Blues board ordered frozen

D.C.'s CareFirst order is similar to Delaware's

Delay sought on Md. reforms

Regulators set hearing over proposed changes

October 25, 2003|By M. William Salganik | M. William Salganik,SUN STAFF

The District of Columbia insurance commissioner yesterday ordered CareFirst BlueCross BlueShield not to change its board, bylaws or corporate goals without his approval.

The order, similar to one issued by Delaware's insurance commissioner in April, is the latest salvo in a dispute in which Maryland is attempting to reform the region's largest insurer.

Lawrence W. Mirel, the D.C. commissioner, noted in his order that "efforts to comply with the Maryland legislation may prejudice the interests" of CareFirst members served by the D.C. plan, or "negatively impact" the plan's "financial stability, product offerings, underwriting standards, etc." He set a Nov. 24 hearing on the issue.

Jeffery W. Valentine, a CareFirst spokesman, said last night that company officials had not seen the order and that he could not comment on it. He noted, however, that D.C. and Delaware insurance commissioners have both been "looking for reassurances that Maryland reform legislation would not negatively affect the interests" of consumers in their jurisdictions.

Maryland's insurance commissioner, Alfred W. Redmer Jr., speaking earlier this week, before the D.C. order was issued, said he had been in discussions with his counterparts, and with the governor and legislative leaders, and that he remained optimistic the issues could be resolved.

He said Maryland officials were willing to make modifications in their reforms to satisfy the neighboring regulators "while preserving the integrity of what they tried to accomplish."

Redmer said he had exchanged correspondence with Mirel and that he planned to meet with him in the next few weeks and with the board of CareFirst's D.C. affiliate.

CareFirst, which provides health coverage for 3.2 million people in the region, was formed by a 1997 affiliation between the Maryland and D.C. Blue Cross and Blue Shield plans. Delaware joined in 2000. Regulators in all three jurisdictions approved the arrangements, but reserved the right to approve major changes.

CareFirst has been run by a board made up of 12 members from Maryland, six from the District of Columbia and three from Delaware. Each of the affiliated Blue Cross plans has its own board as well and some of the members also serve on the parent CareFirst board.

The dispute arose after CareFirst filed for approval to convert its nonprofit status to for-profit in order to sell the company to a California insurer for $1.37 billion.

Maryland's insurance commissioner blocked the deal in March, saying it was not in the public interest and had been driven by the prospect of large bonuses for CareFirst executives. He also held that CareFirst's board of directors had not acted properly.

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