Anthem and Connecticut regulators last week settled a trio of lawsuits over the Indianapolis-based insurer's July 1997 noncash acquisition of Blue Cross and Blue Shield of Connecticut.
Under the agreement, the Connecticut Blues plan will set up a $41 million charitable foundation to fund community healthcare projects.
The settlement is intended to compensate Connecticut residents for tax breaks and other concessions that the North Haven-based Blues plan received as a not-for-profit corporation until it converted to a mutual insurance company in 1984.
The proceeds will be much less than the $550 million in charitable assets that the state attempted to secure from Anthem in late 1997 through separate lawsuits filed by the comptroller and the attorney general. Citizens for Economic Opportunity, a coalition of labor, religious and consumer groups, filed a third lawsuit.
The agreement settles all the litigation.
State Attorney General Richard Blumenthal, state Comptroller Nancy Wyman and the consumer coalition called the out-of-court agreement a victory for the state's consumers.
"With this settlement, Anthem has decided to take its medicine and pay the bill-to the tune of $41 million," Wyman said at a news conference.
Blumenthal said the $550 million figure was never realistic and called the settlement "eminently fair and reasonable."
In a written statement, Anthem said it settled because extended litigation "would not have been in anyone's best interest." It considered the "inherent risks of litigation" and possible damage to its reputation in deciding to settle the case, officials said.
In addition to Connecticut, the mutual insurance company operates Blues plans in Indiana, Kentucky and Ohio; it has agreements to acquire Blues plans in Colorado, Maine and New Hampshire (July 19, p. 12).
This wasn't the first such agreement for Anthem. In February it settled a similar dispute with Ohio by agreeing to create a $28 million foundation to compensate residents there for its 1995 purchase of Community Mutual Insurance, a Cincinnati-based Blues plan (Feb. 22, p. 26). No lawsuit was filed in that dispute.
At the time of the Ohio settlement, Anthem said the agreement would not affect its handling of the Connecticut lawsuits or a similar lawsuit pending in Kentucky. But five months later, Anthem settled in Connecticut.
The state of Kentucky filed a $230 million lawsuit filed over Anthem's 1993 acquisition of the Blues plan there. The suit is still moving forward in the courts, according to an Anthem spokeswoman, who declined to say if settlement talks are under way. A spokesman for the Kentucky attorney general's office said a pretrial scheduling conference will be held Aug. 12.