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SAN FRANCISCO, CA — Blue Cross and Blue Shield of New Jersey is a charitable and benevolent organization, according to a ruling issued today by the Appellate Division of New Jersey Superior Court. This decision affirms an earlier court ruling. Because the court clearly held that BCBS is a charitable organization, consumer groups believe that the assets of BCBS must be preserved for the people of New Jersey and cannot be used to benefit private individuals or corporations.
"Once again, a New Jersey court has found that the evidence supports what consumer groups and regulators have been asserting for months," said Julie Silas, staff attorney with Consumers Union, nonprofit publisher of Consumer Reports. "Blue Cross Blue Shield is a charitable organization."
The Appeals Court decision answers the question of whether BCBS is a charitable and benevolent organization with "a resounding ‘yes.’" The court referred to this conclusion as "ineluctable." New Jersey common law requires that assets of a charitable organization must continue to be used for their original charitable purposes.
BCBS of New Jersey has an application pending before the state Department of Banking and Insurance to convert to a for-profit mutual insurance company. The company originally filed the application simultaneous to an application to merge with Anthem Inc, an out of state mutual insurance company. After the earlier court decision finding BCBS to be a charitable organization, Anthem put those merger plans on hold. BCBS continues to argue that it is not a charity. Consumer groups are challenging this argument, according to Silas, to ensure that millions of dollars meant for charitable health care are not handed over to private individuals.
"The New Jersey regulators are not alone in their efforts to protect the public’s interest," said Silas. "Blue Cross Blue Shield plans in other states have argued that they are not charitable organizations, despite state laws that clearly define them as ‘charitable and benevolent.’ These efforts have consistently failed."
Earlier this week, the Attorney General of Kentucky filed suit against Anthem Inc. to recover hundreds of millions of nonprofit charitable dollars that Anthem absorbed when it merged with Kentucky Blue Cross and Blue Shield in 1993.
