Insurer back for 2 days of hearings

CareFirst will attempt to make case why it needs to convert, be sold

Sessions Monday and Tuesday

April 27, 2002|By M. William Salganik | M. William Salganik,SUN STAFF

The painstaking regulatory review of CareFirst BlueCross BlueShield's plans to convert to for-profit operation and sell itself resumes next week, as Maryland Insurance Commissioner Steven B. Larsen conducts two more days of public hearings.

The focus at the all-day sessions Monday and Tuesday will be CareFirst's business case - why it needs to convert and be sold. Next week's meetings are a follow-up to three days of hearings Larsen held in March as he quizzed officials of CareFirst and of WellPoint Health Networks Inc., the California company that wants to buy Maryland's largest health insurer.

"We hope to convince the commissioner and everybody else involved that this transaction is what's best for CareFirst and for the communities where we do business," James P. Day, a CareFirst spokesman, said yesterday.

Most of Monday's session is expected to consist of Larsen's questioning of Joseph V. Marabito, a partner in the consulting firm Accenture Ltd. Marabito was responsible for a report done for CareFirst and made public in December, which examined the case for conversion and sale and concluded, "CareFirst would benefit from a substantial increase in scale and capital access."

William L. Jews, CareFirst's president and chief executive officer, is also to be questioned at length during the two days.

CareFirst and WellPoint announced in November that CareFirst wanted to drop its nonprofit status and be acquired by WellPoint for $1.3 billion. They formally filed in January with insurance regulators in Maryland, Delaware and the District of Columbia. CareFirst operates in all three jurisdictions, and all three insurance commissioners get to rule on whether the deal should go ahead, and, if so, under what conditions.

The D.C. insurance commissioner has scheduled public forums for May 22 and May 28, and has tentatively scheduled a formal hearing for November. D.C. officials are seeking additional information from WellPoint, which is due in July. Dana Sheppard, senior counsel to the D.C. insurance commissioner, said yesterday that the department is still specifying what additional information it is seeking, and hopes to notify WellPoint next week.

In Delaware, "we are still in the review process," with hearings likely late this year or early next year, Rhonda West, a spokeswoman for the Delaware Department of Insurance, said yesterday.

Larsen hopes to have a decision by the end of the year. Under legislation adopted this year by Maryland's General Assembly, any decision by Larsen would be put on hold for 90 days to give lawmakers a chance to review it.

Larsen's hearings next week will also include a public comment period from 3 p.m. to 5 p.m. Tuesday. Preference will be given to individuals or groups who have not testified at the half-dozen comment sessions Larsen has held around Maryland.

Hearings begin at 9 a.m. both Monday and Tuesday at the Baltimore Marriott Inner Harbor Hotel, 110 S. Eutaw St.

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