Md. lawmakers' reactions to Blues report are mixed

September 29, 1992|By Ann LoLordo | Ann LoLordo,Staff Writer

A congressional panel's revelations that Blue Cross and Blue Shield of Maryland spent premium dollars on tickets to the Olympics, hefty pay raises for executives and misleading ads provoked varied responses from state lawmakers yesterday -- everything from a yawn to a cry for yet another investigation.

"They flat out lied to us," said an outraged Del. Lawrence A. LaMotte, D-Baltimore County.

"In my judgment there was no smoking gun coming out of the congressional hearing," said Del. Casper R. Taylor, Jr., D-Allegany, the chairman of a legislative committee that oversees insurance matters.

"Blue Cross and Blue Shield is going to be hard pressed at this point to make any excuses why the insurance commissioner should regulate them any different than any insurer in the state," said Del. Gary Alexander, D-Prince George's.

And so it went yesterday as legislators commented on the findings of the Senate Permanent Subcommittee on Investigations' two-month probe of the Maryland Blues. The committee's report on the Blues' financial health and the state insurance division's ability to monitor it was released last week.

The Senate panel's findings showed that Blue Cross executives withheld information on the insurer's financial condition from Mr. Taylor's committee, which met in Annapolis about two months ago. The staff report also charged that the Blues officials had misled state legislators about the capabilities of the insurer's new claims-processing system.

Mr. LaMotte, who attended the July 28 hearing in Annapolis, said he has asked the attorney general's office to investigate "the veracity" of statements made by Blue Cross at that hearing. He believes Blue Cross executives purposely misled the committee about the existence of consultants' reports that examined the company's operations.

But other legislators who attended the hearing didn't see it quite that way. Especially not the chairman of the House Economic Matters Committee, Mr. Taylor.

"From what I have read in the newspapers [on the congressional hearings], I didn't learn anything I didn't already know," said Mr. Taylor, who allowed a Blue Cross lobbyist to brief committee members last Wednesday on the expected negative reception the Blues would receive from the Senate panel.

And while Mr. Taylor acknowledged that he didn't know about the Blues' purchase of tickets to the Olympics, nor that Blues executives received bonuses at a time customers were socked with rate increases, the chairman insists those facts are beyond a legislator's purview.

"I've got to go back to a fundamental distinction," said Mr. Taylor, who has worked closely with Blues officials on legislative matters in the past. "We're legislators. We're not regulators. When the regulator brings us legislative proposals that he believes are required or are necessary for him to adequately regulate, then we need to deal with those."

State Insurance Commissioner John A. Donaho has already outlined a series of legislative proposals that would strengthen his ability to regulate the Blues. Mr. Donaho first aired his frustrations in trying to regulate the Blues before the Senate panel.

Mr. Alexander, the cochairman of the House committee, said he was surprised by Mr. Donaho's contention that he needs more tools to properly regulate the Blues.

Gov. William Donald Schaefer, who has invited insurance executives to a dinner Oct. 15 to discuss fraud and abuse in the industry, had no comment on the findings of the Senate panel. His spokeswoman, Page W. Boinest, also said the governor has made no decision yet on Mr. Donaho's proposals.

The Blues' chief executive officer, Carl J. Sardegna, said yesterday he supports the "thrust" of Mr. Donaho's proposals and that his staff has already begun working on elements of the package.

Sen. Thomas P. O'Reilly, a Prince George's Democrat whose Finance Committee also oversees insurance matters, said Mr. Donaho's proposals appear more than reasonable.

The package includes stricter regulations on the creation of for-profit subsidiaries by a non-profit health insurer like the Blues, an increase in the surplus and reserves required of health insurers as well as authority to remove directors and officers if they disobey orders of the insurance commissioner.

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