Sort and wash beans and place in large dutch oven. Cover with water to 2 inches above the beans, and bring to a boil; cook 2 minutes. Remove from heat and let stand for 1 hour.
Drain beans, and return to pan. Add 2 quarts of water and next 8 ingredients (water through ham bone). Bring to a boil; cover, reduce heat, and simmer 1 hour or until beans are tender. Remove from heat; discard ham bone.
Place 2 cups of bean mixture in a blender and process until smooth. Return mixture to pan; add ham and remaining ingredients. Bring to a boil; cover, reduce heat, and simmer 10 minutes or until heated.