CareFirst acquisition bill gets only applause at hearing

Larsen says change could be important

January 30, 2002|By Michael Dresser | Michael Dresser,SUN STAFF

Insurance Commissioner Steven Larsen told lawmakers yesterday that legislation that would force CareFirst BlueCross BlueShield to prove its acquisition by WellPoint Health Networks is in the public interest would strengthen the state's case if his decision on the deal is challenged in court.

Larsen's testimony came at a House hearing where the bill received a chorus of support - and not a peep of opposition - from a wide range of interests. The legislation, sponsored by Del. Michael E. Busch, is the first of many already filed or on their way addressing the future of CareFirst.

The Busch bill, which is apparently on the fast track after CareFirst declined to oppose it, is strongly supported by Gov. Parris N. Glendening and House Speaker Casper R. Taylor. Both sent representatives to endorse it.

Attorney General J. Joseph Curran told the House Economic Matters Committee the bill was "a good tool" for the state to protect the public's interest in the proposed $1.3 billion sale to California-based WellPoint and conversion to for-profit status.

"This change makes all the sense in the world," Curran said.

Representatives of physicians, hospitals, consumers' groups and seniors all voiced support as CareFirst's lobbyist, Fran Doherty, observed from the back of the room.

CareFirst contends that the merger is necessary to give it access the capital it needs to grow.

Under current law, the insurance commissioner could not reject the conversion unless he makes a positive determination that the deal is not in the public interest. Busch, the committee chairman, said his bill puts the burden where it belongs - on CareFirst and WellPoint.

"If in fact they do convert, it has to meet the highest standards of proof," the Anne Arundel County Democrat said.

Some committee members made it clear that they see the legislation as a way to derail what they consider a bad deal. "I hope it drives a stake through the heart of conversion," said Del. Kumar Barve, a Montgomery County Democrat.

Larsen, as the regulator who will make the decision, did not take an official position on the legislation. However, he told the committee the change could be significant if he rejects the merger and the companies sue. He noted that one provision of the merger contract calls for WellPoint to appeal any adverse decision.

While the hearing was supposedly on the issue of burden of proof, many witnesses used the occasion to denounce the conversion deal itself.

Joseph A. Schwartz III, lobbyist for the state medical society compared the deal to a hypothetical sale of Johns Hopkins Hospital - and the right to use the symbol of its famous dome - to the Hospital Corp. of America.

As Schwartz took the rhetoric to a new level, Doherty quietly took notes. "We don't oppose the bill. We have believed all along we must meet the burden of proof," she said.

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