The Maryland U.S. attorney's office subpoenaed health insurer WellPoint Health Networks late last week for documents related to its failed bid for Owings Mills, Md.-based CareFirst BlueCross BlueShield.
Thousand Oaks, Calif.-based WellPoint agreed to purchase Maryland's largest health insurer, CareFirst, in November 2001 for $1.37 billion, contingent on the conversion of CareFirst from not-for-profit to for-profit status. The Maryland Insurance Commissioner denied the conversion in March. WellPoint said it received a notice stating CareFirst's decision to terminate the merger this month.
Maryland this year passed a law requiring the replacement of all 12 Maryland directors on CareFirst's 21-member board. The law also set new executive salary guidelines and requires the company to remain not-for-profit for the next five years.
Ken Ferber, WellPoint staff vice president, corporate communications, confirmed the subpoena stating, "All parties involved with the deal, including the other bidders, have been asked for documents. We have no reason to believe we are a target of an investigation and we plan to cooperate fully."
With 13.4 million members, WellPoint is the third-largest managed healthcare company in the country and the first Blue Cross plan to go public.