
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, June 9, 1995                   TAG: 9506100015
SECTION: BUSINESS                    PAGE: BUSINESS   EDITION: METRO 
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium

TRIGON EXECUTIVES GET BIG RAISES

Despite state fines and ordered refunds that cut Trigon Blue Cross Blue Shield profits 20 percent in 1994, the board of directors gave the company's top two executives raises.

The state's biggest health insurer paid its chairman and chief executive officer, Norwood H. Davis Jr., a total of $895,000 in salary and bonus. That was an increase of 15 percent, or $115,000, from his 1993 pay.

Trigon's president and chief operating officer, Phyllis L. Cothran, got a 6.7 percent pay increase in 1994, to $587,081.

Trigon last year agreed to pay a $5 million fine to settle state charges that it misled consumers about co-insurance - the share they have to pay of their total hospital bill.

The company, which has operations in Roanoke, also agreed to refund excess co-insurance payments to consumers and eventually paid 132,634 customers a total of $22.9 million - an average refund of $173. The cost of the fine, refunds and related expenses cut Trigon's 1994 profits by 20 percent.

``Apparently, the buck doesn't stop on Mr. Davis' desk,'' said Jean Ann Fox, president of the Virginia Citizens Consumer Council. ``You wonder how you're going to get compliance if there's no link between compliance and executives' pay.''

Directors base Davis' and Cothran's pay on formulas that measure how well the company operates, said Dr. Lenox D. Baker Jr., a Norfolk surgeon who has sat on the board since 1985. Baker said directors also look at what similar companies pay their executives.

Baker said that the co-payment issue was handled fairly, honestly and quickly.

``Norwood and Phyllis deserve credit,'' he said.

For 1994, Trigon's revenue rose 2.5 percent. Claims payments declined 0.7 percent. Trigon last year paid 83.6 cents of each premium dollar collected in claims, down from 83.9 cents the year before.

``Trigon didn't have a tough year, it had a very good year,'' said director Frank C. Martin, Jr., a Roanoke market research executive.

Trigon last year also contested state charges of misleading ads and problems handling policyholders' claims. Trigon this spring agreed to pay nearly $1 million in fines and interest to settle those allegations.

by CNB