Blue Cross and Blue Shield of Ohio announced a turnaround plan last week, only to learn that a court had approved its termination from the national Blues system.
The Cleveland-based insurer promptly appealed the loss of its Blues licenses to the full 6th U.S. Court of Appeals in Cincinnati.
The insurer said it would work with the Blue Cross and Blue Shield Association to retain the Blues name and trademarks, and state agencies reportedly were considering backing up the plan. But the association wouldn't back down.
"They're not getting the marks back," association spokeswoman Iris Shaffer said. "We hope the Cleveland company will work with us, but that's on a disconnect."
National Blues President and Chief Executive Officer Patrick Hays said the court's decision "represents a step forward for the Blue Cross and Blue Shield Association and for the 68 million Americans who rely on the Blues brand for unsurpassed quality, service and value."
The Cleveland plan claimed the national association based the termination on the insurer's agreement to transfer assets to Columbia/HCA Healthcare Corp. That deal was called off (March 24, p. 2).
But a three-judge panel of the 6th Circuit disagreed last week. It upheld a ruling that a trial would probably find that the plan's licenses terminated in September 1996 as a result of a lawsuit filed by Ohio Attorney General Betty Montgomery. The panel lifted a 4-month-old stay against the termination.
The association didn't say when it would start disconnecting the plan. Some Blues business would transfer to Anthem Blue Cross and Blue Shield, which has a regional headquarters in Cincinnati.
The insurer's decision to appeal was a switch from earlier in the week, when Kent Clapp, acting chairman, president and CEO, said the plan would "resolve our legal claims and stop fighting."
Clapp described measures to restore the plan to profitability after a $95 million loss in 1996, much of which was attributed to legal bills and other costs of the failed Columbia deal.
The plan said it will save money by cutting capital and administrative expenses, negotiating risk-sharing arrangements and lower rates with providers, and deactivating a managed-care subsidiary, the Northeast Ohio Community Health Plan.