Blue Cross and Blue Shield of Ohio was put on notice last week that it will lose the Blues trademark if it proceeds to sell its assets to Columbia/HCA Healthcare Corp.
At a quarterly meeting in Washington, the board of the national Blue Cross and Blue Shield Association recommended that its 63 member plans vote to terminate the licenses of the Cleveland-based plan should the deal occur.
The Ohio Blues plans to transfer most of its business to a new company, which would become a subsidiary of for-profit Columbia. Under the deal, Columbia would pay $299.5 million to the plan (See related story, p. 16).
Both the Ohio Blues and Columbia said the deal would go forward, contrary to the hopes of some policyholders and consumer advocates, who have filed suit to try to stop the deal. However, Columbia said it would pay $50 million less if it doesn't get the trademark.
The association "clearly sent a message that the way this deal is formulated right now doesn't meet our requirements," said Pam Drellow, a spokeswoman for the association.
The board also considered ways to limit the multimillion-dollar payments top Ohio Blues officials would receive in consulting and noncompete agreements, Drellow said.
The agreement with Columbia stipulates that the Ohio Blues will use its "best efforts" to transfer licensure of the Blues trademark to the new company.
The board vote came one day after the Ohio Blues filed a lawsuit in U.S. District Court in Cleveland to prevent its parent association from amending its licensure rules. The plan also asked the court to declare that the proposed deal with Columbia meets the requirements of current licensing standards.
In the lawsuit, the Ohio plan claims it would face approximately $75 million in penalties payable to the association upon termination of its licenses.
After the board vote, the Ohio Blues issued this statement: "We are going forward with the transaction. Concerning the trademark question, we play by the rules. The association changed them after the fact, and we will make them live by the rules they set. We intend to win this issue in court."
The association stressed that it had not changed any rules as of late last week, although rule changes aimed at clarifying trademark use were on the agenda at the board's meeting.