WellPoint Health Networks, the largest publicly traded Blue Cross Blue Shield operator said late Friday that it will not appeal a regulatory ruling in Maryland that effectively blocked the company's planned acquisition of CareFirst in the greater Washington and Baltimore areas.
But the decision does not necessarily mean WellPoint is ending its pursuit of CareFirst, the Owings Mills, Md.-based company that serves 3.1 million Blues enrollees in Maryland, Delaware, the District of Columbia and a small part of Northern Virginia.
WellPoint Chairman and CEO Leonard Schaeffer explained last month that the Maryland decision applies to CareFirst's attempt to convert to for-profit status, a necessary step before Thousand Oaks, Calif.-based WellPoint could complete its proposed $1.37 billion takeover, first announced in November 2001.
"This was stopped at the conversion level, not at the transaction level," Schaeffer told Modern Physician March 26 at a healthcare investment conference in Las Vegas.
However, Schaeffer also pointed out that Maryland Insurance Commissioner Steven Larson "said no to the conversion, and no means no."
WellPoint officials were not immediately available for further comment Monday.
Larson said March 5 that the WellPoint proposal was "not in the public interest" because CareFirst failed to obtain a bid for fair value of the company from WellPoint.
He also says CareFirst violated an anti-bonus provision of state law by negotiating a $119 million severance package for management and failed to show that the transaction would not increase premiums and reduce access to care in Maryland.