CU urges Court of Appeals to release $350 million decision (Feb. 2003).

Blue Cross Blue Shield decision could help Texans in need of health care

Consumers Union called on the Third Court of Appeals today to issue its ruling on the 1998 merger of Blue Cross Blue Shield of Texas and Blue Cross Blue Shield of Illinois. The decision will determine whether the merged Illinois Blues company will pay $350 million charitable health care dollars that belong to the Texas nonprofit community.

"In times of budget shortfalls, the state cannot meet all of the health care needs of its residents. Yet here is $350 million, languishing in the court for the past three years, that could have been at work for needy Texans," said Lisa McGiffert, a senior policy analyst with CU's Southwest Regional Office.

Consumers Union supports a motion filed by Attorney General Greg Abbott last week asking the Third Court Appeals to expedite the release of its decision, McGiffert said.

In November 1996, then Attorney General Dan Morales filed suit to block the merger of the Texas Blues (a nonprofit) with the Illinois Blues (a mutual insurance company). The suit was intended to protect Texas charitable health care dollars from being siphoned away from Texas. A 1998 lower court ruling that would not have preserved the charitable assets of the Texas company was appealed by the next Attorney General, John Cornyn. Cornyn allowed the merger to proceed with an agreement that, should he prevail in arguing a long-standing doctrine of common law, the Blues would pay funds into a charitable foundation.

"Time is money, in this case, money down the drain," McGiffert said. "We have lost millions of dollars through inflation as this case has languished in the court of appeals. It is time for the court to release its opinion and move this case forward so these charitable dollars can be put to use for Texans."

Under the law, the assets of a charitable nonprofit health plan, like the original Texas Blue Cross Blue Shield, must continue to be used for their original purpose if and when the nonprofit ceases to exist. Texas Blue Cross Blue Shield exists in name only - it is now owned by an Illinois corporation.

Consumers Union has been involved in this case from the start. Thirty-five states also have dealt with Blues conversions in various ways. Over the past two decades, as a result of 130 health care conversions (Blues health plans and hospitals) in this country, over $15 billion has gone to independent foundations for community health needs. For example, when Blue Cross of California converted eight years ago, $3.2 billion was set aside in two independent foundations for public health projects throughout the state.