Former worker sues WellPoint, ex-CFO Colby

INDIANAPOLIS--WellPoint Inc. and its former chief financial officer, David Colby, are being sued by a former employee who was terminated after she allegedly had an affair with Mr. Colby.

The complaint, filed Thursday in the Superior Court of the State of California, accuses the Indianapolis-based insurer of negligence and negligent infliction of distress related to the actions of its former executive, Mr. Colby, who allegedly had an affair with plaintiff Sarah Waugh while also having relationships with more than 15 other women, including Ms. Waugh's younger sister, Jessica.

In 2001, Mr. Colby began pursuing Ms. Waugh, then a 22-year-old employee in WellPoint's corporate offices, which were located in southern California prior to the company's 2004 merger with Anthem Inc. Although Mr. Colby was initially rebuffed by Ms. Waugh, she eventually began a relationship with him, the lawsuit said. After complaining about her situation to WellPoint superiors, Ms. Waugh was terminated, according to the lawsuit.

WellPoint facilitated Mr. Colby's lifestyle through the use of company employees and resources and "benefited from the outward appearance of respectability and propriety of their CFO," according to the complaint. WellPoint employees arranged personal and business travel with various women on Mr. Colby's behalf, according to the lawsuit.

Mr. Colby was allegedly confronted with his relationships and discussed the situation with the company's board of directors in August 2006. In December 2006, the insurer changed certain expense reimbursement policies to preclude Mr. Colby's use of limousines on an hourly basis, the complaint said.

After outside inquiries, the company announced in May that it had conducted an external investigation and demanded Mr. Colby's resignation immediately upon learning of unspecified, nonbusiness activities, the lawsuit said.

In addition to the negligence claims, Mr. Colby is being sued by Ms. Waugh for sexual battery, intentional infliction of emotional distress and breach of contract for failing to keep promises of financial support.

The complaint seeks general damages, medical and related expenses, lost earnings, exemplary and punitive damages, and legal costs.

A WellPoint spokesman declined to comment on the lawsuit, citing the nonbusiness nature of the violation of the company's code of conduct that led to Mr. Colby's resignation.

Peter Steinman, whose Los Angeles-based law firm Gaims, Weil, West & Epstein represents Mr. Colby, declined to comment on the allegations.