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Blue Shield Exec Fired for Trying to Save Money

(CN) - Blue Shield of California fired its former vice president and technology officer after he blew the whistle on financial improprieties committed by another executive, the former officer claims in a state court lawsuit filed Monday.

Aaron Kaufman says that during a dispute over which vendor Blue Shield should choose for its Veritas Data Project, he repeatedly advised senior vice president and chief information officer Michael Mathias to go a cheaper route with a vendor that would charge a fixed price of $1.6 million.

But Mathias wanted to go with a different vendor that proposed an unfixed price of $4.6 million, according to Kaufman's Los Angeles County Superior Court complaint. Kaufman says Mathias essentially wanted to give this vendor, identified in the complaint under the pseudonym ABC Corp a "'blank check,' to bilk Blue Shield beyond the $4.6 million dollar figure with no end in sight."

Mathias is not named as a defendant in Kaufman's suit.

Kaufman says he thought the $1.6 million price was a "no brainer" and he couldn't understand why he was met with so much resistance from Mathias, who wanted a vendor that was three times more expensive.

"On one occasion in January 2015, Mathias abruptly stopped Kaufman's verbal opposition in its tracks, instructed Kaufman to 'Stop!' In a terse tone of voice Mathias instructed Kaufman to leave his office, to never raise this $3 million cost-savings issue with him again," Kaufman's complaint says.

Suspecting a conflict of interest, Kaufman talked to his co-workers, who voiced similar concerns. He says he believed Mathias' conduct violated Blue Shield's own code of conduct, since such conflicts of interests could be perceived as accepting bribes or kickbacks.

"This was especially true since Mathias could not explain why he was beholden to this single, overpriced ABC Corp vendor, why he would want to contract with a vendor with no fixed cost that exposed Blue Shield to an unlimited flow of revenue into ABC Corp's bank account, a vendor agreement not in the best interests of Blue Shield," Kaufman's complaint says. "This was especially true because Kaufman viewed ABC Corp as wholly incompetent and incapable of providing quality service in a timely manner."

Mathias instructed Blue Shield's human resources officer to fire Kaufman on March 11, allegedly for violating Blue Shield's travel and expense policy, according to the complaint. Kaufman believes he was fired because Mathias was worried he would go to executive management or the government.

He adds, "Mathias retaliated against Kaufman because he refused to go along with and participate in his unlawful conduct and financial improprieties. In fact, if anyone should have been fired it should have been Mathias, not Kaufman, that it was Mathias who got caught bilking $3 million from California consumers and 3.4 million Blue Shield members."

He also says Blue Shield still owes him his 2014 executive incentive compensation bonus of $450,000.

Kaufman is seeking reinstatement as well as economic, compensatory and punitive damages for wrongful termination, whistleblower retaliation, conversion and theft, and breach of contract.

He is represented by David Peter Cwiklo of Woodland Hills, California.

Blue Shield spokesperson Clinton McGue told Courthouse News, "Blue Shield of California received notice of a wrongful termination lawsuit filed against the company by Aaron Kaufman in Superior Court in Los Angeles. Kaufman is a former employee who left the company on March 10, 2015. We disagree with the complaint and have no further comment at this time."

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