Blue Cross & Blue Shield of Rhode Island avoided criminal corruption charges yesterday by taking responsibility for the actions of its former executives in corrupting politicians, and agreeing to pay $20 million to promote affordable health care in Rhode Island.

U.S. Attorney Robert Clark Corrente announced the unusual agreement, the culmination of a four-year investigation into Blue Cross’ financial ties to three once-powerful lawmakers — John A. Celona, Gerard M. Martineau and William V. Irons.

The agreement clarifies Blue Cross’ sudden move this week to dismiss four longtime executives, and says that only Rhode Island’s dominant health insurer is spared criminal charges — not any individuals. The sprawling State House influence-peddling probe, known as Operation Dollar Bill, continues, said Corrente — “actively and on a number of fronts.”

“People are just sick of this culture in which legislators take money from entities,” said Corrente.

Rhode Island Attorney General Patrick C. Lynch, who joined Corrente at a news conference at the U.S. Attorney’s office, echoed that his office remains committed to working with federal prosecutors to root out corruption and attack this “culture of greed.”

The agreement spells out details that have become known to Rhode Islanders over the past four years — but this time with Blue Cross taking the blame for the actions and knowledge of “certain members” of its “executive management” regarding dollars that flowed to key lawmakers with the power to influence health-care legislation.

Celona, the former Senate Corporations Committee chairman from North Providence, benefited from a $75,000 Blue Cross payment to a communications company for a cable television show he hosted — $13,565 of that money was in turn paid to Celona.

Martineau, the former House majority leader from Woonsocket, received $175,500 from Blue Cross for 10 million paper bags for a pharmacy promotion — even though only 2 million bags were delivered.

And Irons, the former Senate president and an insurance broker, received more than $400,000 in commissions from 1997 to 2003, on a Blue Cross policy insuring CVS drugstore chain employees in Rhode Island.

Blue Cross executives were aware of those business relationships while lobbying the lawmakers on health-care legislation, the agreement says. Blue Cross “accepts that a corporation can act only through its agents” and “recognizes that a corporation can be held criminally liable for the wrongful acts of its agents.

“In order to resolve this matter expeditiously, [Blue Cross] acknowledges and accepts full responsibility for the conduct of its agents and employees,” the agreement says.

The 22-page document was signed by Blue Cross president James E. Purcell, two Blue Cross lawyers, Corrente and three federal prosecutors, including the chief of the Justice Department’s Public Integrity Section in Washington.

Blue Cross will pay the $20 million into a fund to be administered by the nonprofit Rhode Island Foundation. The agreement requires that the money be used to support projects designed to provide “quality, affordable health services in Rhode Island,” said Corrente.

Blue Cross will not be allowed to raise the $20 million from its policy holders by raising its rates.

State Health Insurance Commissioner Christopher F. Koller said that he was consulted by prosecutors to ensure that the $20-million payment would not harm Blue Cross’ finances, suggesting the delicate balance that prosecutors sought in the agreement. Koller said Blue Cross’ reserves have never been larger.

“Blue Cross is vitally important to the State of Rhode Island,” said Attorney General Lynch.

Added Corrente: “We understand their position — they insure a lot of Rhode Islanders. That was one thing we looked at.”

Purcell said that he was “pleased” to be donating $20 million to help improve health care for all Rhode Islanders, calling it a “really thoughtful and decent resolution.”

In addition, Blue Cross agreed to continue to cooperate with the ongoing investigation, including waiving certain privileges to grant prosecutors access to information, and to improve an enhanced ethics and compliance program that Purcell says was instituted after the corruption scandals that toppled his predecessor, Ronald A. Battista, in 2004.

Among those changes has been to severely restrict business relationships with elected officials. And as part of yesterday’s agreement, Blue Cross will hire an independent ethics monitor to oversee its compliance for two years. Prosecutors will have the right to extend the agreement from two to a maximum of three years, and to pursue criminal charges if Blue Cross does not comply.

Purcell said that Blue Cross is eager “to put this behind and focus on the future not the past.”

“This has been a long, difficult process,” he said in a telephone interview. “We have accepted responsibility for what our former employees have done.”

Neither Corrente nor Purcell would elaborate on the management changes that Blue Cross agreed to as part of the deal, or to comment specifically on the company’s dismissal earlier this week of two senior vice presidents, Lynne Urbani and Matthew Brannigan, and two longtime lobbyists, Scott Fraser and Brian Jordan.

Nor would Purcell say whether he was personally aware of Blue Cross’ deals with Celona, Martineau and Irons.

CELONA PLEADED guilty to selling his office to Blue Cross, CVS and Roger Williams Medical Center in 2005, agreed to cooperate, and is serving a 2½-year prison term.

Martineau pleaded guilty last month to selling his office to Blue Cross and CVS for a total of $900,000 in bag contracts. He awaits sentencing.

Irons, who resigned as Senate president at the end of 2003 in the wake of questions about his financial dealings, has not been charged, but remains under investigation. His lawyer, John Tarantino, could not be reached for comment.

In another Operation Dollar Bill case, prosecutors struck a similar deal with Roger Williams Medical Center last year, agreeing not to pursue criminal charges against the hospital in return for an acknowledgment of its misconduct, ethics monitoring and the donation of $4 million in free health care to the poor.

Yesterday’s agreement could turn up the heat on Irons and Thomas Lynch, a former state senator and Blue Cross executive involved in lobbying at the State House. Lynch, who left after the investigation began, was involved in the decision to bankroll Celona’s cable-access show, over the objection of subordinates at Blue Cross.

Negotiations leading up to yesterday’s agreement began about two months ago, around the time that Martineau agreed to plead guilty.

Throughout the investigation, Blue Cross has said that it was cooperating fully with the authorities — cooperation that has included providing information and witnesses to testify before the federal grand jury.

“Cooperation is important,” said Corrente. “Cooperation, at the end of the day, means something to us.”

Koller, the state health insurance commissioner whose office was created as part of legislative reforms in 2004 to address the Blue Cross scandals, praised the agreement as “a new standard for Blue Cross.” But he said that the insurer “has a long way to go” to regain the public’s trust.

“The illegal activities of Blue Cross executives were a gross betrayal of the company’s mission and the public trust,” said Koller. “I remain concerned that Blue Cross has not sufficiently addressed the culture of indifference to the public interest that led to today’s settlement.”

While Blue Cross did agree to fire four top executives as part of the agreement, Koller questioned “the delayed firing” of the four, noting that Blue Cross’ current leadership had recently promoted two of them.

Koller also cited “the apparent conflict of interest” involving Blue Cross chairman Frank Montanaro, president of the Rhode Island AFL-CIO, in serving as a member of a firefighters’ arbitration board in Providence that steered work to Blue Cross. The Journal reported on the issue yesterday. Purcell said that he was not prepared to comment because he was unaware until he saw the newspaper story.

The Montanaro matter, said Koller, is one of the first things the new ethics monitor should look at. That apparent conflict, and Blue Cross’ delayed firings of the four executives, “clearly indicate that efforts by the board of directors to improve corporate ethical standards have been ineffective.”

mstanton@projo.com