Press Release May 5, 1999	Contact: Mary Ann Cryan or Julie Silas 415/431-6747 Consumers Union's West Coast Regional Office Jane Chiles, 502-875-4345

 

 2 COURT VICTORIES GIVE ATTORNEY GENERAL GREEN LIGHT
TO CHALLENGE TERMS OF ANTHEM'S BLUE CROSS MERGER

SAN FRANCISCO, CA - A Kentucky trial court ruled today that the state Attorney General can proceed with his lawsuit challenging the terms of Anthem Insurance Company's 1993 merger with Blue Cross and Blue Shield of Kentucky. The court denied a motion by Anthem to dismiss the entire case without a trial. In a separate ruling last week, the Court of Appeals ruled that the Attorney General may pursue the portion of his lawsuit charging the company with fraud and deception.

Attorney General Ben Chandler filed a lawsuit against Anthem in 1997 seeking to recover millions of dollars in charitable assets that Anthem absorbed when it merged with Blue Cross, and to reimburse policyholders for premium increases due to violations of the Consumer Protection Act.

Anthem had argued that the Attorney General was prohibited from seeking to recover the charitable assets of Blue Cross by any or all of three events: a 1953 court decision on tax issues, a 1986 change in corporate form, and the 1993 merger, which was approved by the Department of Insurance. The trial court ruled that none of these events affected any charitable assets held by Blue Cross. The court's decision means that the case will proceed.

"Today's court decision is a victory for the people of Kentucky and consumers everywhere," said Julie Silas, staff attorney at Consumers Union, publisher of Consumer Reports. "Two different Kentucky courts in less than one week have ruled that Anthem cannot prevent the Attorney General from asserting consumer and policyholder rights. We hope that Anthem will learn from these decisions. Instead of using valuable dollars to fight consumer interests, it should protect consumer interests in any state where it does or wants to do business."

Consumers Union co-leads the Community Health Assets Project, a national effort to protect nonprofit charitable assets and to ensure that health needs are addressed in the change of nonprofit health care institutions to for-profit status.

"This decision is an important step in reversing this high-handed corporate behavior," said Jane Chiles, of Kentuckians for Health Care Reform. "We view the decision of the court as a strong affirmation of Attorney General Ben Chandler's efforts to return the charitable assets to Kentucky."