A Michigan circuit court judge threw back to the state insurance commissioner the issue of whether a for-profit subsidiary of Blue Cross and Blue Shield of Michigan should have been allowed to purchase a workers compensation company.
Michigan Attorney General Mike Cox brought the lawsuit, alleging that the not-for-profit insurer illegally transferred $125 million to the Accident Fund, a subsidiary, in November 2007, and then used those funds to purchase CompWest Insurance Company, a workers compensation firm in San Francisco, that same month for $127 million. Two other subsidiary purchases are involved in the lawsuit.
In her ruling, Ingham Circuit Court Judge Paula Manderfield agreed with the Detroit-based Michigan Blues on two out of three counts in the lawsuit. But she refused to dismiss Coxs challenge of the transfer of funds.
We are pleased that the court has agreed with our position on the majority of the complaint, said Lisa DeMoss, senior vice president and chief counsel for the Michigan Blues, in a written statement.
John Sellek, spokesman for Cox, said that the attorney general was also pleased because the judge gave some guidance on how the insurance commissioner should rule on the matter that favored the state. He added that if the insurance commissioner decides the transactions were legal, the attorney general will appeal the decision. (For more on this topic, please see Keeping an eye on the Blues.) -- by Rebecca Vesely
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