Consumers sue D.C. Blue Cross Group seeks to keep District, Maryland plans from combining

Health insurance

January 24, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

The Fair Care Foundation, a consumer group fighting the combination of District of Columbia and Maryland Blue Cross plans, filed a lawsuit yesterday accusing management of the District plan of breaching its responsibilities.

In a complaint filed in District of Columbia Superior Court, the consumer group said the District plan's trustees and officers violated the plan's charitable status when they agreed to a combination of operations between Blue Cross Blue Shield of the National Capital Area and Blue Cross Blue Shield of Maryland.

The group also argued that the proposed combination, which would be called CareFirst Inc., betrayed the District plan's obligation to retain tens of millions of dollars in charitable assets. "The federal charter that created the company as a charitable and beneficial institution requires its board to continue to fulfill that obligation," said John Ellison, a Fair Care attorney. "Turning over control of assets to CareFirst violates that obligation."

The complaint also charged that the District Blues plan unnecessarily paid substantial taxes and granted so-called golden parachutes to the plan's senior managers.

Officials at the District plan did not return calls seeking comment.

Fair Care's suit was the second legal challenge against the combination of the Blues plans in as many days. The group on HTC Thursday argued in an appeal filed in a separate court that it was illegally excluded from key discussions on the deal.

The formation of CareFirst will have no immediate effect on the 2.3 million subscribers to the two plans and little change for most of the 5,000 employees, officials of the plans said.

The Blues will ultimately combine their sales forces, products and medical networks, creating a company with regional reach comparable to that of its commercial competitors.

Pub Date: 1/24/98

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