Who Actually Controls BCBS of SC?

 By Lachin Hatemi M.D.

For most of the last 80 years, BlueCross BlueShield of South Carolina has operated as a mutual insurance company under South Carolina law—specifically, Section 38-18-50. That structure is not just a legal technicality; it is supposed to embody a simple, powerful idea: the policyholders are the owners. In turn, those policyholders are meant to elect a board of directors that provides real oversight of the company’s executives and acts in the best interest of the people whose premiums sustain the enterprise.

But somewhere along the way, that promise appears to have been hollowed out.

Instead of a system where policyholders meaningfully choose their representatives, what exists today looks more like a closed loop. A small circle of insiders—along with legal architect Angela DeDee Rowe—has shaped a governance structure in which directors are effectively selected by the very leadership they are supposed to oversee. The result is a board that answers inward, not outward.

Consider the composition of that board. Three of its members—Michael J. Mizeur, Edward Sellers, and David Pankau—are current or former CEOs of the company. Their continued presence raises an obvious question: how independent can oversight be when it is conducted by those who once held, or still hold, executive power? Without reform, these individuals can remain in place indefinitely, stepping down only by personal choice.

The rest of the board does little to broaden perspective in the ways that matter most. Not a single physician, nurse, or pharmacist sits at the table. In a healthcare company responsible for the coverage and claims of millions, the absence of medical expertise is striking. Instead, the board is populated largely by lawyers, bankers, and business professionals—individuals whose skills may be valuable, but who do not bring frontline healthcare insight to decisions that directly affect patient care and costs.

Longevity is another concern. Several directors have served for decades: Merl Code since 2000, John Foos since 2011, Edward Sellers since 2001, and Minor Shaw since 2007. Over the company’s entire 80-year history, there has reportedly never been a contested board election. That is not stability; it is stagnation.

The nomination process lies at the heart of the issue. A nominations committee—drawn from within the existing structure—puts forward a slate of directors that, in practice, faces no opposition. Policyholders receive proxy ballots, but these function more as formalities than as instruments of choice. There is no meaningful mechanism for independent candidates to appear on the ballot, no quorum requirement to ensure broad participation, and no safeguard against the concentration of voting power.

The result borders on the absurd: even if the vast majority of policyholders decline to vote, a minimal number of ballots can still confirm the entire slate. In some cases, even incomplete or blank submissions may be interpreted in ways that favor the preselected candidates. This is not democratic governance; it is the appearance of it.

All of this raises a deeper concern: whether the current system complies with the spirit—if not the letter—of South Carolina law. A mutual insurer is supposed to be accountable to its members, not insulated from them. When governance structures become self-perpetuating, that accountability erodes.

The stakes are not abstract. BlueCross BlueShield of South Carolina is not just another private company. It plays a central role in the healthcare system, administering claims for state employees, federal workers, military families through TRICARE, and millions of Medicare beneficiaries via its subsidiary, Palmetto GBA. Decisions made in its boardroom ripple across South Carolina and far beyond.

Yet the individuals making those decisions are often far removed from the everyday realities of policyholders. Many are in their 70s and 80s, long removed from the pressures facing working families struggling with rising premiums, denied claims, or limited provider networks. When rate increases or policy changes come before the board, they are reportedly approved with little resistance—rubber-stamped rather than rigorously debated.

Reform is not just desirable; it is necessary. Opening the nomination process to independent candidates, establishing term limits, requiring healthcare expertise on the board, and ensuring meaningful participation by policyholders would be a start. These are not radical ideas—they are basic principles of good governance.

Regulators, including the South Carolina Department of Insurance, should take a hard look at whether the current structure fulfills the intent of the law. If they do not act, policyholders themselves may need to seek remedies through the courts.

At its core, this is a question of ownership and accountability. A mutual insurance company belongs to its members. If those members cannot effectively choose their leaders or influence decisions, then the mutual model has been reduced to a legal fiction.

We ask the current directors of the company to resign immediately and open space for new, younger and independent directors. South Carolinians—and the millions who rely on this institution nationwide—deserve better.