WellPoint CFO Fired, but Why?

We have been writing a lot about pharmaceutical manufacturers lately, so it's time to break up the monotony. Similar cryptic stories just appeared about the sudden departure of the Chief Financial Officer (CFO) of one of the US largest for-profit health care insurers/ managed care organizations. For example, from Bloomberg.com,

WellPoint Inc. fired Vice Chairman David C. Colby, named the best health-insurance chief financial officer for each of the past four years by Institutional Investor magazine, over violations of company rules.

The unspecified breaches of a conduct code were 'of a non-business nature' and didn't involve illegality, WellPoint, the second-biggest U.S. provider of medical coverage, said today in a statement.

Colby, who was also an executive vice president of WellPoint, didn't respond to an e-mail or phone calls. Officials won't provide further information on Colby or the dismissal, Shannon Troughton, a company spokeswoman, said in a telephone interview. Board members John Zuccotti and William Mays referred inquiries to Troughton, and other directors couldn't be reached.

Colby was finance chief of WellPoint Health Networks Inc. in November 2004 when the company was bought by Anthem Inc.

'Colby was masterful not only in his management of the company's finances, but also in his communication with investors and had over the years engendered great confidence among his investor base,' said William Georges, a JP Morgan Securities Inc. analyst in New York, in a note to clients today.

An investigation of Colby's conduct by outside lawyers began in ``recent days,'' Glasscock said on a telephone call with investors and analysts.

'Certain concerns were raised, and we immediately began an investigation,' [Wellpoint CEO Larry C.] Glasscock said. 'Based on this investigation, it was concluded that David Colby violated the company's code of conduct.'

WellPoint's code, available on the company's Web site, is a 25-page document that covers a variety of issues, including ethical decision-making, reporting of violations, protecting information, and maintaining the workplace environment. It sets limits on blogging and other Internet use; drugs and alcohol; possession of weapons; and politicking.

Colby's 2007 salary was $740,000, according to a company filing. He was also given 100,000 options on March 1, and received a restricted stock unit award of 12,500 shares.

Got that? Similarly opaque accounts appeared in other media outlets. But obviously we should not blame the media for the opacity.

This is a nifty example of the opacity of large health care organizations. Was this a case of dastardly conduct of a highly-placed, well-remunerated, and powerful leader of health care? Was this a case of a large health care organization running someone off because he failed to observe limits on blogging? Did it have anything to do with WellPoint's recent settlement of a case in which it was accused of canceling individual insurance policies after the policy-holders first made substantial claims (see our post here)? Who knows?

But patients who indirectly (or rarely directly) pay huge sums of money for health care insurance, and who too often have to contest health care insurers and managed care organizations' coverage decisions might like to know what sort of leaders they have, and how they enforce their codes of ethics. So might physicians who must endure endless bureaucratic hassles from health care insurers and managed care organizations.

We surely have a long way to go on the road to more transparent governance of health care.