Judge approves deal for takeover of HMO that has been in receivership

April 10, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

A Baltimore Circuit Court judge approved yesterday a deal for another health plan to take over the patients and physician network of PrimeHealth Corp., which has been in receivership for 2 1/2 years.

The approval by Judge Joseph H. H. Kaplan came despite the objections of PrimeHealth's owners and a last-minute higher bid from another insurer.

State Insurance Commissioner Steven B. Larsen, the receiver who has been running PrimeHealth, sought Kaplan's permission to turn over PrimeHealth's Medicaid patients to Americaid, which covers about 100,000 Medicaid members in the state, in return for $630,000, which would go to PrimeHealth creditors.

Another Medicaid contractor, Maryland Physicians Care, offered to submit a higher bid, providing more money for creditors, and Kaplan at first said he would give them a chance to bid today.

But lawyers for Americaid objected, saying they had participated in a sealed bid process, and, now that their proposal was public, a competitor shouldn't have an additional chance to top it.

Matt Dobson, a lawyer representing Maryland Physicians Care, offered $750,000 on the spot, but Kaplan said that after the process had run its course, "to allow somebody to come in later and bid more is not right."

Lawyers for PrimeHealth's owner, GoldMark Friendship LLC - a majority of which is owned by Dr. Christian E. Chinwuba, a Prince George's County radiologist - argued they should be given more financial information and an opportunity to prepare a recovery plan for PrimeHealth.

Kaplan, however, said Prime-Health could not continue to operate under receivership because it would lose money, "so ... the patients wouldn't be served, and you'd have 19,000 disenfranchised people."

Americaid is slated to take over PrimeHealth operations May 1.

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