Metro

In a sudden departure, Harvard Pilgrim CEO resigns amid questions about his behavior

Harvard Pilgrim CEO Eric H. Schultz told the company’s board Tuesday that he is stepping down with “mixed emotions.” In an interview last month, Schultz said that he had no plans to stop working.
Jim Davis/Globe Staff/File 2014
Harvard Pilgrim CEO Eric H. Schultz told the company’s board Tuesday that he is stepping down with “mixed emotions.” In an interview last month, Schultz said that he had no plans to stop working.

The longtime leader of Harvard Pilgrim Health Care, the state’s second-largest commercial health insurer, abruptly resigned Tuesday for what the company said was behavior “inconsistent” with its values.

The company declined to specify what led to the departure of Eric H. Schultz, who had been chief executive and president of the Wellesley-based insurer since 2010, succeeding Charlie Baker.

“During the past eight years as your leader, I was committed to fostering a workplace culture that was inclusive, welcoming and rooted in integrity and respect,” Schultz wrote in a letter to the board of directors that Harvard Pilgrim released. “I made mistakes, and I’m truly sorry.”

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Harvard Pilgrim did not respond to questions about his behavior, except saying that it occurred within the last few weeks. In an interview with the Globe in May, the 59-year-old Schultz said, “I have no plans to stop working.”

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Schultz did not respond to a phone message Tuesday.

His sudden departure marks a stunning fall for a veteran executive who was well regarded in the business community. Colleagues in local health care circles expressed shock at his resignation.

In a statement, Harvard Pilgrim said Schultz’s decision to resign follows recent behavior “that he recognizes is inconsistent with his personal core values and the company’s core values and code of conduct.”

Harvard Pilgrim named Michael Carson, the company’s chief business growth officer, as its new president. Carson, who joined Harvard Pilgrim in 2017, will not have the title of CEO.

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The unexpected leadership change comes at a critical time for Harvard Pilgrim. The insurer has been negotiating a deal with Partners HealthCare, the state’s largest hospital network, which owns Massachusetts General and Brigham and Women’s hospitals, among others. The two companies have discussed a range of options, including an acquisition of Harvard Pilgrim by Partners.

Schultz had been a key player in those talks, telling the Globe just last month that he was eager to work with Partners to find “creative solutions” to improving patient care, while reining in costs.

Harvard Pilgrim and Partners each said Tuesday that Schultz’s resignation does not affect their discussions about a possible merger.

But David E. Williams, a Boston health care consultant, predicted the leadership change at Harvard Pilgrim would slow any other major moves by the insurer.

“I think it reduces the chance that a deal will happen, especially in the near term,” Williams said. “The Harvard Pilgrim board can’t deal with two major things at once. Partners will want to wait and see if something else shakes out at Harvard Pilgrim.”

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Harvard Pilgrim sells medical coverage to employers and consumers, and has about 1.2 million members. It is the state’s second-largest commercial health insurer, after Blue Cross Blue Shield of Massachusetts.

It has struggled recently, posting an operating loss of $28.3 million in 2017 on revenue of $3 billion. That was an improvement from 2016, when it had an operating loss of $91.3 million.

High-ranking executives and officials in many different industries nationwide have lost their jobs in recent months over various allegations of sexual harassment during the growing #MeToo movement.

A Harvard Pilgrim spokeswoman did not comment when asked if Schultz’s behavior involved harassment or bullying.

Schultz led the Worcester-based insurer Fallon Health before he came to Harvard Pilgrim.

“It is surprising. I’ve always thought of Eric as a very upright and courteous and, I assumed, ethical person,” said Jon Kingsdale, a health care consultant who formerly held executive positions in state government and at Tufts Health Plan.

Kingsdale knows Schultz professionally but had no knowledge of the reasons for his resignation.

Schultz, in his resignation letter, said he was proud of his work to make Harvard Pilgrim an “inclusive organization,” such as offering insurance coverage for transgender health services.

Harvard Pilgrim won an award from the Massachusetts Women’s Political Caucus last month for its hiring of many women and people from diverse backgrounds, including in leadership positions.

Schultz also pushed for more public disclosure of prescription drug and hospital prices.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.
com
. Follow her on Twitter @priyanka_dayal.