Failing Harvard Pilgrim HMO Terminates Execs' Contracts

In a move expected to save $2 million, Massachusetts officials on Wednesday terminated the lucrative consulting contracts of former executives at Harvard Pilgrim Health Care and accepted the resignation of the chairman of the board.

Attorney General Thomas Reilly said state officials, who have the financially ailing HMO in receivership, terminated contracts that were part of the severance packages for the former chief executive officer, Allan Greenberg, and the former chief financial officer, Thomas Brophy.

Reilly also announced that the receivers had accepted the resignation of the chairman of the board, Alan Morse, retroactive to Dec. 31. All told, Reilly said, the actions were expected to save $2 million.

According to news wire accounts, the announcements came at a daily briefing held by Reilly and Insurance Commissioner Linda Ruthardt, who has been named the receiver for the HMO.

Earlier this month, the region's largest HMO, with 1.1 million members in Massachusetts, was placed under receivership, hours after revealing an accounting error that boosted its year-end losses by about $50 million, bringing total losses to more than $150 million.

J. David Leslie, a special assistant attorney general who's helping review the HMO's situation, said the contracts with the executives were terminated because of the deficiencies in the HMO's accounting system that came to light last week when the ``surprise'' results were announced. "Those deficiencies are deficiencies that, in our view, should not have occurred,'' he said