CareFirst refiles in Delaware for approval of WellPoint deal

Decision by Md. expected next year

D.C. uncertain

October 19, 2002|By M. William Salganik | M. William Salganik,SUN STAFF

CareFirst BlueCross BlueShield and WellPoint Health Networks Inc. refiled in Delaware yesterday their application for approval of WellPoint's plan to buy CareFirst, restarting the review process there.

The review in the District of Columbia, however, could be pushed back, as the companies debate with the D.C. Appleseed Center, a public interest group, about information Appleseed says it needs.

Maryland's review is on schedule for a decision early next year, Debbie Rosen McKerrow, a spokeswoman for the Maryland Insurance Administration, said yesterday. After Insurance Commissioner Steven B. Larsen rules, the legislature gets 90 days to review his decision.

CareFirst, based in Owings Mills and the largest health insurer in the region, is seeking permission to convert to for-profit operation and be acquired by California-based WellPoint for $1.3 billion. The regulators are reviewing the plan to determine whether it is in the public interest and whether the price is fair. If the deal is approved, the money would be paid to health-related foundations in the region.

WellPoint suspended its application in Delaware Aug. 15, as it sought to avoid additional costs until it got a look at a report by a consultant to Maryland on the value of CareFirst. If the consultant, the Blackstone Group, had recommended a price WellPoint considered too high, WellPoint could have pulled the plug on the deal.

Blackstone reported last month, saying CareFirst is worth more than $1.3 billion but not setting a firm figure. About two weeks later, WellPoint said it would move ahead and that it would refile soon in Delaware.

Darryl Reese, director of company examination for the Delaware Department of Insurance, said yesterday, "We're going forward with our process."

That could take as long as a year, he said. A former state Superior Court judge was named to conduct a public hearing there.

In the District of Columbia, "it's almost a certainty the schedule will be delayed; it's just a question of how much," said Walter Smith, executive director of Appleseed, which has been designated as an official party in the review process.

Hearings there, tentatively scheduled for December, are likely to be pushed back to spring, Smith said.

Appleseed is seeking financial data from CareFirst and WellPoint for its consultants studying the value of CareFirst and the potential impact on consumers.

"They haven't objected to providing the information; they just haven't done it," Smith said.

Jeffery W. Valentine, CareFirst's director of corporate communications, said, "We have supplied literally thousands of pages of documents to Appleseed."

CareFirst considers some of the requested information, bearing on areas such as marketing strategy, to be proprietary, he said, and will supply such information only when Appleseed signs a confidentiality agreement.

Smith said Appleseed is willing to sign an agreement but that the one proposed by CareFirst is too restrictive.

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