ANNAPOLIS – Lawmakers have been suspicious ever since CareFirst BlueCross BlueShield announced it was planning to switch to for profit so it could be sold.
That suspicion has prompted legislators to introduce bills that take aim at the Maryland health insurer’s conversion plan.
One of those bills, to prevent any officers from making money from the deal, unanimously passed the House Thursday. Company documents show executives could make as much as $30 million if the sale is concluded.
But CareFirst officials contend the bill is too broad, affecting even its employees’ benefit plans.
“(The company’s) 3,800 employees will be impacted negatively by this,” said Fran Doherty, CareFirst vice president. “(Employees) won’t be entitled to any kind of vacation, health insurance, retirement plans or any kind of benefits.”
However, bill sponsor Delegate Dan Morhaim, D-Baltimore County, said her claims are unfounded.
“That’s utterly not true,” he said. “I think (Doherty’s) throwing something out there because she didn’t like the 137-0 vote. She’s just mad because those executives won’t be able to line their pockets with millions of dollars. I’m sure she was in that pool.”
The bill was carefully worded to specifically target CareFirst executives and officers, Morhaim said. And it would remove any question of impropriety if CareFirst executives didn’t receive compensation for the deal, he said.
Members of the Attorney General’s Office were also consulted over the wording and legality of the bill, said Delegate Michael Busch, D-Anne Arundel.
“We think it only affects the officers and executives,” said the chairman of the Economic Matters Committee, which has been overseeing the majority of CareFirst related bills.
CareFirst officials have said the compensation package for its executives is necessary to help retain them if the sale to WellPoint Health Networks of California takes place.
WellPoint, often referred to as the “darling of Wall Street,” provides health care services and has about 16,300 employees with more than 80 offices nationwide. It has offered $1.3 billion for CareFirst.
Morhaim’s bill is just one of more than a dozen targeting CareFirst and the conversion proposal.
In another bill heard Thursday, introduced by Sen. Christopher Van Hollen Jr., D-Montgomery, the conversion would be blocked. That bill was heard at a Senate Finance Committee hearing.
“This bill would stop the sale in its tracks,” Van Hollen said. “Let’s preserve the nonprofits we have.”
For the conversion to take place, Insurance Commissioner Steve Larsen must decide if the sale is not in the public interest. In other words, as the law stands, so long as Larsen determined there would be no harm to the public, the sale would have to be approved.
But under another bill with House approval, CareFirst would have to prove the conversion would benefit Marylanders, essentially shifting the burden of proof to CareFirst.
Larsen said a decision from his office wouldn’t probably be made for another 15 months.
All of these bills being introduced by legislators to stop the conversion are unfair, Doherty said.
Not all of the information on the conversion is out there yet, she said. Experts are being hired to examine the issue, and they should be allowed to present their findings before a decision is reached, she said.
“This is a significant public policy issue that should be looked at thoroughly,” she said. “But you can’t do justice on a 90-day session on this issue.”
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