Blue Cross and Blue Shield of North Dakota became the latest insurer to take the hot seat in connection with a change in legal status.
Consumers Union and a coalition of state organizations last week called on the Blues plan to preserve its charitable assets in its effort to convert to a mutual company.
But Blues spokeswoman Claudia Danovic said the Fargo-based insurer has no intention of distributing assets to a foundation.
Recent legal decisions in Missouri and New Jersey may force Blues plans in those states to create foundations as a prerequisite to undergoing an ownership change.
"The money now held in reserve to pay claims belongs to our subscribers. Those dollars should remain in reserve to pay the claims of our subscribers," Danovic said.
The insurer filed a petition with the state insurance commissioner late last month to change from a health services corporation to a mutual, which would be owned by its policyholders. The plan has a 73% market share in North Dakota.
An official from the insurance department said a review of the petition hadn't started as of last week. The insurer said the move is meant to clarify ownership of the assets and enable the company to market outside the state. It said its not-for-profit status will not change.
Consumers Union, a San Francisco-based consumer advocacy group, said the change would convert the insurer from a charitable corporation to a stock company organized to benefit private individuals. It wants the plan to emulate some insurers in other states that have distributed assets to charitable foundations when changing corporate status.
While laws vary among states, authorities are becoming more vigilant about insurance plan conversions. Consumers Union cited last month's retroactive settlement between Ohio Attorney General Betty Montgomery and Columbus, Ohio-based Central Benefits Mutual Insurance Co. The plan agreed to pay $5.1 million to charity nine years after its conversion from a health services corporation to a mutual.
Sister Bernadette Bodine, healthcare advocate with the North Dakota Catholic Conference, said the North Dakota Blues is "clearly a charitable organization" and was founded by a clergyman who later became bishop of the Bismarck, N.D., diocese.
But Danovic said the insurer is not organized as a charity under North Dakota law, although it did receive state tax breaks prior to 1983.