Insurance Commissioner Adam Hamm said he ordered the company to make changes after insurance examiners found inappropriate or excessive expenses paid with policyholders' dollars. He said the nearly inch-thick report raised questions about compensation, travel policies, investments and severance packages.
Hamm said the report showed "a lack of judgment" by board members and senior management. It was the first audit of the nonprofit company since 2004.
"I expect and demand that those things won't happen again," Hamm said.
Company officials said Tuesday that changes were already being made when Hamm ordered the audit in March, following criticism of a sales managers' trip to the Grand Cayman Islands that cost $238,000. The company's chief executive at the time, Mike Unhjem, was fired later that month.
"The culture of this organization is very different than it was a few months ago," said board chairman Dennis Elbert.
The company provides health care coverage to more than 375,000 North Dakota residents and 75,000 nonresidents.
Hamm said that of the $418 million in the company's administrative expenses over the past five years, the audit found "millions and millions of dollars in excessive expenses."
The report said that premium payments funded nearly $15 million in employee bonuses that were almost assured regardless of performance, a $3.5 million investment in a hotel in Fargo and sales reward trips to resorts totaling $1.2 million.
In one case, the audit found that $34,814 was spent for a party for a retiring vice president.
And remember, in the Baucus bill, which for some ungodly reason seems to be the front-runner, insurers will be required to spend only 65% of premiums collected on actual health care. That gives them 35% for other stuff--ads, administrative costs, bonuses regardless of performance, and trips to the Cayman Islands and other rewards. And yet funding this sort of culture with our premium dollars is more attractive to some than paying for a Medicare-like government administered policy. We often think government = waste. In reality, the greed and irresponsibility of private business = waste just as much, if not more.