Press Release November 13, 1998	Contact: Reggie James, Lisa McGiffert or Rob Schneider (512) 477-4431 Consumers Union's Southwest Regional Office

Attorney General cites obscure exception
to deny public access to Blue Cross valuation

AUSTIN, TX -- An obscure exception to the Texas open records law has been used improperly by Attorney General Dan Morales to deny the public access to a key report on the value of the assets of Blue Cross Blue Shield of Texas, Consumers Union said today.

In an opinion letter dated November 9, the AG ruled a Texas Department of Insurance (TDI) report on the valuation of the Blues' assets falls under the "condition and operation reports of financial institutions" exception to the Texas Public Information Act. The same exception was cited by Travis County District Court Judge Paul Davis this summer to block public access to insurance redlining data held by TDI.

"The Attorney General's opinion is the second nail in the coffin closing public access to Texas insurance industry records," said Reggie James, director of the Southwest Regional Office of Consumers Union. "The AG is extending the use of an exception designed to stop a 'run on the bank' and using it to deny public access to a wide variety of insurance department records." The exception is designed to assure bank regulators can protect the release of sensitive solvency information that could lead to depositors panicking and quickly withdrawing their funds from the banks.

The valuation report was prepared by Coopers & Lybrand, L.L.P. at the request of the insurance department in connection with the agency's review of the proposed merger between Blue Cross Blue Shield of Texas and Blue Cross Blue Shield of Illinois. Consumers Union requested a copy of the report to establish for the public - the "owners" of this charitable, nonprofit company -- an accurate assessment of the worth of the company.

In September, the Texas Blues and the Attorney General's Office announced a partial settlement of an AG lawsuit seeking to block the merger in which the two parties agreed to settle the value at $350 million. The $350 million, for example, pales in contrast to the value of the California Blues' assets, which were estimated at $3.2 billion.

"The public has a right to know whether government officials are fully performing their duty under Texas law," continued James. "Without access to this valuation report, we have to rely on regulators and Blue Cross when they say 'trust us.'"

The AG's opinion raises serious concerns about public access to insurance records generally. Within only a few months, public access to two critical insurance department reports have been denied based on an obscure exception to the Public Information Act.

"Last summer we raised concerns that this exception threatened not only public access to redlining data, but to a substantial portion of the industry records maintained by the insurance department," James continued. "This decision by the AG validates our fears, and the outgrowth of that decision is happening now."

The Attorney General is required by law to protect the charitable assets of a nonprofit insurer in the event of a merger. The purpose of the valuation report was to determine the fair market price of these charitable assets.