Anthem thought it had it right this time, but the lawsuit came anyway--after Anthem bought a Blues plan and after it set aside money for a charitable foundation.
Last week, Maine's attorney general filed suit to determine if the price Anthem paid for its acquisition of Blue Cross and Blue Shield of Maine was fair. The lawsuit, filed in Kennebec County Superior Court on June 26, also seeks to ensure that a charitable foundation established in conjunction with the sale is properly funded.
On June 5, Anthem paid $102.5 million to acquire the Maine Blues, with $81.7 million of the proceeds set aside to fund the Maine Health Access Foundation, which will subsidize healthcare services for uninsured state residents.
Since 1993, Indianapolis-based Anthem has acquired not-for-profit Blues plans in seven states. In Connecticut and Kentucky, the company set up foundations with a combined $86 million to settle lawsuits charging that Anthem was withholding money the Blues had saved for public programs. In Ohio, no lawsuit was filed, but in an out-of-court settlement Anthem set aside $28 million for Ohio residents.
This time it didn't matter that Anthem created the charitable foundation up front.
"We're obviously disappointed by the action," said Lauren Green-Caldwell, an Anthem spokeswoman. "We are confident that the decision of (Maine's superintendent of insurance, who approved the deal ) will be upheld."
Under Maine law, when a not-for-profit healthcare organization switches to for-profit status, proceeds from the sale must be transferred to a charitable trust.
In its lawsuit, the attorney general's office argues that the sale price may not accurately reflect the fair market value of the 440,000-enrollee Maine Blues at the time of the sale.
An appraisal of the Blues completed by an independent accounting firm in July 1999 was the basis for determining the sale price. The appraisal needs to be updated to guarantee that the charitable foundation receives all funds to which it is entitled, said Christina Hall, Maine's assistant attorney general.
The attorney general's office wants the court to order an updated appraisal.
If such an appraisal reveals that the Blues was worth more than Anthem paid, the attorney general wants the difference given to the foundation.
In 1999, Blue Cross and Blue Shield of Maine lost $17.3 million on premium revenue of $460.8 million.
"In light of the magnitude of the transaction, we wanted to be sure no less than fair market value has been transferred to the foundation," Hall said.
She added that the attorney general is not seeking to nullify the deal, which was the subject of five public hearings and a review by the Maine Bureau of Insurance.
Maine's Superintendent of Insurance Allesandro Iuppa, who approved the transaction, said he stands by
As of last week, no court date had been set.