Lawsuit claims Blue Shield is "bilking" consumers

Two weeks ago, Blue Shield of California told the Los Angeles Times that it would be “inappropriate” to use any of its billions of dollars in excess reserves to hold down rates. Last week, we got an indication of where some of that money may instead be going: overpaying favored information technology vendors by millions of dollars.

Aaron Kaufman, a former technology vice president for Blue Shield, sued the insurer last week claiming that he was wrongly fired for raising objections about a contract for information technology services that cost millions more than it should have. Kaufman’s lawsuit alleges financial improprieties in the awarding of the contract, claiming that it involved “bilking $3 million from California consumers.”

Remember, since Blue Shield is officially a “nonprofit social welfare organization,” those billions in reserves belong to the public. Blue Shield’s top executives say we can trust them to use that money for public good. This lawsuit is just one more indication that we can’t.