Two lawyers ask Blues to sue former officials Attorneys say they represent subscribers

March 25, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

Two attorneys who have asked Blue Cross directors to su former executives of the company for gross mismanagement said yesterday that they were acting on behalf of subscribers who want to see the health insurer recoup losses because of alleged misdeeds.

"We feel money was wasted and should be returned," said Jon W. Brassel, an Annapolis lawyer. "We want to return the money to the Blues, not put it in the pockets of individual clients."

The Blues' directors were scheduled to discuss the attorneys' request and a second, similar request made Tuesday by Maryland Attorney General J. Joseph Curran Jr. at a board meeting today.

"We appreciate Attorney General Curran's letter to the board. His recommendation will be reviewed," John A. Picciotto, senior vice president and general counsel, said in a statement. "However, we do not discuss any potential litigation."

Mr. Brassel and Towson lawyer Stephen J. Nolan said they wrote the board in early March, asking that the insurer seek damages from former employees.

They provided Blue Cross with the results of an investigation they conducted beginning last fall, the lawyers said.

The lawyers said they were awaiting the company's response before deciding whether to file a suit themselves. The request to the Blues board is a required step before any suit could be filed by an outside party.

Mr. Brassel estimated that negligence caused at least $40 million to $50 million of the $120 million in losses the company suffered in the past decade.

"We feel we can trace a significant portion of the $120 million in losses over five years to gross mismanagement by officers and negligence of consultants," Mr. Brassel said.

Blue Cross' liability insurance coverage for its executives is worth a total of $25 million.

Mr. Brassel and Mr. Nolan, whose father, James Nolan, was president of Blue Shield before it merged with Blue Cross in 1984, said they were representing a cross section of subscribers, including individuals, small groups and medium-sized groups. But they declined to identify their clients.

Nor would they say who among the company's former executives would be sued, saying that it would depend on which causes of action they included in a lawsuit.

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