cain did not respond to a phone call to find out if he brought the plan
idea from Montana Power to Blue Cross. ‘’It’s logical to assume he got the idea there,” said Hibbard, who later served on the Montana
Power board as well.

Dr. Arnold’s antics plucked some plumes from Babin’s cap, but that did not deter him from his acquisition mission.
From a PR standpoint, this meant improving the company’s image among its subscribers. While premiums skyrock-
eted, its Customer Service rating took a nosedive because of dropped calls and excessive hold times. The rating
was low enough to seriously threaten BCBSMT’s accreditation with the national Blue Cross Blue Shield Association
which sent warnings to that effect. Thanks to the call-routing fallout from Dr. Crichton’s impromptu customer con-
tact, members who were already stressed and confused by their coverage were now regularly overwhelming a phone
system little better than a plug-in switchboard.

As a temporary remedy, Mr. Babin decided to personally conduct Town Hall Community listening sessions through-
out the State. His thought was that once he explained BCBSMT’s “challenges” to them, members would be happy
to patiently wait as the company implemented new “solutions” for their benefit. Instead, these meetings were a
lesson for Peter in just how large and sparsely populated Montana actually is. Given the task of capturing heartfelt
moments of these meetings on video, I was part of the entourage that crisscrossed Montana for nearly two months.
Whenever possible, Peter flew to the meetings on the corporate jet, but airports in Montana are few and far between
so he was often packed into a corporate monster Chevy Suburban with the rest of us. The result of all this effort
was a waste of time and money.

The intended script for Peter and an assortment of other BCBSMT “thought leaders” was to hold court while
random customers asked earnest questions and, mainly, expressed gratitude for their Blue Cross and Blue Shield of
Montana insurance coverage. Instead, the actual scenario was that of a barely controlled mob, armed with reams of
denials and cryptic claims statements. They demanded that Peter fix their problems on the spot. Rural Montana saw
a chance to directly confront the cause of their frustration and they took it. There were no warm soft focus video
21
clips from these meetings. The one upside of the Chevy Suburban circus train was that it did shoot a mild corporate
cash infusion into some lonely motels and saloon grills. I grew up in a Montana town with a reputation for alcohol
consumption, but it was still shocking to witness the heavy drinking that was allowed as an executive expense. It
is ironic that keeping the ubiquitous Peace of Mind health insurance advertising promise is in the hands of so many
alcoholics and prescription drug addicts.

When Lipstick is Not Enough

Aside from BCBSMT’s inept management and bloated administration costs, Montana actually is a small, impover-
ished health insurance market. A for-profit health insurer would not seriously consider a buyout under those condi-
tions alone. By chance, I personally overheard one of Mr. Babin’s phone conversation about sales prospects for the
company. Peter was still on a conference call when I arrived at his office to videotape him so his assistant led me
into a side room containing his executive bathroom and kitchen. A door between this side room and the main office
was open so I would have had to physically plug my ears to avoid hearing Peter. Though it was only his side of the
conversation, the gist of it was this: BCBSMT was definitely on the auction block and he was doggedly cutting costs
and raising prices (two years of 30%+ premium increases) to primp things up. In addition, he was applying relent-
less pressure on providers to further discount their contracted fees. The most attractive aspect of BCBSMT, though,
was its very profitable “for profit” subsidiaries such as Western States Insurance.

Double Cross? Missoula Independent (Link no longer available - Full Text is Appended)
The Consumers Union, the nonprofit publisher of Consumer Reports, tracks nonprofit-to-for-profit conversions, and San Francis-
co-based staff attorney Scott Benbow says the organization has discerned several indicators that a company may be planning to convert.
Placing assets into for-profit subsidiaries is part of that pattern, he says.

Again, BCBSMT fits the pattern. In addition to cash reserves, BCBSMT owns four for-profit subsidiaries: Insurance Coordinators of
Montana, Inc., incorporated in 1976; Combined Benefits Management, Inc., incorporated in 1993; Western States Insurance Agency,
Inc., acquired in 1994; and Health-e-Web, Inc., incorporated in 1999.

But Montana’s insider business world was more of a survivalist brotherhood than Peter may have ever encountered.
The first onslaught came from within BCBSMT itself. When Tom Cladouhos took his early retirement, IT turned
from predictable disarray to absolute pandemonium. Antipathy against Peter for destroying years of corporate
ascension assumptions was upfront and obvious. Rather than stir the bubbling IT pot further, Babin replaced Tom
with Sheldon Boe, an even less qualified insider whose best recommendations for the job were his imposing size
and bromance with the Two Chucks. To look busy and important, Mr. Boe immediately began restructuring IT and
dismantling e-business.

The providers that Peter began to pressure for high profits weren’t willing to work for less money and they had a
long-time ally at BCBSMT who was not Mr. Babin’s friend. Mark Burzynski was a lucky accountant with a strong
appetite for a free lunch. Years earlier, he was the chief financial officer of a small Eastern Montana physician
22
owned health cooperative called the Yellowstone Community Health Plan (YCHP). The only thing Mr. Burzynski
loved more than playing golf was playing golf with doctors and pharmaceutical reps. I got to experience his rapport
with the Merck people myself when he invited me and a few other BCBSMT employees to a marketing research
session that took place in his office during work hours. Led by one of Burzynski’s close friends at Merck, we were
“gifted” with a fifty dollar certificate to an upscale local restaurant in exchange for our opinions on various demo-
graphic aspects of BCBSMT members. I purposely did not have much to offer and was not invited back.

Years before Mr. Babin arrived on the scene, BCBSMT had purchased YCHP in a convenient merger/buyout. As
I mentioned earlier, BCBSMT encouraged small competitors to emerge in order to avoid looking like a monopo-
ly. When they inevitably teetered on bankruptcy, BCBSMT would heroically save them in a merger. In the YCHP
instance, Mr. Burzynski wrangled himself a BCBSMT VP of Provider Relations title that essentially paid him to
socialize and play golf with doctors full time. It is worth noting that, as of 2016, Mr. Burzynski is the only member
of the BCBSMT Senior Staff from this early period who is still with the company. Mr. Babin and Mr. Burzynski had
little, if any, professional respect for each other. I attended a small corporate sponsored Christmas party in Mark’s
office where, after making a toast with an expensive wine, he gleefully defaced a print of Mr. Babin’s official corpo-
rate portrait.

By refusing to sign the scaled-down reimbursement contracts they were offered, Anesthesiologists in Missoula
became the first group to push back against Babin’s cost-cutting pressure. This created havoc for patients needing
surgery and a legal morass for BCBSMT in meeting Federal network adequacy rules. Stories of
patients traveling hundreds of miles just to be anesthetized during surgery starting a cycle of bad press that only
increased as Radiologists in Missoula joined the Anesthesiologists in refusing to renew their contracts with any form
of compromise. By 2004, BCBSMT was suing the very providers who were needed to service its members. Peter’s
dominoes were starting to fall.

Surgeons Cancel Blue Cross Contracts in Protest

The class-action suit filed by Blue Cross, four Missoula-area employers and five individuals charging Missoula Radiology with being a
“predatory monopoly” is an arrogant attempt to bully the radiologists into becoming part of Blue Cross’ network, said neurosurgeon
Nick Chandler. The lawsuit, filed after a long dispute with the 12 radiologists over reimbursement rates that led to the group’s depar-
ture from the Blue Cross network in June 2003, also sets a dangerous precedent in insurance company-health care provider negotiations,
Chandler said. Should Blue Cross prevail, he said, the stage is set for doctor-network relationships to boil down to one sentence: If you
won’t be our customer, we’ll sue you.

Double Cross? - Missoula Independent (Link no Longer Available - Full Text Appended)
BCBSMT’s real motive for suing Missoula Radiology may be to force the radiologists to sign on the dotted line, ensuring that the
specialty provider remains part of the BCBSMT network. There are several reasons for the insurance giant to want to keep its provid-
er network intact, the most obvious and least nefarious of which is to be able to deliver comprehensive care to its policyholders: health
care consumers. But another possibility is that BCBSMT may be eager to shore up its provider network in anticipation of a corporate
restructuring—a sale or merger, for example—on the open market, with uncertain consequences for health care consumers in Montana.
23
Seizing on the opportunity to win an upper hand, one of the BCBSMT’s crucial business partners, Intermountain
Administrators, unexpectedly broke its contract and became a competitor under a new name, Allegiance Health.
Intermountain handled Third Party Administrator (TPA) services for BCBSMT’s self-insured subscriber groups
which included its largest clients. For those who are interested, there are details about this arcane insider Insurance
practice on this link Wikipedia TPA Explanation. The short version is that most large organizations, such as the
State of Montana, choose to self-insure meaning that the organization itself covers the cost of employee claims but
hires an outside service to do the administration tasks such as claims processing. The self-insured State of Montana
religiously awarded BCBSMT a lucrative contract to act as its TPA. In truth, though, BCBSMT was not a licensed
TPA and relied exclusively on Intermountain, a long-standing family-owned Montana TPA in Missoula, to actually
provide that service. It was an awkward and financially detrimental situation for Intermountain but the family let it
ride under its ailing patriarch until an ambitious son, Dirk Visser, took over. BCBSMT needed Dirk Visser but Dirk
Visser did not need BCBSMT.

Since this arrangement had gone on for some years, BCBSMT had become comfortably ensconced in the Inter-
mountain office. BCBSMT computer hardware, network access, and even a full-time IT technician were onsite. With
one phone call out of the blue, Dirk Visser severed his contract and created an immediate full-blown crisis. Hard-
ware was scrambled out the Intermountain back door and patched together temporarily in a local agent’s basement
office. Then close behind the first swing of Visser’s wrecking ball was Susan Witte, BCBSMT’s Director of Govern-
ment and Public Relations and former Chief Legal Counsel for Montana’s Insurance Commissioner. She left BCB-
SMT to become Visser’s VP of Government Relations and easily scooped up TPA contracts that had suddenly been
tossed to the winds. Witte was also on Babin’s intolerable list.

An abrasive but effective and well-connected Montana attorney, Susan said shit and fuck a LOT, regardless of
where she was or who was around. This habit alone was enough for Babin to distrust her but she was exactly the
kind of ally Visser wanted on his team. A small, family-owned insurance agency became a formidable competitor on
BCBSMT’s weakest front.

Blinded by the (FiberOptic) Light

Though they weren’t legally married, BCBSMT and the Montana Power Company had definitely been in bed to-
gether for a long time. Cross memberships on each other’s corporate Boards was an arrangement akin to incest
with the jointly contrived Benefit Restoration Plan as but one example. All of BCBSMT’s communications, Internet
connections, and virtual private networks were handled through Touch America, Montana Power’s failed fiber optic
telecom venture. Except for a few executives who literally made out like bandits, the Montana Power/Touch Amer-
ica bankruptcy scandal was a tragedy for all involved. There was shameful national news coverage, including a CBS
Sixty Minutes story, about how Enron and Goldman Sachs had easily taken advantage of greedy ignorant rubes. As
a result, Montana State legislators and the Insurance Commissioner were not in a mood to risk another disaster with
the sale of BCBSMT.

24
Who Killed Montana Power?
For nearly 90 years, the Montana Power Company exemplified the very best of American capitalism. It provided cheap, reliable electric-
ity for the people of Montana, excellent benefits for thousands of employees and generous, reliable dividends for its stockholders. Every-
one was happy, except for the corporate officers and their Wall Street investment banking firm who decided there was more money to be
made in the more glamorous and profitable world of telecommunications. The result exemplified the worst of American capitalism.

When 60 Minutes first reported this story last February, the cheap electricity, the good jobs and the life savings of a lot of people were
gone, along with the name Montana Power. Its demise may not be the biggest scandal of our time, but to its stockholders, it shows how
greed and outright stupidity destroyed one of the oldest and proudest companies in America.

Power Brokers
It’s arguably one of Montana’s most tragic stories. It led to the demise of Montana Power, the state’s only Fortune 500 Company, and
it pushed power prices into the stratosphere. While most know how the experiment in Electricity Deregulation ended, few know how it
all began. In this hour-long documentary, Montana PBS investigates the sources of the deregulation movement and the subsequent power
crisis. The documentary uncovers surprising relationships and business connections that would eventually cast a shadow over former Gov-
ernor Marc Racicot and draw Montana Power into a federal investigation.

Other than the sudden black hole in BCBSMT’s Web technology that the Touch America bankruptcy created,
Peter did not seem to notice its political ramifications for his corporate merger plans. Forging ahead, he attempted
to shame the Missoula Radiologists into signing a contract by expressing his “concerns” over exorbitant radiolo-
gy fees which were impressive at over $700 an hour. At first, this gained some traction. Even I recognized that, in
general, health care providers in Montana enjoyed lifestyle and financial advantages that the street level doctors I
worked with in California did not. But the radiologists were not to be shamed. Instead they marshaled their own
homegrown Montana PR campaign. By 2004, it was Babin’s own compensation that made regular withering head-
lines with the lucrative Benefit Restoration Plan always getting special attention. The constant stream of bad press
brought Peter Babin’s CEO tenure to a swift end. His fate was sealed when the State Auditor announced that Babin
was being investigated for undisclosed reasons.

Blue Cross Chief Quits - Montana Standard

State Auditor John Morrison, who also is the State insurance commissioner,
said he’s been concerned about the direction of Blue Cross Blue Shield of Montana for some time. His office began a comprehensive
examination of the company and has nearly completed the task. An internal review also is under way, Morrison said.

Because of my unusual combination of Web and video production duties, I spent a considerable amount of time
interacting with Peter Babin and do think he was overwhelmed by the labyrinth of BCBSMT’s inner circles. He was
probably hired to do the straightforward job of preparing and negotiating a sale to a suitable suitor and, instead,
ended up being the scapegoat for pent-up well-deserved ill will against BCBSMT. His stunned appearance in news-
paper coverage was real with good reason.

25
As the Board of Directors began the delicate PR pageant of dismissing Mr. Babin, one of the newest Board mem-
bers, Jerry E. Lusk, emerged as the Puppet Master. His name was first mentioned during an all employee meeting
at the height of Babin’s ouster. Sherry Cladouhos, soon to be appointed as Babin’s replacement, thanked someone
named Jerry Lusk for his unfailing support during this “challenging time” and added that he graciously agreed to
take Peter’s seat as Chairman of the Board. She then told us, her baffled employee audience, to applaud. It wasn’t
until I began researching Mr. Lusk that I realized how long his relationship with BCBSMT has been. Even though
he lived in Georgia and was only part-time at his vacation home in Kalispell, newspapers described him as an actu-
arial consultant to BCBSMT for over two decades and affiliated with Milliman Corporation, one of the largest actu-
arial firms in the world. Some of those same articles mention that he was a recent addition to the BCBSMT Board
at the time of Peter’s resignation. Yet, he immediately replaced Babin as Chairman. Even more interesting is the fact
that he remained chairman through the sale of BCBSMT and may occupy that seat even now. As an out of State
corporation, BCBSMT’s new owner, Health Care Service Corporation, is not mandated to publish Board members
on the Website or release executive salaries to the press.

Blue Cross Chief Quits - Montana Standard

Jerry Lusk, a consulting actuary for the company for more than 20 years and former chief financial officer for Blue Cross Blue Shield
of Georgia, will serve as acting chairman until a replacement is found, she said. Lusk has been on the board of directors for the past
year.

Peter Babin Quits as Blue Cross CEO - Billings Gazette

The board appointed director Jerry E. Lusk, a certified actuary, as acting chairman. Lusk, who has served on the board the past year
and has been a consulting actuary for Blue Cross and Blue Shield of Montana for two decades, is former chief financial officer for Blue
Cross and Blue Shield of Georgia.

In addition, the board appointed Cosgrove, senior vice president of regulatory and corporate affairs, and Sherry Cladouhos, senior vice
president of operations and government programs, to serve as the company’s co-chief operations officers responsible for day-to-day opera-
tions of the company until a successor is named.

Sherry Cladouhos Named CEO - Missoulian

She and Terry Cosgrove had been co-chief operating officers of the company for six months, and Cosgrove will be her executive vice presi-
dent and general counsel. They were appointed to run the company after the board of directors forced former president and CEO Peter
Babin to resign in January following a controversial tenure and concerns over the company’s direction.

Fanning The PR Smokescreen

Sherry Cladouhos probably had the CEO job even before Babin resigned, but the transition to a new Leadership
team also created an opportunity to spin a bright new Corporate press image. Rescuing Montana from the clutches
of an evil Babin was a holy trinity of down-home saviors: Jerry Lusk, Sherry Cladouhos, and Terry Cosgrove.

26
After graduating from Helena High school in 1973, BCBSMT became Mrs. Cladouhos’s (nee Kokoruda) first and
only official employer. She grew up on her family’s Helena Valley ranch, known as the The Kokoruda Ranch Com-
plex in geologic journals that refer to it. In a State known for its vast private properties, Senator Max Baucus’s Sie-
ben Ranch may be the only one that eclipsed its size in the county. Sherry started her career at BCBSMT a few years
before Baucus was first elected to the US Senate and she considered him to be a personal friend. After starting as an
admin assistant in Customer Service, Sherry was managing that department by the time she got involved with Tom
Cladouhos. Though both Tom and Sherry were married to others when they met, their power couple attraction was
written in the stars.

With her lighter-than-air resume, it is a near certainty that no one, including Sherry, ever imagined she would one
day be named CEO. In the aftermath of the Babin scandal, though, she was a ready-made all-American feel-good
PR campaign. A humble hometown Helena girl, with nothing more than a high school education, was now rescuing
Montana’s most vulnerable from the intellectual schemes of a highfalutin east coast lawyer. In addition, her appoint-
ment lifted morale among the beleaguered Customer Service women on the front lines of member grievances. They
held parties celebrating the fact that “one of their own” had made it to the top.

Newspaper stories cheered Sherry on as she undertook the mountainous challenge of setting Montana back on
a virtuous path. In any other circumstance, this scenario would have met deserved ridicule. Internally, there were
many who acknowledged the hoax, but would not address it directly. Following the classic advice of Thumper’s
mother, “If you can’t say something nice, don’t say nothin’ at all”, they would laud Sherry as being qualified for the
job because she was such a “hard worker”. Highlighted in coverage of her promotion was the fact that her salary
would be less than half of what Babin had gotten.

Sherry Cladouhos named CEO - Missoulian

A fourth-generation Montanan, Cladouhos comes from a blue-collar background. Her parents had a ranch in the Elkhorn Moun-
tains, southeast of Helena, and her father, Bill Kokoruda, was a carpenter. From her parents and the ranch work, Cladouhos said she
learned the values of hard work, honesty, integrity and giving back to the land and the community. “My siblings and I were taught the
value of the dollar,” she wrote the board in her application for the top job. “If we wanted to go to the show in town, I had the option of
picking rocks out of the field. The going rate was a penny a rock.” The much-criticized CEO’s perquisites during the Babin era at Blue
Cross Blue Shield have clearly ended. In her answers to a series of questions during the interview, Cladouhos made that clear without
ever mentioning Babin by name.

In the statewide scheme of things, BCBSMT Leadership was, and continues to be, exceptionally well-paid. Until
the time it was finally sold to a national conglomerate, it was obliged, under State mandate, to publicly disclose its
annual executive salaries. These numbers never got much media attention until premium rates began to dramatically
increase. In researching the reasons for this, reporters noticed that most BCBSMT executives were paid more for a
few weeks work than the average Montanan took home in a year. Finally, the press began to ask “Why?”

In response to the salary question, the company crafted a curt PR reply, used over and over without shame, even to
27
this day. The bogus rationale behind the six and even seven figure executive salaries was that high compensation was
the only way for the company to attract national “best of the best” talent to work in the “Last Best Place”. With the
exception of Peter Babin, though, all of BCBSMT’s CEOs have come from old homegrown Montana money that is
not inclined to welcome outside competition.

In Sherry’s case, it was an absurd notion that her qualifications deserved even half of what Babin got. The salary
reduction was a PR stunt designed to supplant Babin’s salary from the headlines. The following year her salary be-
gan a steep and steady climb upward, ensuring that she could retire in five years with a comfortable lifetime annual
income. Her husband, Tom, also retired with a comparable guaranteed compensation package. Between the two of
them, close to a million corporate expense dollars are being deposited every year into the Cladouhos household.
To avoid any obvious signs of preplanning, Mrs. Cladouhos did not don the mantle of power immediately. During
a temporary transition period, she shared a fuzzy co-COO title with Terry Cosgrove while Lusk quietly slid into his
permanent Chairman of the Board seat.

Terry Cosgrove was not a new hire, but it’s difficult to pinpoint exactly when he started at BCBSMT. As an estab-
lished power player in Montana legal circles, his fingers had been in every pie that mattered in the State for a long
time. The Board may have quietly brought him in through a back door when Babin became an obvious liability.
While researching his background, I found a possible explanation for why some of his female colleagues reacted
with slight disgust at the mention of his name. In the 90s, Cosgrove defended the Montana Catholic Diocese in a
pedophile case involving a twelve-year-old boy. By chance, I’d gone to high school with the victim, so got in touch
with him and confirmed that the case settled out of court because the perpetrator’s guilt was obvious and indefensi-
ble (Cosgrove’s defense strategy was to claim that the sex had been “consensual”). Yet, Cosgrove maintained a close,
elaborately devout relationship with the Diocese, the very clients he knew had lied for years to conceal a despicable
crime against a child.

Burrowed in his executive suite, Cosgrove pursued his real objective, grooming Mike Frank to be the next CEO. A
native of Billings, the young and fresh Mr. Frank was the son Terry Cosgrove wanted to have, as opposed to the
two he actually did have. Though his credentials were narrow and lackluster, Frank was attractive corporate lawyer
material and Cosgrove was happy to mentor him. When Frank needed a suitable new spouse after a messy divorce,
Cosgrove connected his protege with the family of Montana’s top, million dollar insurance agency. It as a match
made in the Boardroom.

The Babin era concluded in 2005 with Lusk as Chairman of the Board, Cosgrove as Executive Vice President/
Chief Legal Counsel, and Cladouhos as an idyllic “Hometown Girl Goes CEO” headline. Stories about her promo-
tion read like nursery rhymes. Sherry was a fairy godmother with a magic wand. It was enough to make you wonder
why such a corporate treasure hadn’t become CEO sooner.

28
Not so Hip HIPAA
Back at the street fight level of BCBSMT, the high flying e-business team was making a forced landing. It actually
started its descent soon after Peter became CEO. He was tech savvy enough to recognize the meager capability
of BCBSMT computer operations. From a merger/acquisition standpoint, it made sense to deflate such a bloated
expense.

Thanks to the Health Insurance Portability and Accountability Act (HIPPA), BCBSMT had an opportunity to spin
off its electronic claims processing division as a for-profit subsidiary. In a temporary move before killing it off
completely, e-business was “re-structured” as part of this electronic claims division, called Health-e-Web. Located
in the basement of an old JC Penney store in downtown Helena, Health-e-Web was, without question, the dreariest
department in the entire company. With dark brown stains splashed across the torn carpet and sagging ceiling tiles,
it was fittingly referred to as The Asshole of BCBSMT. I had actually been in the Penney’s store as a child, and my
desk was located in what I recognized as the former Infant Bedding Department. Descending the basement stair-
case on my first day at Health-e-Web, a toddler voice inside me said, “I don’t belong here.”

Complementing the fecal decor was a gut-wrenching tension. Thanks to HIPAA, an excessive stress level was com-
mon in claims processing departments throughout the country. Like many others, BCBSMT could not meet feder-
ally mandated project completion dates so sweat, spit, and anger were constantly bouncing off the walls. The US
Dept. of Health and Human Services had already extended HIPAA milestones and granted exceptions far beyond
the original 2002 goals. But even with the extensions, BCBSMT was behind schedule and facing serious fines, largely
because the Director of Health-e-Web (who shall not be named) had a blatant problem with alcohol. With his wife
ensconced in HR, this power couple was allowed to operate without consequence until Peter took office and told
the Director to take his issue elsewhere. Determined to do everything possible to avoid the fines, Babin jacked up
performance pressure in The Asshole.

HIPAA is a morass of regulation, policy and procedure. Because of the Affordable Care Act and the advancement
of technology, HIPAA changes are ongoing. Even experts have a difficult time keeping up. For those interested in
more detail, this is a good summary of HIPAA on Wikipedia.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA; Pub.L. 104–191, 110 Stat.
1936, enacted August 21, 1996) was enacted by the United States Congress and signed by President Bill Clinton
in 1996. It has been known as the Kennedy–Kassebaum Act or Kassebaum–Kennedy Act after two of its leading sponsors.[1][2]
Title I of HIPAA protects health insurance coverage for workers and their families when they change or lose their jobs. Title II of
HIPAA, known as the Administrative Simplification (AS) provisions, requires the establishment
of national standards for electronic health care transactions and national identifiers for providers, health insurance plans, and employers.
[3]

Health-e-Web was involved in the electronic transaction Title II Administrative Simplification aspect of HIPAA.
“Simplification” was necessary because of the absurd amount of proprietary file formats and processes that insur-
ance companies themselves created primarily as hedges against competitors. In filing claims for payment, a provid-
29
er’s office (doctor, therapist, pharmacist, etc.) often dealt with hundreds of completely different entities, each with
their own special forms and requirements. While developing the interface for BCBSMT’s Website, I spent time in
provider offices to observe all the steps required in submitting a claim for payment. I came away astounded, and
often embarrassed, by the breadth of senseless minutiae these minimum wage workers in small rural Montana pro-
vider offices were expected to understand and execute without error.

Another driver of HIPAA complexity was that health insurance was almost exclusively sold to groups which got
to outline their own coverage, such as religious organizations not covering birth control, etc. So, proprietary cod-
ing and processes were often developed just to handle one particular group. From the standpoint of the insurance
company, this was a good thing. Group plans are a more profitable long-term customer than lowly individual buyers.
Health insurance companies win group accounts through customization that retains that client as they become too
exclusively invested to ever consider changing.

But the turbulent winds of Healthcare reform were already blowing by 1996 and chances were good that individual
coverage would eventually become the norm. HIPAA Administrative Simplification Provisions were enacted to lay
the foundation for more individualized, rather than group, claims transactions. The Federal Government subsidized
this transition through grants and business credits. In effect, health insurance companies were being mandated, and
compensated, to build what could become their own demise. Delays, of course, were abundant.

Once e-business was dissolved, Dana lost his free-ride expense account and kissed his corporate golf cart good-
bye. Joe, at the age of fifty-five, left to become a Catholic priest, a story too involved to explain here. So, at Health-
e-Web, I also got a new boss. Bob Janicek was another big, backslapping, BCBSMT white guy, rocketing toward
corporate stardom. His primary occupation was to create no-win performance goals for those who were slated
for spin-off from the BCBSMT “family”. My no-win performance goal was to wireframe new versions of all the
corporate Websites even though there was no interest in actually building them. So rather than wireframe useless
fantasy projects, I began promoting video as a “communications” resource for Senior Leadership, betting that their
taste for being in front of a camera would salvage me from the spin-off. And it did. Just as Health-e-Web officially
became another for-profit subsidiary, I returned to the BCBSMT corporate fold for its merger/buyout revival.

The Wrecking Ball in Haute Couture

In the Fall of 2006, a little over a year after Sherry was awarded her executive armchair, a new COO landed at BCB-
SMT and again began prepping it for the auction block. As with Peter Babin, Sheila Shapiro seemed to have materi-
alized out of thin air, creating a barely-controlled panic among those who were already just surviving on Prozac.

Rather than allay those fears, Ms. Shapiro actively encouraged them. A rumor, that she may have started, said her
unofficial title was Corporate Downsizer. She swept through departments murmuring words like re-organization
and efficiency while pandering opportunists followed in her wake. It’s difficult to describe Shapiro and her behav-
ior in a way that isn’t tinged with negative stereotypes about women and power. In her interpretation of the “the
30
clothes make the man”, she wore a different expensive outfit every day but always looked uncomfortable. She and
her clothing seemed to be repelling each other. It was unsettling just being near her.

The corporate playbook now had Sherry doing homespun publicity stories; Terry Cosgrove grooming his surrogate
son to inherit the corner office; Jerry Lusk trolling for acquisitive business partners; and Sheila Shapiro staging the
corporate feeding trough for maximum ROI. To the extent possible, I kept a distance from the Shapiro disruption.
Having determined my own exit strategy, I saw no benefit in being sidetracked from it. Then, Shapiro released a list
of her immediate COO projects. After installing a new customer service call center, which was vital if BCBSMT
was to retain its accreditation, rebuilding the company’s entire Web architecture was her pet priority. This prospect
actually gave me some hope, so I could not help but pay attention. From a simple utilitarian standpoint, this was a
chance to finally leverage what the Web does best: reduce redundancy, improve transparency, and speed communica-
tion. In my best corporate etiquette, I told Ms. Shapiro that I welcomed the opportunity to assist in the re-design.

When Shapiro outsourced most of the new Website development to Infosys, a global IT consulting firm based in
India, the level of angst in IT exploded. Not only was Infosys an obvious threat to the existing IT power structure,
even worse was the fact that all of the Infosys consultants and programmers were from India. Aside from Mon-
tana’s diminishing Native American population, the State is nearly 90% Caucasian. That was one of the things the
IT brotherhood liked most about Montana. Although HR policies discouraged overt racism, in day-to-day reality,
IT was an echo chamber of unfiltered bigotry. No matter how competent the Indian consultants were, their project
was destined to become a flaming failure.

At first, Infosys did involve me in outlining application requirements but, after divulging all that I knew of the exist-
ing architecture, I was excluded from the new project though still continued to maintain the existing sites. Given the
fact that I was likely to be maintaining and further developing the new sites after Infosys was gone, the logical sce-
nario would have been to keep me involved with development for the sake of continuity. So, I brought this situation
up to John Kelly, my boss at the time. Kelly was another “retired on the job” type. His real occupations were skiing
in winter and hosting private wine parties in summer.

In meeting with Kelly, I framed the situation as probably being a case of simple oversight that he, of course, would
want to correct. His grunting response was, “I’ll mention it to them.” When the exclusion continued, I politely
pressed for a reason. In response, Kelly would only repeat my question back to me as a statement of the obvious,
“You’re just not included in the project.”

As a last resort I turned to HR’s formal Open Door employee hearing process for resolution. Presenting my inquiry
as a concern for BCBSMT members and the best use of their premium dollars, I compiled a twenty-five-page docu-
ment of actual email, correspondence, and events supporting the argument that I, as a valuable resource, was being
squandered. When HR did not reply to my Open Door request for resolution, I sent my document to all pertinent
leadership above me, including Sherry Cladouhos. The eventual response, without explanation, was to transfer
me out of IT and into the Corporate Communications/Public Relations department. Though still responsible for
31
website maintenance and video production, I was also expected to make mind numbing text changes in benefit and
policy documents. I was being buried alive in minutiae.

As a side note, in my ten years at BCBSMT, I had eight different bosses. For various reasons --- illicit affairs, men-
torship bromances, and the hidden benefits of constant chaos --- leadership shape-shifting was standard practice
throughout the company though IT did set the gold standard. Continuous flux diffuses accountability.

Moore of a Problem
My new boss, Linda McGillen, had her own corporate betrayal story. A few years earlier, she held one of those life-
time “pot of gold” jobs as Communications Director for Montana Power. Because of the Montana Power/Touch
America bankruptcy, she and most of her colleagues were literally robbed of their entire retirement. If things had
gone as she expected, McGillan would have already retired to a beach condo in Hawaii. Instead, in her late fifties,
she found herself starting over from scratch at Blue Cross and Blue Shield of Montana with absolutely nothing to
show for more than thirty years at Montana Power. Linda had no sympathy left to give for those caught in corporate
power plays. Her only objective, which she did not hide, was keeping her new bosses happy until she accumulated a
viable Social Security benefit. Being twisted and turned by every Leadership windbag that blew through her office,
work life under McGillan was unpredictable at best but, at least, I appreciated the reason.

Just as I landed in Corporate Communications, the health insurance industry was hit by a storm front of pent-up
public outrage. On top of soaring rate hikes, exceeded only by bloated executive compensation, stories of a slimy
backroom practice called Rescission were making shameful headlines. Under the gauzy umbrella of “fraud preven-
tion”, health insurers were abruptly and retroactively canceling coverage on their sickest members by re-labeling
their illnesses as preexisting conditions that the members had failed to disclose.

This opening paragrapgh of a 2006 Los Angeles Times article sums up the situation:
The state’s largest health insurer systematically -- and illegally -- cancels coverage retroactively for people who need expensive care, 10
former Blue Cross members claimed in lawsuits filed Monday.
The suits, filed simultaneously in Los Angeles, Orange, Riverside and San Bernardino counties, allege that Blue Cross of California
and Blue Cross Life & Health operate a “retroactive review department” devoted to finding ways the company can escape its obligations
to members who become seriously sick.

Though rescission had been a common, but furtive, practice since the 1990s, its use escalated after George W took
office in 2000. In 2007, Michael Moore’s film Sicko blasted a media spotlight on the crooked conduct. Having
gotten away with so much for so long, health insurance companies were caught off-guard by the Sicko PR “chal-
lenge”. Like firecrackers exploding in an anthill, damage mitigation work groups scurried between tactical meetings.
“Talking Points” flooded every in-box. The Health Insurance Industry began prepping for war against its own most
vulnerable customers. At BCBSMT, we all received a corporate memo like the one mentioned in the story on this
link, BlueCross Secret Memo Re: ‘Sicko’. Note the emphasis on “brand image” in this excerpt from the official Blue
32
Cross Blue Shield Association version.
While Humana and Kaiser Permanente are demonized (in Sicko), the BlueCross and BlueShield brands appear, separately and togeth-
er, visually and verbally, with such frequency that there should be no doubt that whatever visceral reaction his movie stirs will spill over
onto the Blues brands in every market. Here are some examples:
• Horizon BlueCross/BlueShield is picked out early in the film in a collage of stories citing bad treatment of members.
• BCBSA is cited for rejecting a woman for coverage due to a high BMI - “too fat” is written across the screen over a copy of her
application denial letter, which describes the BMI rejection.
• BlueShield of California denied coverage for a diagnostic test, which the patient later received overseas. Patient sues BS of CA and
medical director admits to not ‘seeing’ the actual denial letter, which was given an electronic signature.
• BlueCross of California denied payment for a major surgery after they discovered a previous yeast infection, then dropped the person
for coverage. This is followed by an interview with a person who claims to have been a specialist at finding inaccuracies in applica-
tions to enable post-treatment payment denials.
• A BCBSA card is shown while the narrator describes how they (insurers) got wealthy.

In Montana, we adopted additional layers of defense because our Senator, Max Baucus, was head of the Senate
Finance Committee, the same body that would eventually draft the Affordable Care Act. We were told to avoid
discussion about Sicko and health insurance in general. Plain clothes security guards were stationed outside execu-
tive offices, and employees were counseled to hide ID badges outside of company buildings. With ominous clouds
on the corporate health horizon, BCBSMT launched two major PR initiatives. The first was an updated version of
Peter Babin’s “town hall” sessions. Led by Tanya Ask, VP of Public Relations, these events were billed as an oppor-
tunity for the public to help BCBSMT fulfill the goal of developing an affordable basic healthcare plan. As in the
past, these sessions were an empty, and sometimes even insulting, gesture that accomplished nothing.

The second initiative, however, was significant. Even more than most of us at BCBSMT realized at the time. The
(First) Montana Health Care Forum was touted within the company as a demonstration of its commitment to
providing affordable health insurance in Montana. Though other community stakeholders were said to be involved,
BCBSMT was the sole underwriter and organizer. The Corporate Communications department was responsible for
planning and executing the details. Jane DeLong, BCBSMT’s recently retired VP of Human Relations, was gifted
with a consulting contract as the event coordinator. Whatever expectations were outlined in Jane’s contract, the
practical extent of her effort was to make phone calls that instructed “her people” to get in touch with “their peo-
ple”. The few things she did handle only increased the chaos so we encouraged her to relax in her Arizona condo.

Few of the professional speakers at the HealthCare Forum, such as Ian Morrison, had any direct connection to
Montana. Given their caliber and celebrity, it was curious that so many of them happened to have the same open
calendar dates for a spur of the moment conference in a remote location. Morrison’s current speaking fees (Mini-
mum Fee - U.S. Dates $15,000-$24,999) were probably not much different in 2007. Thanks to Sicko mania, it’s pos-
sible his fees were even higher at the time. And he was just one of many conference speakers in this compensation
category. Alain Enthoven’s name was the first that caught my attention. As an Economist in the 1960’s, working for
the RAND Corporation and the Johnson Administration, Mr. Enthoven devised NATO’s Nuclear Arms Strategy
33
and later applied those principles to healthcare. I had met and videotaped him around 1990 at a joint Kaiser Perma-
nente/Stanford University health conference in Oakland California. The fact that I would be recording him again in
Helena Montana boggled my mind. It was certain he wasn’t there just to address Montana’s healthcare concerns.

Based upon the Speaker credentials that I entered on the Website, a more accurate title for the Forum would be A
National Strategic Summit on the Future of the US Health Insurance Industry. After running through their Pow-
erPoint roadshows at the Forum, it’s likely that the serious discussions took place on Baucus’s Sieben family ranch
where there was no chance of reporters wandering in. The Montana Healthcare Forum was financed with health
insurance dollars from Baucus’ already overburdened constituency, yet public press coverage was not invited. As
employees, we were told it was a private conference and should not be discussed outside of the company.

Notable Among Notables

A few Montana State health care representatives participated, but the bulk of presenters were nationally recognized
leaders of the health insurance industry. Video recordings of the conference are publicly available from Montana
State University - Great Falls through interlibrary loan. I got them that way myself in November 2016. Here is the
WorldCat.org reference link and following is the list of speakers on the DVDs.

2007 Montana HealthCare Forum Agenda Listed in the WorldCat Reference:

Day 1: • Managing Health, Not Illness Tiers, Transparency, and Transformation / Ian Morrison
• Access for All Americans, a vision for reform / Karen Ignagni
• Message from Congressman Dennis Rehberg / Suzanne Studer
• Medicare’s Fiscal Future / Andrew J. Rettenmaier
• Taking the Pulse of Charitable Healthcare / Carol Keehan
• A New Moral Vision for Healthcare / Richard Lamm
• Montana at a Glance / Dwight Heisterman
• Montana’s Health Assessment / Joan Miles, Gail Briese-Zimmer
• Quality Outcomes in Montana / Kirsten Kammerzell, Kim Kurokawa
• National Healthcare Policy / Michelle Easton -­Alain Enthoven
Day 2: • A New Vision for Health Care, a leadership role for business / Charles Kolb
• Better Health Care Together / Kate Sullivan
• Reframing the Health Care Debate, taking on the culture of control / Mark B. Ganz
• State Innovations / John McDonough, Rachel Nuzum, Jim Chase
• Measuring and Improving the Efficiency of Care / Bruce Bagley
• Using VA Quality Improvements as a Model / Lisa Rubenstein
• Improving the Disparities of Healthcare Data Collection and Reporting / Linda Kloss
• Cows and Clinical Efficiency Breakthrough / Arnold Milstein
• Panel Discussion, Montana where do we go from here / Mark C. Rumans, Jim Chase,
David Kendall

34
Aside from Alain Enthoven, two women were the most notable on this list. The first was Karen Ignani. At the time,
she was CEO of America’s Health Insurance Plans (AHIP), formerly known as the Health Insurance Association
of America (HIAA). Though considered to be one of the most powerful and effective lobbyists in healthcare, her
address to the Forum was little more than repeating the need for a “public/private partnership” in solving the US
healthcare crisis. The second notable was Michelle Easton, a drug company lobbyist who Baucus hired as his Chief
of the Senate Finance Committee Health and Welfare Team.

United States Senate Committee on Finance

DECEMBER 08,2005 (Washington, DC) - U.S. Senator Max Baucus (D-Mont.) today announced that he has hired Michelle
Easton to be Chief of the Senate Finance Committee Health and Welfare Team. Easton is currently Vice President for the Afford-
ability and Access Committee for the Pharmaceutical Research and Manufacturers of America (PhRMA).

“Michelle’s an expert not only in health policy, but also in how that policy affects American families where they live,” said Baucus. “Her
background in public health and on the Senate Aging Committee will be particular assets as we work to make Medicare, Medicaid and
other vital programs work better for all our citizens.” At PhRMA, Easton has focused on making health insurance more affordable for
Americans and on increasing seniors’ understanding of the new Medicare prescription drug benefit.

Easton, however, was actually the slightly lesser half of Baucus’s health insurance tag team. Elizabeth Fowler was
the real heavyweight. She and Easton revolved between Baucus’s office and Wellpoint (Anthem) Blue Cross, the
largest for-profit company in the Blue Cross Blue Shield Association. They were so closely tied that a search on one
name will usually include the other. At the 2007 Healthcare Forum, Fowler was on her stint at Wellpoint so Easton
represented Baucus. By 2008, Fowler was back with Baucus and is credited with being the primary author of the Af-
fordable Care Act. Baucus even thanked her publicly when the bill passed. This Bill Moyers commentary is a good
summary of the Baucus/Fowler/Easton triad.
BILL MOYERS JOURNAL | Bill Moyers Essay: The Health Care Lobby | PBS

Timeline Elizabeth Fowler Michelle Easton

2001-05 Chief Healthcare Aide to Baucus Staff Director - Committee on Aging
2006-08 VP Public Policy - Wellpoint Chief Health & Welfare- Senate Finance
Committee
2008 Chief Healthcare Aide to Baucus Chief Lobbyist-Tarplin, Downs & Young-
Main Client: Wellpoint

From the Congressional Record Page 4971

Mr. BAUCUS. Mr. President, there are a flood of emotions going through all of us today as we pass this reconciliation bill which im-
proves upon the bill the President signed 2 days ago. I would like to focus only on one part–a very important part but only one part–and
that is to thank the people who have worked so hard, especially in this body, to help accomplish this result. […] We all want to thank so
many people. Once we start mentioning a couple or three names, we run the danger of offending people whose names are not mentioned.
We all know that. There will be an appropriate time for us to make all the thanks, and I will make mine so sincerely because I am so

35
grateful for all the hard work my staff has put into this. I wish to single out one person, and that one person is sitting next to me. Her
name is Liz Fowler. Liz Fowler is my chief health counsel. Liz Fowler has put my health care team together. Liz Fowler worked for me
many years ago, left for the private sector, and then came back when she realized she could be there at the creation of health care reform
because she wanted that to be, in a certain sense, her profession lifetime goal. She put together the White Paper last November–2008–the
87-page document which became the basis, the foundation, the blueprint from which almost all health care measures in all bills on both
sides of the aisle came. She is an amazing person. She is a lawyer; she is a Ph.D. She is just so decent. She is always smiling, she is
always working, always available to help any Senator, any staff. I thank Liz from the bottom of my heart. In many ways, she typifies,
she represents all of the people who have worked so hard to make this bill such a great accomplishment.

At the beginning of this story, I mentioned having a private conversation with Timothy Murphy who was in the
process of implementing RomneyCare in Massachusetts. I first noticed his name while formatting the Forum guest
list but found it curious that he wasn’t also included as a speaker. Being an advocate for Universal/Single Payer
Healthcare, I made a mental note to introduce myself to him and inquire about his work. While other attendees
swarmed around their various self-interests, Murphy seated himself at an empty table on the periphery with no one
competing for his attention. So I sat down next to him and mentioned that I went to high school with someone
named Tim Murphy which is a common name in Butte where I grew up. On the basis of this causal connection,
he spoke to me as though unburdening himself to an old friend. Without hesitation, he said that he didn’t see how
Massachusetts could continue to cover the rising cost of coverage, and it was then that I saw a reason for why he
wasn’t speaking. In 2007, Romneycare was not playing out as a viable long-term solution. Yet three years later it was
re-packaged and sold as Obamacare.

Corporate Communication is About Keeping Your Mouth Shut

There were countless hidden agendas at the 2007 Montana Healthcare Forum and courting a buyer for BCBSMT
was one of them. Regence Blue Cross had taken an interest in the company and its CEO, Mark Ganz, was invited
as a Forum speaker, giving him the opportunity to survey his prospective acquisition firsthand. As a result, Shapiro
got lots face time with Mr. Ganz, including the benefit of his thoughts about her peers. Perhaps encouraged about
prospects for positioning herself into a CEO acquisition bonus, Shapiro launched “exciting outside-the-box” proj-
ects to “creatively message” the success of her Leadership abilities, particularly around technology. I was assigned to
produce one of the most frivolous.

A traditional and much appreciated BCBSMT employee Christmas gift was a $25 food certificate redeemable at a
respected local grocer. For 2007, instead of this $25 certificate, Shapiro decided that all employees would receive a
custom DVD highlighting her role in BCBSMT’s achievements. This was her way of including the whole company
in her success.

When I was given the project, it was hard to decide which of my objections could most effectively kill it. Settling on
economic logic, I demonstrated that the cost of duplicating and distributing DVDs for 700 employees ($10,000+)
would about equal the cost of the food certificates, but many more people benefited from the food. In keeping
36
with her own objectives, which I respected, Linda McGillen told me to shut up and do what I was told. In the end,
the “Success DVD” was probably the least successful employee gift in the company’s history. Based upon employ-
ee feedback, very few of them even owned a DVD player at the time so most of Shapiro’s digital gratitude landed,
unopened, in the garbage.

Though it wouldn’t be completed until early 2008, the star of Shapiro’s Success DVD was the BCBSMT Website
re-design. Its impending release dominated every aspect of corporate communications, prepping stakeholders, from
subscribers to providers, for the benefits of 21st Century cyberspace. Instead, what they got was hell frozen over.
Ms. Shapiro’s million dollar Website launched at the end of January and fell into irreparable oblivion less than three
weeks later. Other than a static view of the homepage, nothing else worked. All stakeholders, especially physicians
that BCBSMT had wrangled into exclusive use of its Web services, were now marooned in a truly dark Web. It was
a very tense situation.

After unsuccessful attempts at remote remediation, Microsoft and Infosys flew technicians to Montana on a private
jet. Though the killer glitch was never discovered, they did identify the interface layer (the screens you see on your
web device) as the most probable cause of the problem. But they also concluded that the problem could not be
repaired. Instead, the interface would have to be completely replaced. In tech terms, the site was a total, complete
clusterfuck. This is when I got a call.

Shapiro herself requested that I help build a new interface. For me, even more surprising than her phone call was
the fact that she was still around. Humiliation alone would have prompted most ordinary people to leave immedi-
ately. Sheldon Boe, Assistant VP of IT at the time and thus carrying an obvious responsibility for the project, was
significantly demoted and temporarily replaced by an industry technology consultant. But Shapiro hung on as COO.
The screenshots below may be the only surviving reminder of her tech savvy affectation.

37
A spark of hope pushed me to want to save the day by replacing the interface and even feel some vindication. I was
assigned to work with a young programmer who I helped to hire years earlier. He grew up in a working class family
from a small Montana Canadian border town. As a way to finance his education, he joined the National Guard. In
2003, soon after completing his Computer Science degree and being hired at BCBSMT, he was called to serve for
over a year in the Shock and Awe Iraq War so I didn’t get much opportunity to work with him. At least, I now had
the pleasure of pulling together a project, under pressure, with a talented partner. In just two weeks, while BCB-
SMT’s entire Website hung in a frozen limbo, he and I coded a whole new version of the interface and connected it
to the Sharepoint back-end. Without question, this was a remarkable achievement that deserved acknowledgment.
But, other than a “Thanks” email from Linda McGillen, the effort was essentially hidden because, for PR purposes,
the Website failure never happened.

This experience strengthened my resolve to leave BCBSMT the following year when my age, finances, and parenting
responsibility all favorably aligned. Over that same period, Ms. Shapiro took shelter in her office while retaining her
title, salary and perks. As is common at the executive level, it’s likely that her contract allowed for a comfortable job
hunting period before resigning. Recommendations on her LinkedIn page dated in 2009 are from people who never
worked at BCBSMT yet are identified as her colleagues there. In 2014, she became a National Vice President for
United Healthcare.

Right on target, Sherry Cladouhos retired at the five year mark that optimized her retirement package. She now
keeps busy accruing additional income from the various corporate boards on which she sits. Terry Cosgrove’s cho-
sen son, Mike Frank, did fill Sherry’s seat as CEO. Soon after, BCBSMT was sold to a national conglomerate called
Health Care Service Corporation which retained Frank as a Senior Vice President. Mark Burzynski, that lucky free-
lunch accountant, was also awarded a more heavily feathered nest in the sale. The following 2015 article in the Bill-
ings Gazette was one of the last times their executive salaries were publicly disclosed. Note the usual “to attract the
best and the brightest” rationalization for the outrageous compensation even though all of them are Montana stock.

Health insurers pay out big bonuses despite 2014 losses

Health insurance companies that sold policies on the Montana health care marketplace reported some substantial losses in 2014 — but
that didn’t stop their executives from collecting some big bonuses.
.....In Montana, Blue Cross President Mike Frank’s total compensation for 2014 was $849,000, including a $355,000 bonus and
salary of $488,000. Montana Blue Cross spokesman John Doran said Frank’s total compensation package in 2014 was slightly lower
than his $870,000 compensation for the previous year.
“Compensation is a way to attract and retain experienced professionals who will serve our members’ long-term interests at a time when
the health care system is undergoing historic changes,” he said. “We need the best and the brightest at all levels of our business to ensure
insurance works for everyone over the long term.”.....
Top executive salaries for other companies selling on Montana’s marketplace include: Vice President for Provider Services Mark
Burzynski had nearly $485,000 in total compensation last year, down from $647,000 the previous year. Frank Cote, vice president for
Montana sales, had $352,000 in compensation last year, down from $410,500 the previous year. Both men had bonuses for 2014.

38
The Seed
It was difficult to decide what to include and what to leave out of this story. In the end, it seemed best to keep it
short. But for those who trust that health insurance corporations and their self-serving executives act in the best
interest of the public, I hope this writing is enough to germinate a realistic seed of doubt.

Addendum:

Double Cross - Missoula Independent Story Now Offline

Retrieved from the Internet Archive Wayback Machine

http://www.missoulanews.com:80/News/News.asp?no=4518
1 capture - 13 Jan 2005 www.MissoulaNews.com
Vol. 16 No. 1 Issue Date 1/6/2005

Double Cross?
by Keila Szpaller

When 12 Missoula radiologists declined to sign a contract with Blue Cross Blue Shield, the state’s largest health care
insurer called the doctors a monopoly and sued for antitrust violations. What are the Blues really after?

In September, Blue Cross Blue Shield of Montana (BCBSMT), the largest health care insurer in the state, sent a
shock wave through Missoula’s medical community when it filed a lawsuit against a group of 12 Missoula radiolo-
gists doing business as Missoula Radiology, and its affiliate, Advanced Imaging at Community Medical Center. The
suit charges the radiologists, who in June 2003 declined to accept a new service-provider contract with Blue Cross
after four years of doing business with the state’s dominant health insurance provider, with antitrust violations—es-
sentially, operating a monopoly. Close observers don’t buy that charge.

“Blue Cross didn’t claim [Missoula Radiology was] a monopoly when they were participants in their network,”
points out Dirk Visser, president and CEO of BCBSMT competitor Allegiance Benefit Plan Management. “And yet
nothing has changed within [Missoula Radiology’s] corporate structure.”

“That monopoly issue just doesn’t hold a lot of credibility,” agrees Dennis Palmer, a Helena radiologist who for
several years sat on BCBSMT’s physician advisory board.

BCBSMT’s real motive for suing Missoula Radiology may be to force the radiologists to sign on the dotted line,
ensuring that the specialty provider remains part of the BCBSMT network. There are several reasons for the insur-
ance giant to want to keep its provider network intact, the most obvious and least nefarious of which is to be able
39
to deliver comprehensive care to its policyholders: health care consumers. But another possibility is that BCBSMT
may be eager to shore up its provider network in anticipation of a corporate restructuring—a sale or merger, for
example—on the open market, with uncertain consequences for health care consumers in Montana.

Elsewhere in the country over the past decade, numerous formerly nonprofit Blue Cross companies have merged,
been acquired or converted to for-profits. Some BCBSs have attempted to convert but been denied by state regula-
tors. Blue Cross Blue Shield of Montana—now a nonprofit—denies up front that it has any such plans, but in fact
BCBSMT may already be effectively converted, dependent on the outcome of an obscure auditor’s office dispute
with the insurer and the results of the 2005 legislative session. In the auditor’s dispute, the state claims the corpora-
tion is what’s known as a public-benefit corporation; BCBSMT insists that it’s a mutual-benefit. As a mutual-benefit
corporation, BCBSMT could sell or merge with no state regulation of corporate assets derived from BCBSMT’s
longstanding nonprofit status. As a public-benefit corporation—which the state argues BCBSMT is—a portion of
Blue Cross assets would remain in a public charitable trust in the event of a for-profit conversion. In any case, Sen.
John Cobb, R-Augusta, fears those assets might already be out of reach. “Under the worst case scenario, they’ve
already converted,” says Cobb. “And we don’t get anything.”

Blue Cross Blue Shield of Montana is one of 40 member health care organizations of the national Blue Cross Blue
Shield Association (BCBSA). Nationally, Blue Cross Blue Shield contracts with more hospitals and physicians than
any other insurer. The company’s roots go back to the Great Depression when teachers purchased prepaid hospital
stays and employers purchased injury care for miners and loggers. Over time, Blue Cross and Blue Shield, which
merged in 1982, became known as “the insurer of last resort.” Today, one in every three insured citizens is insured
by a BCBS plan. In the past 10 years, “the Blues” have collectively increased membership by 30 million. In 2003,
system-wide enrollment reached an all-time high of 88 million.

BCBS member organizations were originally chartered as nonprofits. In 1994, the association changed its bylaws to
allow its members to convert to for-profit status. In 1985, more than 90 independent BCBS plans were operating in
the United States. Today, due to mergers and acquisitions, there are 40. Three are for-profit, including two publicly
traded companies, according to BCBSA spokesman Chris Hamrick. In late November, two of the largest Blue pro-
viders—Anthem, Inc. and WellPoint Health Networks, Inc.—merged.

In Montana, Blue Cross Blue Shield is responsible for nearly half of the commercial health insurance premiums
collected in the state. The state’s 58 hospitals—including all of the state’s rural critical access hospitals—participate
in some manner with BCBSMT. Nearly a quarter of the state’s population carries a BCBSMT health insurance card.

BCBSMT’s dominance in the market allows the insurer to play the heavy with health care providers.

When a BCBS-insured patient goes to a doctor, some portion of that doctor’s fee is paid by BCBSMT. Whatever is
not paid by BCBSMT has to be made up elsewhere. The extra load can be passed on in the form of higher rates to
non-BCBSMT patients, including the uninsured, or it can be passed on to BCBSMT patients whose visits to Mis-
40
soula Radiology now constitute out-of-network service. Or it can be carved from the health care providers’ bottom
line.

If a health care provider, like a hospital, should balk at the reimbursement rates offered by BCBSMT, BCBSMT can
simply send—or threaten to send—its insured patients elsewhere. By many accounts, BCBSMT refuses to negotiate
contracts with providers.

Fourteen years ago, Dr. Palmer, the Helena radiologist, joined Montana Interventional and Diagnostic Specialists,
which contracts with BCBSMT. “First of all,” says Dr. Palmer, “it’s not a negotiation. They send out a contract.
They talk about Missoula Radiology having a monopoly. Well, they have a monopoly for the people we provide care
for. They sort of hold the cards for those people. We either sign with them or we don’t.”

Dr. Palmer’s practice continues to sign, despite the fact that “we have taken a reduction in our level of reimburse-
ment for almost every year,” Palmer says. In 2002, David Espeland, CEO of Fallon Medical Complex in Baker,
considered not signing a contract with BCBSMT, believing that his hospital couldn’t afford to operate with the
reimbursement rates offered by BCBSMT.

“I did ask what the alternative was if we didn’t sign an agreement with them. And they said, ‘Well, then I’m afraid
that Blue Cross Blue Shield patients can’t come to you.’” At the time, Espeland says, roughly one third of the pa-
tients in Fallon County were covered by BCBSMT.

“We’re kind of held hostage in some respects. Because the last thing we want to do is alienate a large portion of our
population. We were, in some ways, being told, ‘Either you sign, or patients are going to have to be redirected out
of town,’” says Espeland.

Missoula Radiology, whose members declined to discuss the suit on the record on attorney’s advice, held a contract
with BCBSMT from 1999 to 2003. Missoula Radiology is composed of 12 doctors and 11 staff; the company also
owns 50 percent of Advanced Imaging at Community Medical Center, a diagnostic center that performs CAT scans,
MRI scans and mammograms. According to internal Missoula Radiology reports, the practice saw BCBSMT reim-
bursements decline for most procedures each year of its contract. Had Missoula Radiology signed with BCBSMT
for a 2004 contract, BCBSMT’s current reimbursements for the most frequently performed procedures would be on
average 11.4 percent lower than they were in 1999.

BCBSMT says that while its reimbursement rates for some procedures may be declining, it uses the same reim-
bursement scale used by Medicare, Medicaid and other private insurers, and that improved technology has increased
efficiency for many procedures, justifying lower rates.

BCBSMT has been joined in its suit by four small local businesses—Davis Transport, Inc., APS Healthcare North-
west, Inc., ELM Locating and Utility Services and Missoula Cartage Co.—whose employees are covered by BCB-
41
SMT plans. Their complaint: They may have to pay more for their employees’ health care coverage because Missou-
la Radiology, without a BCBSMT contract, is now an out-of-network provider.

“[BCBSMT has] basically painted Missoula Radiology and Advanced Imaging as the villain to these employers,
whose angst is really misdirected,” says Allegiance’s Visser. “They do have a legitimate beef, but it’s with Blue Cross,
not with the radiologists.”

Susan Good, former chairwoman of the Montana Republican Party and formerly a lobbyist on behalf of physi-
cians, believes that BCBSMT may harbor concerns about Missoula Radiology’s rejection on a number of fronts.

“Network adequacy is something that they [BCBSMT] really need to pay attention to, which would be enough of
a reason for them to be very concerned,” Good says. “They’ve got the domino-effect concern, where [potentially]
everybody tells them, ‘stick it in your ear.’ And if they want to go for-profit, this could also be a motivator.”

Jesse Cole, a radiologist based in Butte, thinks he sees a pattern that supports the prospect of BCBSMT positioning
itself to turn for-profit. Across the country, Blues have been amassing great sums of cash reserves. The companies
are required by law to maintain minimum reserves to protect policyholders, but in some states, including Montana,
no maximum is set. Often, after stockpiling reserves and funneling cash into for-profit subsidiaries, the corporations
attempt to convert from nonprofit to for-profit status.

A portion of the reserve funds, explains Dr. Cole, is often used to satisfy state requirements for charitable assets.
Oftentimes, however, state regulators undervalue the companies and the state acquires much less than policyhold-
ers have poured in. Additional reserves and long-term assets then go to shareholders. “What happens is Blue Cross
Blue Shield tries its darndest to get as much market share as it can before this happens because that is going to
figure into their stock valuation,” Cole says.

In general, a fuller network with specialty physicians translates to higher premiums, explains John Leonard, an
analyst at Charlottesville, Va.’s SNL Financial, a financial research firm that covers the banking and insurance sec-
tors, among others. Comprehensive networks and higher premiums, in turn, translate to improved financial ratings,
appealing to management whether a corporation intends to convert to for-profit or not.

Blue Cross denies any intention to transition to for-profit status. BCBSMT spokeswoman Linda McGillen calls the
idea “foolish,” saying the company already explored and rejected the idea. “It dropped off of the table early in 2003
as not even an alternative to be looking at,” McGillen says.

However, an early 2003 letter from BCBSMT to Sen. Cobb stopped well shy of dismissing conversion, explaining
only that the company intended to wait until the 2005 legislative session to pursue conversion-friendly legislation.
BCBSMT spokeswoman Tanya Ask says the board has since changed direction, but declines to provide records of
board meeting minutes that would document the board’s deliberation.
42
However, Chuck Butler, a former BCBSMT vice president and current communications director for Gov. Judy
Martz, says that when he left the company in December 2002, it was not the board but President and CEO Peter
Babin suggesting the company consider conversion. Babin directed all queries to McGillen, who is the corporate
communications director, but declined to respond to repeated Independent requests for direct comment.

Pat Driscoll, chief legal counsel with the state Auditor’s Office, says conversion is currently “more of a theoretical
concern.” But, “the fact that it is a theoretical concern suggests that it’s a possibility.”

By 1992, Montana law had established separate designations for nonprofit corporations: religious, public-benefit or
mutual-benefit. Corporations could denote their nonprofit designation in their articles of incorporation. Otherwise,
the state would consider a corporation’s 1995 annual report as the appropriate indicator. In 1995, BCBSMT filed
an annual report designating itself as a public-benefit, but the insurer says that the original filing was the result of a
clerical error.

A hearing between BCBSMT and the state auditor over BCBSMT’s corporate designation is pending.

If BCBSMT is found to be a public-benefit corporation, “they can’t under ordinary charitable trust law take assets
that are dedicated to charitable trust purposes and give them to a for-profit entity,” explains Chris Tweeten in the
Montana attorney general’s office. If BCBSMT were to attempt a for-profit conversion as a public-benefit corpora-
tion, or be sold or dissolved, the attorney general’s office would have authority to oversee the transaction and ensure
that appropriate BCBSMT assets would be placed in a trust for the benefit of the state.

BCBSMT, however, considers itself a mutual-benefit, says spokeswoman Ask. If that is determined to be the case,
the attorney general’s office has no authority over Blue assets, says Tweeten. If considered a mutual-benefit, the
company is free to merge or be sold with no charitable trust obligations.

“In the worst case scenario, they don’t have to give us a dime,” says Sen. Cobb.

In March 2003, the Montana Department of Insurance, having audited BCBSMT from 1997 through 2000, asked
BCBSMT to amend its articles of incorporation to reflect that it was a public-benefit corporation. BCBSMT re-
fused. In August 2003, State Auditor John Morrison ordered that BCBSMT “must amend its articles of incorpora-
tion and its by-laws to reflect that it is a public benefit corporation.”

Negotiations between the state auditor’s office and BCBSMT have been underway for more than a year.

BCBSMT spokeswoman McGillen insists the company has no plans to convert to for-profit, and spokeswoman Ask
confirms that the Board of Directors is not steering BCBSMT in that direction.

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BCBSMT’s promises, though, hold little water with Cobb, who is anxious to have the issue resolved. “Somebody
could tell them they’re going to convert,” he says. “What if someone just buys them out? Another Blue Cross?”

“At this point, Blue Cross Blue Shield is not for sale,” counters Ask. “We have absolutely no intention of selling.”
Neither, she says, is the company pursuing a merger.

When Butte radiologist Jesse Cole, M.D., reviewed his paperwork, he noticed that BCBSMT’s reimbursements were,
on average, “considerably lower than anybody else.” “In the 1990s, the percentage of money these guys started
holding back for administrative expenses and cash reserves started to increase, and it did that all around the coun-
try,” he says.

In that respect, BCBSMT fits the national mold. According to the insurance commissioner’s office, BCBSMT held
$52.8 million in reserve in 2000. By 2002, reserves had jumped to $60.5 million. With reserves of roughly $94 mil-
lion as of June, BCBSMT is flush, holding more than three times the minimum required by state statute. “They have
enormous reserves, of course, and other companies would call that profit,” says former lobbyist Good.

BCBSMT reserves, says spokeswoman Ask, are now at an acceptable national average compared with other Blue
Cross companies. The minimum required by state statute, says Ask, is well below the minimum required by the Blue
Cross and Blue Shield Association. BCBSA, says McGillen, requires that its members hold at least 400 percent of
risk-based capital in reserves. BCBSMT, she says, holds roughly 625 percent.

Since reserves nominally exist to protect consumers, the state is reluctant to set a maximum, according to the audi-
tor’s office. “They [BCBSMT] could charge to infinity and the state could say nothing. There is no upper limit. And
that’s a loophole that I think these guys have been willfully exploiting,” Dr. Cole says.

The Consumers Union, the nonprofit publisher of Consumer Reports, tracks nonprofit-to-for-profit conversions,
and San Francisco-based staff attorney Scott Benbow says the organization has discerned several indicators that a
company may be planing to convert. Placing assets into for-profit subsidiaries is part of that pattern, he says.

Again, BCBSMT fits the pattern. In addition to cash reserves, BCBSMT owns four for-profit subsidiaries: Insurance
Coordinators of Montana, Inc., incorporated in 1976; Combined Benefits Management, Inc., incorporated in 1993;
Western States Insurance Agency, Inc., acquired in 1994; and Health-e-Web, Inc., incorporated in 1999.

Another sign of coming conversion, says Benbow, is activity in the Legislature. “Often, when nonprofit health plans
are lobbying for legislation to make conversions easier in any given state, a conversion proposal could be just around
the corner,” Benbow says.
Montanans were well aware of the nationwide conversion trend in 1999 when Sen. Mignon Waterman, D-Helena,
sponsored a bill that would have authorized the attorney general to review and regulate conversions. The Commis-
sioner of Insurance supported the bill, anxious for guidelines that would determine what assets the public was due
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in the event of a nonproft-to-for-profit conversion. At the time, a spokesperson for Montana People’s Action, an
advocacy group for low-income citizens, said that without proper oversight, “vast amounts of the public’s money
could be siphoned from public benefit and put into private pockets.”

The bill died. “[BCBSMT] succeeded in getting the bill killed,” Waterman says. “They worked very hard to get the
bill killed.” Susan Good also saw BCBSMT lobby heavily between 1995 and 2001. “Blue Cross Blue Shield has had
so much influence at the Legislature in the past,” says Good. Once, she says, she received a copy of a draft bill.
“It said in parentheses, ‘see Chuck Butler for more details.’” At the time, Butler was a vice president for BCBSMT.
“They were writing the bill. That’s way too much influence,” says Good.

Consumers Union’s Benbow has noticed that BCBS profits are causing a stir nationally. “In Pennsylvania, at the mo-
ment, four nonprofit Blue Cross plans are being asked by the insurance department there to explain why they have
such huge surpluses, and why they’re not using those surpluses to further their nonprofit mission,” Benbow says.

In Montana, it’s executive salaries and benefit packages that are making the headlines. President and CEO Peter
Babin’s salary in 2003 was $525,306. (The same year, the 16 board members were paid an average of $5,585 each.)

When Blues convert, it’s usually corporate executives who win big. In 2003, Consumers Union issued a report
titled “How Much is Too Much?” According to that report, nine years after Blue Cross of California converted to
the for-profit WellPoint Health Networks, its CEO salary and bonuses increased from $922,000 to $19.26 million.
When Virginia Blues converted to Trigon Healthcare, Inc., the CEO’s salary ballooned 203 percent. And competitor
Anthem, Inc., which owns Blues from Nevada to Maine, is no different. Its CEO’s salary at the for-profit was 1,035
percent higher than his compensation before conversion. In 2002, Anthem CEO and President Larry Glasscock
received $15.9 million for his work.

A 2000 Consumers Union report noted that when nonprofit health care organizations convert to for-profit, “Many
of those dollars ended up in the hands of former executives, board members, and employees of the nonprofit as
well as private investors.” As consumer watchdog groups have become aware of the threat, however, state regulators
have made stronger demands on health care organizations attempting conversion.

The millions being siphoned into CEO salaries and perks, gouged out of patients, small businesses and the bottom
lines of health care providers, were once reserved by state regulation for health care, and some states are loathe to
see those revenues go up in CEO smoke.

Benbow describes the “legal wrangling” that took place in California to try to force the for-profit WellPoint to re-
turn policyholder money by placing it into charitable assets.
By the early 1990s, he says, most of Blue Cross of California’s assets were controlled by the for-profit WellPoint. In
1996, the California commissioner of corporations ruled that Blue Cross had committed a de facto conversion and
had an obligation to return assets to the nonprofit sector.
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“First the Blues plan offered zero. Then, [they] offered $100 million, which was rejected [by the corporations com-
missioner]. Finally, when all was said and done, they agreed to set aside $3.2 billion into two nonprofit foundations
that are independent from the Blue Cross plan,” says Benbow.

Dr. Cole puts it this way: “They throw a few bones to some not-for-profit foundation.” Then, the new for-prof-
it corporation issues shares. Corporate executives and shareholders are handed the assets amassed by payments
from policyholders. “It’s like the perfect crime,” says Dr. Cole. Except one thing: “It’s all legal. The people that get
screwed are the people who have been pouring their money into Blue Cross Blue Shield all these years for those
premiums,” says Dr. Cole.

In July 2004, the insurance commissioner of the state of Washington, in denying Premera Blue Cross’s request to
convert, concluded in part that conversion would result in less money being spent on health care. “Blue Cross Blue
Shield pays us a little bit more than Medicare, and they pride themselves on that,” says Fallon Medical Center CEO
Espeland. “It still amounts to a discount of 20 percent.”

“You guys [BCBSMT] don’t get the big picture here,” Espeland says. “If we don’t get adequate reimbursement,
then we don’t keep the doors open, and there is not access for the patients. They don’t have access to medical care.”
While Blue Cross’s reserves have ballooned, Espeland says that his hospital has taken a loss for years, unable to set
aside reserves of its own.

Faced with the choice, Missoula Radiology decided not to charge the uninsured and patients with other insurance
more so that BCBSMT members can receive the giant’s discounted rates. Dr. Cole, who is not a Blue Cross Blue
Shield provider, respects the Missoula radiologists’ decision.

“I applaud them for their moral clarity on this issue,” he says. “I will work with anybody if they have financial hard-
ships on a bill,” says Dr. Cole. “But I refuse to subsidize Blue Cross Blue Shield and Peter Babin with other people’s
money. It’s wrong.”

In the end, the suit against Missoula Radiology may have backfired. In late September, a group of Missoula neuro-
surgeons and general surgeons cancelled their contract with BCBSMT to protest BCBSMT’s lawsuit against Missou-
la Radiology.

Other specialty providers without local competitors are wondering whether they, too, might come face to face with
an antitrust suit that could cost millions to defend. “That’s the unspoken fear,” explains Dr. Cole. “There are lots of
towns in Montana with only one specialist or one group of specialists…because this is Montana. It’s a small place.
So are they going to be nailed as a medical monopoly if they decide they don’t want to participate?”

The Montana Medical Association’s Brian Zins believes the suit, currently pending, will be watched nationwide. “I
think the physicians are really, really concerned. You’ve got 12 people here against a huge entity,” says Zins. If the
46
suit does force Missoula Radiology to join BCBSMT and accept its rates, Zins says, “I think this could be something
that could have far-reaching effects on the practice of medicine.”

Preserving the integrity of its network is desirable for BCBSMT regardless of whether it plans to convert. But just
in case, Sen. Cobb has prepared draft conversion legislation for the upcoming legislative session that he hopes will
preserve some of the company’s assets as a charitable trust if it does make the move to for-profit.

Benbow and the Consumers Union encourage Montanans to insist that charitable assets be preserved if BCBSMT
does convert. In California, he says, similar assets were eventually placed in health care foundations. “These founda-
tions are making enormous contributions to the health and well-being of Californians by funding health initiatives
all over the state,” says Benbow. “Montanans should accept no less.”

Dr. Cole, however, believes that the nonprofit BCBSMT should not be allowed to use its reserves to buy its way to
for-profit status. He would like to see the corporation’s rates regulated more closely, as the Public Service Commis-
sion regulates utility rates.

Whether BCBSMT pursues for-profit conversion in the 2005 Legislature, as the insurer’s 2003 letter to Sen. Cobb
suggests it might, it’s at least clear that BCBSMT is not afraid to use its muscle to force local health care providers
into line, and that BCBSMT considers its assets to be the minimally regulated purview of a mutual-benefit corpora-
tion, whether the state likes it or not.

For Dr. Cole, the situation is maddening either way. “If these guys are not-for-profit, and they’re supposed to be
operating for the benefit of the policyholders, they’re not,” Dr. Cole says. “They are using the policyholders of
Montana as their own personal piggy bank.”

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