Federal investigators have subpoenaed extensive records of CareFirst BlueCross BlueShield in a probe of the conduct of Maryland's largest health insurer and its officers in attempting to convert the company to a for-profit operation and sell itself to a West Coast health care giant.
"I was informed there had been a subpoena," said state Attorney General J. Joseph Curran Jr. in a telephone interview last night. He said he could not provide details on the investigation.
Other government and private sources said last night that the U.S. attorney for Maryland, a federal grand jury and the FBI are involved in the probe, which was initiated after a sharply critical report on CareFirst was released by the Maryland Insurance Administration.
In that report, CareFirst President and Chief Executive Officer William L. Jews and other officials were accused of deception, conflicts of interest, mismanagement and flagrant attempts to profit personally from the proposed sale. In releasing the report last month, new state Insurance Commissioner Alfred W. Redmer Jr. said he would bring civil charges based on the report. Action on those charges is pending.
Redmer's report followed one issued in March by then-Commissioner Steven B. Larsen rejecting CareFirst's conversion-and-sale plan as not in the public interest. Larsen collected more than 85,000 pages of board minutes, consultant reports, correspondence with potential purchasers and other records as he reviewed the sale application.
Besides the 15-page institutional subpoena delivered to CareFirst requesting documents from the past several years, legal requests for information also went to the Maryland Insurance Administration and the law firm of Isaac Neuberger, who has represented Jews and CareFirst. WellPointHealth Networks, the California insurer who attempted to buy CareFirst for $1.37 billion, also appears to have been asked for information, sources said.
The sources would not or could not say what violation of federal laws the investigators suspect.
The insurance administration was asked for documents collected by Larsen, according to one source who has seen the subpoena. The source said investigators appeared to be using Larsen's report "as a road map of sorts."
Larsen said a lavish bonus package for CareFirst executives - Jews stood to receive up to $39.4 million - was a key driver of CareFirst's decision to sell and its selection of a partner for the deal.
