Blue Shield of California is embroiled in a fight with a former executive over $100,000 spent on Hollywood nightclubs and other dubious items.
Blue Shield of California is counter-suing its former chief technology officer, Aaron Kaufman, for some $100,000 in allegedly inappropriate personal charges to the nonprofit insurer's corporate credit card.
Kaufman, who joined Blue Shield in 2013 and was fired in March, first sued the insurer on April 6, arguing that he was unfairly retaliated against for trying to intervene in an IT purchase decision and wrongfully terminated a day before he was set to earn a bonus of $450,000.
Kaufman argues that the termination was related to his advocacy for the company to get a good deal in the IT contract. In the lawsuit, he said he tried to convince chief information officer Michael Mathias to use a contractor for the Veritas Data Project that would charge a fixed price of $1.6 million, when Mathias wanted to use a different company charging an unfixed price of $4.6 million.
According to Blue Shield, though, Kaufman's termination was related to inappropriate personal charges on the corporate credit card.
In the countersuit, Blue Shield is seeking to recoup the money spent for a litany of personal charges Kaufman allegedly made on the company credit card, such as $17,491 for a Florida vacation to visit his girlfriend Tara Reid, the actress known for her work in the "Sharknado" and "American Pie" movies.
He also allegedly charged $1,382 for drinks at the Warwick, a Hollywood nightclub, and $879 at a company bowling party in San Francisco, where "Mr. Kaufman's girlfriend acted inappropriately, taking inappropriate photographs of herself and sharing them," according to the lawsuit, first reported on the L.A. Times. "Word of the behavior at the bowling alley event spread quickly at Blue Shield and caused a great disturbance within the company. Employees were embarrassed."
Approximately 75 percent of Kaufman's credit card charges were not related to business work, and he was first warned about the issue in the spring of 2014, according to the lawsuit. Kaufman apparently told senior executives that at the time, during a divorce, his bank accounts were locked up.
Kaufman came to Blue Shield in 2013 from the mobile applications company Kony Solutions, after stints with medical supplier Cardinal Health and the U.S. Oncology Network. In his original suit, Kaufman is seeking compensation and reinstatement to his job, although he's now working as chief product officer at SocialWellth, a digital health engagement company based in Las Vegas.
The revelations about extravagant spending and would-be $450,000 bonuses come as Blue Shield, California's third largest insurer, is trying to keep its tax-exempt status, which was revoked earlier this year by the California Franchise Tax Board.