Even as Anthem Insurance Cos. tries to defend itself against litigation brought by Kentucky's attorney general, the $6.3 billion mutual insurer is about to be sued again.
In the coming weeks, the state of Connecticut plans to sue Anthem in state Superior Court to recover charitable assets the Indianapolis-based insurer is said to have assumed when it acquired Blue Cross and Blue Shield of Connecticut this July.
Consumer groups say at least $240 million should have been set aside in trust.
"Basically the public is entitled to benefit from that trust rather than a private corporation such as Anthem," said Bob Shields, a partner with Horton, Shields & Cormier in Hartford, the firm appointed by the state to investigate the charitable-assets issue. "We have not filed a complaint, but we expect to do so shortly."
Don Stengele, a spokesman for the company, had no comment because Anthem has not been notified of the litigation.
Shields would not offer an estimate of the amount of money he'll seek in the case. That will be determined in the discovery process, he said. Other details also have yet to be worked out.
Anthem's total 1996 surplus is $1.3 billion. The company operates Blues plans in Connecticut, Indiana, Kentucky and Ohio.
Connecticut Attorney General Richard Blumenthal has not been directly involved in the Anthem proceedings. Having received money from the Blues plan to fight the nation's tobacco companies, he stepped aside and appointed outside counsel to look into the matter.
The state's pending lawsuit would follow one filed late last month by Kentucky Attorney General Albert "Ben" Chandler III (Oct 27, p. 14). That suit seeks to reclaim at least $230 million in charitable assets the state says Anthem illegally pocketed when it acquired the Kentucky Blues plan in 1993.
Anthem contests the state's assertion that the Blues plan was a charity and is waging a controversial campaign in the court of public opinion. It's running radio and print ads and sending direct mail pieces to its 1 million Kentucky enrollees that may be "deceptive or misleading," according to state insurance department officials.
The ads contend the lawsuit would boost premiums. They also charge that Consumers Union and Kentuckians for Health Care Reform have "teamed up" to "force Blue Cross and Blue Shield to turn over financial reserves." Although neither group is a party to the Kentucky suit, both lobbied for state action.
"We perceived the charitable-assets lawsuit to have a direct effect on (enrollees') financial security," Stengele said. "We believe this is our members' money."
But the state insurance department questions those allegations. It has given Anthem until Nov. 14 to provide "documentary proof" backing its claims about the suit's effect and consumer groups' involvement. The charitable-assets lawsuit is a matter for the courts, said Rosemary Weathers, a department spokeswoman.
Insurance officials question Anthem's use of advertising "as if some sort of public-issue campaign were being waged," Weathers said.
Anthem said it's preparing a response.