Letter shows senators backed HMO sale

4 urged state to act on deal that later died

July 14, 2000|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

Four legislators, including Senate President Thomas V. Mike Miller, urged the Glendening administration to proceed with a now abandoned plan to sell a troubled health maintenance organization to a group of Prince George's County physicians.

News of the letter written on behalf of the physicians' Universal Health Plan prompted PrimeHealth founder Christian Chinwuba to charge through a spokesman that politics has dictated the state's treatment of his company.

Tori Leonard, a spokeswoman for the Insurance Administration, said this week that the letter did not affect the process.

No specific law applies to a case like this, but Miller said nothing was improper about the note. "It was a delegation letter," he said, adding that he and the other county senators were concerned that the HMO remain minority-owned, as it was under Chinwuba and his partners.

"We felt if [Universal] had the wherewithal, they should get it. It's easy to be a Monday-morning quarterback based on what we know now," Miller said.

In the letter dated Jan. 3, the four senators urged Gov. Parris N. Glendening to sell Prime- Health of Lanham to "a new group of highly qualified county health providers." That group, though it was not named in the letter, was Universal, a newly formed Prince George's health care firm.

Universal was subsequently picked by Insurance Commissioner Steven B. Larsen in early May to take over PrimeHealth, but, on June 1, Larsen withdrew the sale proposal, which was pending before a Baltimore City circuit judge.

Leonard, the Insurance Administration spokeswoman, said this week, "The letter didn't really have any effect on the process. We didn't even respond to it. We read it, and that was that."

PrimeHealth was placed in receivership by Larsen in the wake of an investigation of former state Sen. Larry Young and his relationship with the firm. Young, a West Baltimore Democrat who was expelled from the state Senate on ethics charges related to PrimeHealth and was later acquitted of criminal charges, had urged state officials to grant PrimeHealth a license and a lucrative state contract.

In addition to claiming that political bias determined the state's action against PrimeHealth, Chinwuba said through a spokesman that the state seizure of PrimeHealth in November 1998 was not justified.

"The letter is further proof that all the decisions this administration makes in regard to PrimeHealth are based on politics and not on merit," Chinwuba said through the spokesman.

In announcing the withdrawal of the proposed sale to Universal last month, Larsen said the company had failed to disclose key financial information when it submitted a $2 million bid for PrimeHealth, which serves about 15,500 patients, many in the Baltimore region.

"We received information related to the finances and ownership of Universal Health Plan that is contrary to information received with the bid. Had this information been initially submitted, Universal would not have been considered a qualified bidder," Larsen said at the time.

The plan to sell PrimeHealth to Universal was announced May 2 and was immediately challenged in court. Several creditors petitioned Judge Joseph H. H. Kaplan to reject the proposal. Attorneys for the creditors said a rival bid would have provided $2.3 million more to pay PrimeHealth's outstanding bills, which totaled $9 million.

The letter from the senators was made public this week in response to a public records request by The Sun for documents relating to the sale. In addition to Miller, the letter was signed by Sens. Ulysses Currie, Gloria G. Lawlah and Nathaniel Exum, all Prince George's Democrats.

The letter, addressed to the governor and later forwarded to the state Insurance Administration, states, "We understand that this group of board certified physicians not only has the knowledge base and financial stability needed to succeed, but currently provides services in northern, central and southern Prince George's County.

"We believe Prince Georgians are best served by medical professionals within the county's local medical community," the letter concludes.

In an interview this week, Miller said, "Based on what we knew at the time, I don't think the letter would be any different. The issue was assembling capital. We certainly didn't know every single detail," he said. "This could be nice if it had worked ... it didn't work."

The other three senators did not respond to requests for comment.

After the withdrawal of the Universal proposal, Larsen said the state would resume negotiations with the other bidders. Court records show a competing bid was submitted by Maryland Physicians Care, which also challenged the proposed sale to Universal.

Leonard said negotiations were continuing.

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