Blue Cross and Blue Shield of Missouri is appealing a Missouri Court of Appeals ruling that affirmed the company had illegally converted itself into a for-profit company.
That decision, issued Aug. 4, affirmed a lower court ruling in December 1996 that the Blues was not operating consistently with its statutory purposes as a not-for-profit health services corporation.
Clara Webb Kinner, Blues spokeswoman, said the insurer filed a motion Aug. 19 for a rehearing by the state appellate court and to transfer the case to the Missouri Supreme Court.
The dispute is connected to a lawsuit the Blues filed in May 1996 against Missouri Insurance Director Jay Angoff. Angoff had protested that when the Blues created a new for-profit subsidiary, RightChoice Managed Care, in April 1994, it illegally transferred most of its valuable assets into that subsidiary. The Blues then sued the insurance director and the state's attorney general, Jay Nixon, in hopes the court would agree that it remained a not-for-profit organization.
However, Cole County Judge Thomas Brown III found in December 1996 that the Blues had exceeded its legal authority in transferring the assets.
Angoff said he was "delighted" with the recent court of appeals decision that affirmed the lower court ruling. "The appellate court found that what we have said all along was true-Blue Cross converted illegally into a for-profit company."
Angoff added that he had no beef with the current leadership of the Blues. "The people who got Blue Cross into this mess are gone," he said. "The new management team is working diligently to get this episode put behind them, and we are very pleased with the progress we are making in resolving the issue."
Based in St. Louis, the Missouri Blues is the licensee for all of the state except the region including Kansas City and several adjacent counties.
In the meantime, the Blues, Angoff and Nixon have been working on a settlement that would create the largest healthcare foundation in Missouri. Lawyers for the three parties are hoping to have the settlement finished by Sept. 15.
The foundation, once established, is expected to be worth roughly $175 million, said Tom Bixby of Missouri's Insurance Department.