Lobbyist for CareFirst lonely figure at hearing

But it's her birthday, so foes of conversion act with restraint

February 22, 2002|By Michael Dresser | Michael Dresser,SUN STAFF

It was lobbyist Fran Doherty's birthday, so legislators got together and gave her a relatively gentle mugging.

Doherty drew the unenviable assignment yesterday of defending CareFirst Blue- Cross BlueShield's proposal to convert to for-profit status before hostile lawmakers.

Six bills were up for hearing in the House Economic Matters Committee, the epicenter of legislative discontent over CareFirst's proposed conversion and $1.3 billion sale to California-based WellPoint Health Networks. All of the measures were to some degree inspired by opposition to the deal.

Doherty, who turned 61 yesterday, was the sole opponent to testify against each of the bills. Hers was a lonely voice in defense of the proposed conversion.

"The management of this company believes this was the best way to make this a viable company," she said.

The bills heard yesterday would:

Require that any sale of CareFirst be an all-cash deal. The WellPoint proposal calls for $850,000 of the $1.3 billion purchase price to come in the form of stock.

Limit the pay of the insurer's board of directors or, in a closely related bill, let the insurance commissioner regulate the compensation of board members and top executives.

Forbid any director or officer of CareFirst from profiting personally on the Well- Point deal.

Require health insurers with multiple plans to let participants in closed programs transfer to an affiliate without a change in their risk levels. The measure is intended to address problems raised when CareFirst's FreeState HMO subsidiary left the small-group market, leaving thousands of Marylanders scrambling for coverage.

Deny nonprofit insurers a longstanding tax break if they don't participate in Medicaid coverage. CareFirst withdrew from the state's Medicaid program in 2000 - a move that forced about 100,000 Marylanders to find new coverage.

Not on yesterday's list was the bill many CareFirst critics truly prefer: one that would take the proposed sale out of the hands of the insurance commissioner and ban the sale outright.

Each bill gave lawmakers, lobbyists and health care activists a fresh opportunity to get in a few licks on CareFirst.

"It went from a community center to a country club," said lobbyist Minor Carter, speaking on behalf of a nonprofit called Maryland Cares. "It went from CareFirst to CareLess."

Some of the most pointed comments came during the hearing on the bill to ban the inclusion of stock in the purchase price, which would go to a foundation set up by the state.

Committee Chairman Michael E. Busch, sponsor of the bill, said it would be inappropriate for the state to become a stockholder in a company it would then regulate.

Doherty urged lawmakers to leave that question to the insurance commissioner, saying he had the power to determine whether the stock sale was in the public interest.

She noted that a provision in the WellPoint deal gave the state the option of selling the stock as soon as the deal was completed.

Joseph A. Schwartz III, representing the state medical society, greeted that defense with ridicule.

"Can you imagine Maryland getting $850 million in stock and saying `dump it'? The Dow Jones would go down that day," Schwartz said. "If they're going to pay a price that's unreasonable in our view, they should at least pay it with real money."

Del. Dan K. Morhaim, sponsor of the bill to bar officers and directors from profiting on the deal, said the top 34 Blue Cross executives in Georgia had pocketed $41 million in its sale to WellPoint.

"I have a concern that this is the Enronization of Maryland," the Baltimore County Democrat said.

Doherty replied that the Georgia plan was already a for-profit. She defended the practice of negotiating employment agreements with current CareFirst executives.

"I think you want the management of the company, if they're doing pretty well, to stay here and not run to a competitor," she said.

While legislators repeatedly pounded on CareFirst over its proposed conversion and withdrawal from less lucrative markets, committee members clearly were pulling their punches with Doherty - a popular fixture on the Annapolis scene.

Through all the grilling, through all the bashing, Doherty never lost her birthday grin.

"We had, I think, a very good discussion of the issues," she said after the last potshot was taken.

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