Insurance chief's exit follows Haley grant controversy

South Carolina officials remained tight-lipped Thursday about the abrupt resignation of the state's top insurance regulator less than a year after Gov. Nikki Haley appointed him.

But several Democrats and others who worked with the former director said he wants out of an administration embroiled in a controversy that entangles his agency.

David Black, director of the S.C. Department of Insurance, resigned Wednesday but hasn't said why.

In a brief email to his colleagues Wednesday, Black said, "After reflection, I decided last week it would be best for me to resign as director of the agency."

The announcement comes amid questions over how Black's department spent a federal health care reform grant.

Last week, U.S. Sen. Tom Harkin, an Iowa Democrat, called for an investigation into whether the Haley administration misused the grant by dictating the recommendations of an independent panel using the funds. Black's department was the state agency that received the $1 million grant.

Black, 54, of Greenville, acknowledged but did not accept an interview request from The Post and Courier Thursday. His resignation from the $112,000-a-year post was effective Wednesday.

News of the director's departure generated chatter in Columbia during what was expected to be a slow holiday week, with some observers saying Black wanted to leave the department before becoming the Haley administration's "fall guy."

"He doesn't want to be the one to go down," said S.C. Rep. Harold Mitchell, a Spartanburg Democrat.

Mitchell wrote a letter to Black on Friday requesting a briefing about the Health Planning Committee, the panel using the $1 million grant in question.

South Carolina received the funds to study whether the state should have a federal or a state exchange. A central part of the federal health care overhaul, insurance exchanges are the state- or federally established marketplaces where health coverage will be sold to individuals and small-business employees beginning in 2014.

A Haley spokesman did not answer questions about Black's departure, saying only: "He resigned, we accepted, he left on good terms, and we wish him well."

Insurance Department spokeswoman Ann Roberson also declined to say why Black left.

"You have received all of the information that I have available," Roberson said in an email. "If you need further information you will need to contact Mr. Black."

The Post and Courier reported this month that Haley ordered the panel's findings in March, before the 12-member group met for the first time. The committee's eventual report mirrored Haley's directive in a March email that "the whole point of this commission should be to figure out how to opt out and how to avoid a federal takeover, NOT create a state exchange."

Black was not copied on that email. But S.C. Health and Human Services Director Tony Keck, an influential committee member who wrote key portions of the panel's report, was copied there.

"Tony was very articulate and knowledgeable and very persuasive," said Gary Thibault, who received a $102,000 contract to lead the committee.

Thibault was not copied on the emails and said he was unaware of them before reading news reports earlier this month.

Cynthia Williams, who served on the health panel subcommittee directed by Black, said the former director told her he was unaware of Haley's email directive. Williams said she contacted Black in mid-December because she was dismayed by news reports of the emails. "I think it was important to him that I knew he was operating to the best of ability — with integrity even though the emails put a pall over the whole situation," she said.

Haley announced Thursday she appointed Gwendolyn Fuller McGriff, the Insurance Department's general counsel, as acting director. Haley said in a letter to the S.C. Senate President and S.C. Speaker of the House that an interim director would be "named in the near future."

In a statement Thursday, the spokeswoman for the department praised "the accomplishments it has made under David Black's guidance."

"During his tenure, the Department continued its work to make the Agency's processes both more effective and efficient for the stakeholders the Department serves," spokeswoman Roberson said in the release.

Black, the former CEO of Liberty Life Insurance, formerly a division of the Royal Bank of Canada, was appointed in January and took over the Insurance Department in February. Under his leadership, the department faced criticism from residents who cannot afford health coverage. Other critics slammed Black's "industry ties."

Black has said his industry experience was a "benefit to the state" and has dismissed concerns about conflicts of interest.

The agency is tasked with maintaining a balance between keeping policyholders' premiums priced fairly and ensuring that carriers have adequate capital reserves to pay all claims filed. But it has failed on both fronts, The Post and Courier reported in August. Department analysts have the power to reject unjustified rate hikes but rarely do so, the report said.

Consumer Watchdog said in March that Black's appointment did nothing to "close the revolving door between the insurance industry and regulators."

Black also served on an advisory board at a Columbia think-tank whose board of directors has three Blue Cross Blue Shield leaders on it, including former CEO M. Edward Sellers. Sellers and Black also formerly served together on the board of the South Carolina Chamber of Commerce.

Reach Renee Dudley at 937-5550 or on Twitter @renee_dudley.