Redmer favored for state position
Ehrlich likely to choose Balto. Co. delegate to lead Md. insurance agency; Larsen's term ends this month; Executive would resign from company that works with CareFirst, he says
 
By David Nitkin
Sun Staff

May 19, 2003

Del. Alfred W. Redmer Jr., a sales executive with an insurance company that does $300 million in business with health care giant CareFirst BlueCross BlueShield, is the apparent choice to become Maryland's next insurance commissioner.

If he gets the job, Redmer, the House minority leader from Perry Hall, could rule on issues affecting the finances of the state's largest health insurer and his employer, BenefitMall.

Redmer said he would resign from BenefitMall and divest himself of any insurance-related holdings if Gov. Robert L. Ehrlich Jr. offers him the job of head of the Maryland Insurance Administration, a position that pays $125,236 a year. GOP sources say Redmer will likely be tapped for the position.

"Obviously it would be a conflict for anybody to regulate their own business," Redmer said. "I would be prohibited from working in that business if I was regulating it."

Ehrlich is close to settling on a replacement for insurance Commissioner Steven B. Larsen, whose five-year term expires at the end of the month.

Typically a near-invisible assignment, the commissioner's office grabbed the spotlight during the past 18 months as Larsen weighed a CareFirst proposal to sell itself to WellPoint Health Networks Inc. of California, abandoning its not-for-profit status.

Larsen rejected the $1.37 billion transaction, and this year, the General Assembly passed a bill reshaping CareFirst's board of directors and preventing the company from seeking a conversion for five years.

But Ehrlich is considering a veto of the bill, meaning the sale of the not-for-profit company could land in the lap of Larsen's replacement.

Redmer's candidacy - as well as that of other leading applicants with ties to CareFirst - raises questions of the appropriate qualifications for the post, which serves as the chief advocate for consumers on insurance issues.

Elected as a pro-business governor, Ehrlich is looking to redefine relationships between state regulators and corporate interests across many areas, including environmental protection, economic development and insurance. He has sought appointees with private-sector qualifications.

"We are never going to have an insurance commissioner who is as good and consumer-oriented as Steve Larsen. He is an exception, and he is terrific," said Del. Shane E. Pendergrass, a Howard County Democrat who serves on the Health and Government Operations Committee with Redmer.

"If you've lowered your expectations, and you know it's a Republican governor and you know he is pro-business, you are probably going to get somebody from the business community," Pendergrass said. "Given all those constraints, I think, frankly, Al Redmer is as good an insurance industry person as you can find."

Pendergrass said Redmer seemed fair and balanced during negotiations over this year's CareFirst reform legislation. "He made sure that we were listening to all sides," she said. "He made it a better bill because of his contributions."

Redmer has urged Ehrlich to sign the bill, which has been opposed vigorously in recent days by CareFirst board members.

House Speaker Michael E. Busch, a former chairman of the committee handling insurance issues, said he was not overly concerned by Redmer's industry connections.

"It's a disclosure, but I don't think it's a conflict," Busch said. "You want somebody who has a background in the industry."

In January last year, Redmer filed a disclaimer with the Joint Committee on Legislative Ethics, acknowledging that "the appearance or presumption of a conflict of interest exists" on issues related to the proposed CareFirst conversion.

"My employer, BenefitMall, is an administrator for CareFirst with insurance premiums of approximately $300 million," Redmer wrote on the form.

The form includes the statement: "I swear or affirm that despite the presumed or apparent conflict, I am able to participate in legislative action relating to the above fairly, objectively and in the public interest."

Insurance industry sources say that companies typically collect commissions averaging between 1 1/2 percent to 2 1/2 percent from health premiums, meaning BenefitMall could collect at least $4.5 million from its CareFirst business.

Redmer would not confirm the amount, and said he did not benefit directly from those premiums.

"I get paid from BenefitMall based on a salary and a small percentage of business that brokers generate, regardless of where that business comes from," he said.

In April 2000, BenefitMall acquired the Mather Cos., Redmer's former employer. Company President Dennis Mather, who is a regional vice president with BenefitMall, was in Annapolis as recently as Friday lobbying administration officials on the CareFirst issue.

Edward J. Muhl, Maryland's insurance commissioner from 1982 to 1988 who went on to a similar position in New York state and is a partner with PricewaterhouseCoopers in Washington, said strong industry knowledge was not a crucial component of the job.

"What you really need is the ability to manage the staff," Muhl said. "And what you need is the ability to get really clear and unbiased facts so you can make informed decisions. Your job as a regulator is to find the balance. You have consumer interests, you have insurance industry interests, administration interests and legislative interests."

But former Commissioner Dwight K. Bartlett III, who held the post from 1993 to 1997, said industry knowledge is crucial and doesn't necessarily create bias.

Bartlett points out that one of his first acts as commissioner was handing out a penalty to Monumental Life, a company where he had worked as senior vice president and chief actuary.

Other candidates for the commissioner's job also have connections to CareFirst.

Gary Harriger, 63, is an attorney with Funk & Bolton, the Baltimore law firm that has represented CareFirst. Harriger has met with the governor's office staff, and is hoping for a face-to-face interview with Ehrlich. "I'm told that if Delegate Redmer is not appointed, I will" get the meeting, Harriger said.

He said he does not work directly on CareFirst issues at the firm, and saw no conflict between the firm's advocacy and his taking the job.

Additional candidates include Kathleen A. Birrane, counsel for the insurance administration and daughter of former commissioner Edward J. Birrane; and Martha Roach, who served as acting commissioner briefly in 1988, and was previously the executive director of the Maryland Association of Health Maintenance Organizations.

Sun staff writer Stephanie Hanes contributed to this article.
 

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