State health and insurance officials disclosed yesterday plans to sell the health care business at the center of the failed bribery case against former state Sen. Larry Young to a Prince George's County physicians group, which apparently forfeited its corporate charter last year.
In a joint announcement that gave scant details, Insurance Commissioner Steven B. Larsen and Health Secretary Dr. Georges C. Benjamin said PrimeHealth Corp. in Lanham will be sold to Universal Health Plan. The sale is subject to the negotiation of a final sales agreement and approval of that agreement by a Baltimore City Circuit judge.
Tori Leonard, spokeswoman for the Maryland Insurance Administration, said the details of the sale, including the price, could not be disclosed before filing with the court later this month.
Officials of Goldmark Friendship LLC, the original owners of PrimeHealth, issued a statement late yesterday vowing to "vigorously oppose" the sale and charging that the state takeover was not justified in the first place.
Karen Black, spokeswoman for the state Department of Health and Mental Hygiene, said the sale should have no impact on the 15,272 patients being served by PrimeHealth. She said PrimeHealth enrollees will be able to continue getting care from providers in the PrimeHealth network.
PrimeHealth was placed in receivership in late 1998 after state insurance officials said they discovered millions of dollars in undisclosed debts and raised questions about the corporate structure and ownership of the parent company, Goldmark Friendship. Among the items uncovered was the fact that the parent company had had its corporate charter, its basic authority to do business in Maryland, forfeited.
Records at the state Department of Assessments and Taxation show that Universal Health Plan, the company that will take over PrimeHealth, was registered as a trade name on Aug. 24, 1998 by Universal Health Inc. Records show Universal Health Inc., which had been incorporated in 1997, forfeited its corporate charter last year when it failed to file a required annual report for 1998.
Richard Slater, an executive of the management firm working with Universal, said yesterday that there was conflicting information in state records on the current legal status of the company.
"As far as we are concerned, we are in good standing," said Slater, adding that company officials would take steps to eliminate any confusion. Leonard said state officials "will certainly look" at the company's corporate status before the sale is finalized.
State campaign finance records show that officers and directors of Universal Health donated $1,600 to Gov. Parris N. Glendening's campaign committee.
Officials of PrimeHealth, a minority-owned health maintenance organization, were key witnesses in the bribery and extortion trial of Young last year, who was expelled from the General Assembly on ethics charges after a series of stories in The Sun. Young was acquitted of the criminal charges by an Anne Arundel jury.
During Young's trial, PrimeHealth's founder and principal stockholder, Christian Chinwuba, testified that he paid Young $72,000 in cash, but said he did not consider the payments to be a bribe. PrimeHealth had sought Young's help in winning a state license and a lucrative state contract to serve Medicaid patients.
Chinwuba and other PrimeHealth officials have raised a series of legal challenges to Larsen's takeover of the company, including charges that the action was racially motivated.